Trademarks – Transborder reputation and establishment of goodwill in India – SC decision in Prius distinguished

The Division Bench of the Delhi High Court has ordered removal of the registration for the mark ALPHARD in favour of the respondents in a case where the dispute involved determining whether the appellant’s same word mark, by virtue of its alleged prior adoption and asserted transborder reputation, qualified as a ‘well-known trademark’ on the date of the respondent’s application for registration within the same business sector.  

On the question of spill-over of transborder reputation and establishment of the goodwill in India, the Court noted the following:

• Appellant was the prior adopter of the mark globally since 1986 while respondent filed its application only in 2015 on ‘proposed to be used’ basis. 
• Appellant’s vehicles carrying the mark were available in India since 2008 by way of direct imports by individuals and vehicle enthusiasts, though there was no formal launch of the vehicle in India. 
• Indicia of reputation must be evaluated considering the targeted consumer base (relevant here for luxury goods like appellant’s vehicle) rather than broad public penetration.
• Act of importing a luxury product is not undertaken in the absence of recognition of the product’s source or reputation.
• Unsolicited/voluntary importation thus reflected a conscious commercial decision, driven by recognition and attractiveness of the appellant’s mark among Indian consumers and traders, indicating that the mark had achieved a significant level of awareness and desirability in India. 
• Goodwill attached to the mark was sufficiently strong to motivate independent market actors to import into India without any prompting from the appellant. 
• Statutory definition of ‘use’ does not confine it to acts of the proprietor alone but extends to any statement in the public domain that associates the mark with the availability or performance of the services.
• Mere fact of a ‘proposed to be used’ application later in 2017 by the appellant does not detract from its reputation in India, especially in the absence of a formal commercial launch.
• Appellant’s mark thus crossed the threshold from mere foreign reputation to actionable recognition within India, being recognized within the relevant consumer segment in India, thereby qualifying as a ‘well-known trademark’ under Indian law.
• Law recognizes that reputation in a niche market, even without mass penetration, is sufficient to establish a well-known mark.

The High Court in Toyota Jidosha Kabushiki Kaisha v. Tech Square Engineering Pvt. Ltd. & Anr. distinguished the Supreme Court’s decision in Toyota Jidosha Kabushiki Kaisha v. Prius Auto Industries Ltd., noting that the evidence there was insufficient to establish substantial goodwill or reputation, whereas the appellant here proved prior reputation in its vehicle through substantial published material, including third-party sales evidence. 

Also, in terms of adoption of the mark by the respondent, the Court noted that the adoption was not bona fide, and there were contradictory statements and undocumented transactions which undermined the respondent’s arguments.