Over the last couple of weeks we brought you Rahul Bajaj and Ritvik’s analysis of the decision in Mac Personal Care Pvt. Ltd. and Anr. versus Laverana GMBH and Co. KG and Anr. Ritvik had argued here that Indian courts have recently become lenient in protecting foreign marks which are not being used in India. In this post Rahul Bajaj, our first Spicy IP fellow for this year offers a rejoinder to Ritvik’s analysis.
Last week, I analyzed the Delhi High Court’s division bench judgment in Mac Personal Care Pvt. Ltd. and anr. versus Laverana GMBH and Co. KG and Anr., describing the judgment as a valuable addition in the rapidly burgeoning body of case law on trans-border reputation for its nuanced articulation of the threshold that must be met by the plaintiff to conclusively demonstrate the existence of such reputation.
Ritvik Kulkarni offered a counterpoint to my analysis by contending that this verdict has further exacerbated the problem of Indian courts being excessively lenient in granting protection to foreign marks in India. In order to constructively critique Ritvik’s argument, I think it would be apposite to divide his views into 3 parts.
Territorial application of IP rights
Ritvik contends that, since it is axiomatic that intellectual property rights are intrinsically territorial in their application, the concept of trans-border reputation, as applied by Indian courts, flies in the face of this fundamental notion.
It is submitted that this view is premised upon the erroneous assumption that proof of reputation of a Plaintiff’s mark in a foreign country is a sufficient condition for the Plaintiff to be able to restrain the defendant from using the mark in India. On the contrary, as Justice Nandrajog makes clear in para 15 of the Mac Personal Care decision, such proof is only a necessary and not a sufficient condition for the plaintiff to be able to establish trans-border reputation. The Plaintiff is also required to demonstrate how such reputation has spilled over into India.
If this second ingredient were dispensed with, the view that the manner in which Indian courts apply the concept of trans-border reputation does not sit well with one of the foundational tenets of intellectual property law could be countenanced.
The concept of trans-border reputation, as evolved by courts, is reflective of a desire to strike an appropriate balance between keeping the territorial nature of trademark law intact on the one hand and keeping pace with the proliferation of information technology on the other which necessitates the crafting of a remedy to prevent the type of misappropriation that the defendant in this case was engaging in.
Need to show existence of goodwill
Goodwill, Ritvik argues, is the sine qua non for demonstrating the existence of trans-border reputation; sans goodwill in the local market, mere proof of reputation of the mark in foreign markets cannot pass muster in an action for passing off.
This argument, flies in the face of the basic goal underpinning the invocation of trans-border reputation by courts to grant the remedy of injunction to plaintiffs whose products have attained the requisite level of universal acclaim to merit such protection. More specifically, the concept of trans-border reputation would be rendered completely redundant if plaintiffs were required to demonstrate how their product had attained goodwill in the Indian market as a condition precedent for obtaining an injunction. This argument is fortified by Justice Manmohan Singh’s judgement in which he reaffirmed the grant of injunction to the plaintiff against which the defendant appealed to the division bench.
Justice Singh observed in para 46: “This concept of goodwill and the insistence of localized business has been a traditional concept of passing off which sometimes is called a classic case of passing off. However, this concept of passing off has undergone changes due to advent of technology and modernization. For the said reason the tendency to insist localized goodwill has been transformed into proving reputation of a global character. All this would mean that courts entertaining the case of passing off can discount the localized existence of goodwill and the business in the territory specific if the substantial nature of reputation has been proved which has some kind of nexus in the territory where the protection is sought and the said concept in the modern language is called trans-border reputation whereas the goodwill is always local in character, the concept of reputation is dynamic and is all encompassing.”
Further, in the Calcutta High Court decision of Allergan Inc. v. Milment Oftho Industries, 1999 PTC (19) (DB) 160, which was later reaffirmed by the Supreme Court, Justice Ruma Pal made it abundantly clear that goodwill is not an essential ingredient in a case of passing off founded upon trans-border reputation in India in the following words in para 13:
“… Some Courts have held that reputation which is built up on the basis of trade within the country is entitled to protection from passing off. Other Courts have made some concession to the communication explosion and held that if the Plaintiff has a reputation in another country, his right to the mark will be protected if it is coupled with some actual or proposed business activity within the country… Still other Courts have held that with the increase in international commerce, mass media communications and the frequency of the foreign travel, political and geographic boundaries do not stem the exchange of ideas and instant information. Local business is not an essential ingredient of a passing off action. However, the reputation must be well established or a known one… The decisions which reflect the first and second view have so held for reasons which are partly historic, partly geographic and partly because reputation was equated with goodwill. Goodwill has been defined as the benefit derived from reputation. It is not the reputation required to found a passing off action. The law of passing off is not trammeled by definitions of goodwill developed in the field of revenue law (emphasis mine)… It is an asset of a business assessable in terms of money and transferable…In my opinion reputation forming the basis of a passing off action need not be so localised. Whatever the compulsion for the Courts taking the first or second view in other countries, as far as this country is concerned, Courts in India prescribe to the third view and have held that a plaintiff with a reputation which is established internationally can sue to protect it in this country even if it does not have any business activity here. In other words reputation of a product may precede its introduction and may exist without trade in such product in the country.”
Misplaced reliance on judgments
Ritvik relies on the case of Sakalain Meghjee versus BM House in support of the proposition that a failure to put forth cogent evidence in the form of sales figures in the Indian market would be fatal to a Plaintiff’s passing off claim.
However, a closer reading of that case further reinforces the argument that actual presence in the Indian market and existence of trans-border reputation are two discrete grounds upon which a claim for passing off can be founded; the latter need not be supported by the former for the claim to succeed. In the aforesaid case, after noting that the Plaintiff had failed to establish its presence in the Indian market, Justice Sikri noted in para 15: “Even in the absence of such sales in India the Plaintiff could still succeed, had it shown trans-border reputation of its publication. Here again, the Plaintiff has failed as no evidence of spill over reputation has been produced.”
Further, while it is true that in the case of Rob Mathys India versus Synthes Ag Chur, the court supported the view that international reputation+spillover ipso facto would not be sufficient for claiming passing off in India, it also held: “It would thus appear that there is conflict of approach between the “hard-line or national approach” of the English authorities and the “liberal international approach” of the Courts in other Commonwealth countries. We feel that we must follow a middle course.We must readily support decisions which seek to promote commercial morality and discourage unethical trade practices of making such a situation where Indian purchaser/consumer starts presuming franchise like connection between foreign products and Indian Products which either cause confusion or which appear to be deceptively similar. Indian Courts have consistently and rightly disapproved the attempt by Indian trade and industry to bask in the warmth of, and make illicit profit from, a reputation not earned legitimately by their own effort but built by others elsewhere, by the short cut of trickery and passing off and thus protected not only private rights but commercial morality and thus expanded the scope of passing off action to meet that end.”
Further, as Justice Manmohan Singh rightly noted in his judgment, a myopic conception of trans-border reputation cannot be countenanced today on account of the proliferation of information technology owing to which a Plaintiff’s product can make a concrete and tangible impact in the Indian market despite not being available in India.
In sum, the Mac Personal Care decision offers a principled, nuanced and clear rationale for affording protection to the plaintiff’s mark on account of its trans-border reputation and is in keeping with the felt necessities of the time, as Justice Holmes would say.
Image from here