Trademark

Spicy IP Fellowship 2016: Goodwill Hunting- The Delhi High Court upholds LAVERA’s Trans-border Reputation, restrains MAC’s LAVERA


Last week we brought you Rahul Bajaj’s post on MAC Personal Care Private Limited & Anr. v Laverana GmbH and Co. Kg & Anr. on trans-border reputation in a passing off claim. This week we have a post by Ritvik Kulkarni on the same decision where he argues that though the courts may have in this case rightly restrained the Defendant from making dishonest use of an international mark, Indian courts have recently become lenient in protecting foreign marks which are not being used in India. This is Ritvik’s first submission for the fellowship.

One of the first things we learn about IP rights is their territorial application. We are taught that intellectual property rights are separately governed and protected by the laws of each nation. But much water has passed under the bridge since then; and today certain trademarks have managed to spill out of territorial waters to enjoy quasi-global protection against passing-off. This post covers one such spillover recognized by the Delhi High Court (HC) in its latest decision on the law of trans-border reputation.

Facts

The Delhi HC recently upheld a Single Judge’s order in restraining the Appellant (Defendant) from using ‘MAC’s LAVERA’ and passing-off the Respondent’s (Plaintiff’s) trademark ‘LAVERA’.

The Plaintiff is an international brand in cosmetic products. It has been using ‘LAVERA’ on its high quality goods since 1982. This mark is registered in several countries and pending registration in India. The Defendant is engaged in the same business and has been using ‘MAC’s LAVERA’ in India since 2005.

The Plaintiff argued that consumers across the globe attribute the origin of ‘LAVERA’ to the Plaintiff due to its extensive promotional activities done through various international media. The Plaintiff also relied upon its strong presence on e-commerce websites to achieve a spillover of its reputation into the Indian market.

The Spillover

In NR Dongre v Whirlpool, the Supreme Court for the first time held that even a foreign trader having no business in India can protect his/her trademark. This was made subject to proof of the mark’s international reputation and of its adequate advertisement through any media which reaches Indian consumers. Subsequently, in Milment v Allergan, the SC observed that it would be anomalous to allow in India the sale of similar goods which bear a mark enjoying transnational repute and another identical mark from India.

Apart from the above, the Single Judge in the present dispute was specifically convinced by the Delhi HC’s decision in Cadbury UK v Lotto; in which the Court observed that the merchant’s existence on web-pages and social media is sufficient to show the existence of trans-border reputation without commercial use in India. Further, in Lowenbrau AG v Jagpin, the Delhi HC also observed that “the question of prior use cannot be agitated on the basis of user in India alone because natural and manmade borders are getting diluted and the world has to be viewed as a common market”.

The Error Apparent

As well reasoned as it may seem, Justice Manmohan Singh’s judgment was put to a strenuous test before the Division Bench (DB). This was because it was noted in paragraph 44 that the Plaintiff can enjoy the perks of trans-border reputation only if it is prima facie established that LAVERA has unique goodwill in other countries; something the Plaintiff had not done.
Subsequently in paragraph 45, Justice Singh discussed the quintessentially local character of goodwill. He reproduced an excerpt from the Kerly’s “Law on Trade Marks and Trade Names” which stated that “a foreign claimant may have a reputation in this country-from travellers or periodicals of international circulation or, increasingly, from exposure on the Internet-yet still fail in an action for passing off because he has here no business and so no goodwill”. However, the DB observed that the Single Judge had “misapplied himself” in recording at paragraph 51 that the Plaintiff had successfully established its goodwill in India.

Nevertheless, the DB eventually agreed with the order below on the finding of trans-border reputation. This was due to the Plaintiff’s international domain names, trademark registrations and overall sales figures. Lastly, the Court rubbished the Defendant’s claim that its mark was derived from a dissection and adaptation of ‘ALOEVERA’.

The (F)law of Territoriality

The Court may have rightly restrained the Defendant from making dishonest use of an international mark. This is because the Defendant appears to have also borrowed the first half MAC’s LAVERA from international brand Makeup Artist Cosmetics Inc.

That said, it seems that Indian Courts have become overly lenient in protecting foreign marks which are probably not even intended of being used in India. Goodwill is the sine qua non to enjoy such protection. And in today’s world goodwill might as well be capable of spilling over into other nations. But neither judgment has discussed the Plaintiff’s sales figures or presence in India. The Plaintiff successfully claimed protection on the basis of the mere availability of its goods on the online market. While this may show reputation, it miserably fails to show that the mark enjoys any goodwill at all in India. The Plaintiff should at least have been required to prove that LAVERA is a well-known TM in any country and mainly in India.

In Saklain Meghjee v BM House , the Delhi HC was faced with facts similar to the present case. The Plaintiff claimed exclusivity over the name of its UK-based magazine publication “WEDDING AFFAIR”, the name was subsequently adopted by the Defendant for similar use in India. It was observed that the Plaintiff has failed to bring up enough evidence to establish trans-border reputation and had not shown any documents or invoices of its sales in India. Moreover, the Defendant successfully argued balance of convenience as it would “not be in a possession to recover damages from the plaintiff [in case the latter lost], inasmuch as the plaintiff was national and citizen of U.K. with no assets in India”.

It is interesting to note the Delhi HC’s observation in Rob Mathys v Synthes that it was odd that marks not registered in India, not used in India, with reputation not established in India by carrying on business in India, could be protected in India on the basis that their reputation elsewhere is known in the country. There appears to be a contradiction between the legislative policy requiring “user” for trademark protection and the liberal extension of protection to TMs irrespective of use in the country on the strength of reputation abroad hardly known in India except by those who are glued to cable TV. At present, the latter can be said of and be limited to overenthusiastic mobile shoppers.

While genuine foreign claimants should indeed be protected, the question that arises is how far is the judiciary willing to dilute trademark law to prevent trademark dilution?

 

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