In the first post of our fellowship series, Rahul Bajaj, our Spicy IP Fellowship applicant analyses a recent decision of a division bench of the Delhi High Court in MAC Personal Care Private Limited & Anr. v Laverana GmbH and Co. Kg & Anr. on trans-border reputation in a passing off claim. [Readers interested in finding out more details about our SpicyIP Fellowship applicant series can click here.]
Since the Indian Supreme Court delivered its landmark decision in N.R. Dongre versus Whirlpool Corporation, it has been a well accepted proposition that proof of trans-border reputation of the Plaintiff’s trademark is a sufficient condition to claim a remedy for passing-off even if the trademark hasn’t made a concrete or tangible impact in the Indian market.
As we have noted on this blog before, judicial pronouncements by Indian courts on trans-border reputation not only set forth a sensible and practical approach to weigh the importance of such reputation in trademark disputes but are also in consonance with the basic goals underpinning the trademark system. Against this backdrop, it would be constructive to examine a recent judgment by a division bench of the Delhi High Court which delineates the key parameters that courts must take into cognizance while grappling with a Plaintiff’s claim of passing-off on the basis of trans-border reputation.
The Respondent/Plaintiff, Lavarana GMBH & Co. Kg, was registered as a limited liability company in Germany and adopted the trademark LAVERA in 1980 in connection with its cosmetic product which it began marketing in 1982. The product has been marketed in a large array of countries, such as Italy, France, Ireland and Denmark and was pending registration in India in accordance with the Respondent’s application dated September 16, 2009. The Respondent learned about the Appellant’s use of the mark ‘MAC’s LAVERA’ in September 2010 when it was published in the trademark journal for inviting oppositions to its registration. The Respondent duly filed its opposition. After considering the material put forth by the Plaintiff, the single judge came to the conclusion that the Plaintiff had prima facie established its goodwill as well as trans-border use of its mark which warranted the grant of an ex-parte interim injunction. An appeal was filed with the division bench against the grant of interim injunction.
The Respondent’s argument was threefold. First, it contended that the scale and scope of the use and marketing of its mark was reflective of the fact that the mark had attained goodwill and reputation across the globe. By indicating how the sale figures of its product rose from 74,76,500 euros in 2007 to 1,15,27,839 euros in 2011, the Respondent sought to demonstrate how its mark had attained worldwide acclaim. Second, the Respondent contended that its products are widely available on online stores like eBay and it had registered domain names for LAVERA in countries like India, Japan and Denmark. Therefore, by virtue of its prominent presence in cyberspace, the Respondent contended that its product was sufficiently well known in India. Third, the Respondent contended that Indians traveling abroad are exposed to its products and it follows that they associate the mark LAVERA with its cosmetic product.
On the other hand, the Appellant contended that the Respondent had never used its product in India – a claim best evidenced by the fact that the Respondent admitted in its own registration application that it was “planning” to sell the product in question in India. Second, the Appellant contended that it had drawn inspiration from the plant aloe vera for formulating the word LAVERA. By removing ‘a’ from aloe vera, they had formed the word ‘LOEVERA’ which eventually resulted in the formulation of the word ‘LAVERA’. Further, the Appellant argued that they had been using the words ‘LAVERA’ and ‘MAC’s LAVERA’ since 2005 and the 7-year delay in the filing of the suit by the Respondent amounted to its acquiescence of the Appellant’s use. Finally, the Appellant contended that the word LAVERA is Latin for ‘truth’ and, since the word is in the public domain, it cannot be appropriated by the Respondent. The Appellant assailed the prima facie view of the single judge principally on the ground that, after essentially implying that the Respondent had failed to prima facie prove that its mark had attained trans-border reputation, the judge went on to discuss the relevant legal principles that guide the inquiry of whether or not the threshold for proving trans-border reputation was met and abruptly came to the conclusion that the Respondent had prima facie demonstrated that the mark had attained sufficient goodwill and reputation.
The court held that the single judge was clearly in error in coming to the conclusion that the Plaintiff had successfully discharged the burden of prima facie establishing its trans-border goodwill without even considering any evidence to support this proposition. The court noted that the single judge had returned a self-contradictory finding in paras 44 and 51 of the judgment – he held in para 44 that the plaintiff had failed to prima facie demonstrate that the mark had attained unique goodwill in other countries which is the sine qua non for proving trans-border reputation but however held at para 51 that the Plaintiff had successfully discharged this burden.
In my view, this reading of the single judge’s order is erroneous. Contrary to what the court states, the single judge did not arrive at a finding in para 44 that the Plaintiff had failed to prima facie demonstrate the existence of trans-border reputation; he merely enunciated the threshold that must be met by the Plaintiff for proving the existence of trans-border reputation. While the court is right in asserting that the single judge abruptly arrived at the finding that the Plaintiff had met the threshold for proving trans-border reputation in para 51 without considering any relevant information, I think it would be fallacious to assert that the single judge arrived at two contradictory findings in paras 44 and 51.
The court also delved into a discussion of what constitutes trans-border reputation and what factors should guide and inform such an inquiry.
In para 15, the court listed out the two ingredients that are required to be proved to establish trans-border reputation:
- Existence of international reputation in the plaintiff’s trademark on account of its use made overseas; and
- The spilling over of the reputation to India.
On account of the proliferation of communication devices in today’s information age, the court noted that the second ingredient is no longer hard to establish. However, with respect to the first ingredient, the court set forth three factors to ascertain the international reputation of the mark.
First, the registration of a trademark in a foreign country is of particular relevance because it amounts to a public declaration by the Plaintiff that the trademark belongs to it and also makes the details of the trademark publicly accessible. It is also indicative of the distinctive character of the mark because the registration of the mark takes place only after the registering authorities in the concerned nation assess its sui generis features. Registration of the mark in multiple jurisdictions can create a strong presumption of trans-border reputation. Second, a reference to the mark in international journals, magazines and publications can serve as a powerful indicator of the mark’s reputation, especially if the journal/magazine is considerably renowned. Third, any form of commercial exploitation of the mark should typically be adequate to prove its reputation, provided that the same isn’t de minimis or trivial. Volume of sales of the product bearing the mark can also be a critical piece of evidence in this respect.
In light of these factors, the court took note of the fact that the sale of the Respondent’s product rose nearly by 50% during the period between 2007 and 2011; the Respondent’s mark was registered in eight countries; and the Respondent owned seven domain names in relation to the product LAVERA. On the basis of this, the court came to the conclusion that the Respondent was able to successfully discharge the burden of demonstrating that its mark had prima facie attained trans-border reputation.
In response to the contention that the word LAVERA was in the public domain and that the Respondent’s choice was in no way distinctive, the court noted that this argument wasn’t legally tenable because the English equivalent of the word LAVERA, i.e. truth, has no intrinsic nexus with cosmetic products, so it would be fallacious to assert that the word LAVERA was an obvious choice for the respondent’s product. Calling the Appellant’s reasoning for the adoption of the word ‘LAVERA’ “prima facie contrived”, the court held that the single judge was right in holding that the Appellant’s attempt to get its mark registered shortly after the Respondent filed its registration application was prima facie dishonest.
In response to the Appellant’s argument about delay and laches, the court, after enunciating the seven factors to be taken into consideration to address such arguments, held that honesty of adoption at the initial stage must be shown by the Defendant to sustain a claim of delay or bona fide concurrent use; since the Defendant in this case was a dishonest adopter of the mark LAVERA, its claims about delay and laches must fall by the wayside.
In conclusion, it would be fair to say that for its nuanced articulation of the relevance of trans-border reputation in trademark disputes, this judgment is likely to be a valuable addition in the rapidly burgeoning body of case law on this subject.