Spill the Tee M: Discussing the Delhi High Court’s Order on Transborder Reputation in Toyota v TechSquare

[This post has been co-authored with SpicyIP Intern Hiranya  Bhandarkar. Hiranya is a fourth-year law student at the School of Law, Bennett University. Her areas of interest are Intellectual Property Laws, Data Privacy Laws and Company Law.]

Image from here.

In December 2017, the Apex Court in Toyota v Prius Auto Industries, set the standard of claiming transnational reputation in a mark backed by adequate evidence. In what may seem like a deja vu for Toyota, 5 years after the Supreme Court’s order, it found itself in another trademark litigation claiming transnational reputation this time on a different brand of cars- ‘Alphard’, before the Delhi High Court, this time in the case of Toyota Jidosha Kabushiki Kaisha vs Tech Square Engineering Pvt Ltd   

Toyota claimed to have launched its product- a minivan, under the name Alphard in 2002, stating that they have been using it in China, Russia, Indonesia, Philippines and Japan. In India, Toyota has filed an application to register the mark on a “proposed to be used” basis, under class 12  (Vehicles; apparatus for locomotion by land, air or water) in 2017. However, the same stands rejected by the Registry on the ground of its similarity with Techsquare’s mark (pdf). On the other hand, Techsquare Engineering Pvt. Ltd. (respondent) has registered the mark ‘Alphard’ in 2015, for using it in classes 9 (different scientific, nautical, life-saving apparatus, computer and computer softwares etc.) 12 (for car cover, horns, visor, bumper horns and other car-related accessories) and 27 (Carpets, rugs, mats and matting, linoleum and other materials for covering existing floors; wall hangings). Techsquare has 2 more applications awaiting registration for ‘Alphard’ word mark and a device, under Class 12 for land vehicles, and the same have been opposed by Toyota in 2017 (word mark) (pdf) and in  2018 (device) (pdf). A public search report for the ‘Alphard’ mark can be accessed here (pdf).

In light of this web of registrations, oppositions, and refusal, the dispute reached the Delhi High Court when Toyota sought to cancel Techsquare’s mark by filing a rectification petition. Interestingly, Toyota does not use the Alphard mark in India, but instead sells the same vehicle under the name ‘Vellfire’. 

The Order

Seemingly following the footsteps of the Toyota v Prius order, the court rejected Toyota’s rectification application on the ground that it has failed to establish goodwill “and” the reputation of the Alphard mark in India. Prof. Basheer had discussed the difference between these two terms in his post on the Prius judgement here. Two important observations by the court in the present order were its reliance on the strict test (prescribed in Toyota v. Prius) regarding the ‘territoriality principle’ and the difference between the application of the ‘spillover effect’ of the transborder reputation in passing off and rectification cases. 

With regard to the first, the court dismissed all the evidence produced on behalf of Toyota, to hold that apart from establishing ‘Alphard’s’ goodwill abroad, Toyota must also establish its goodwill in India too. (The Court’s categorical discussion on why and how the evidence like brochures, import-export data, newspaper, and magazine articles will not further its argument about cross-border reputation, is something that deserves special noting here.)

Second, Toyota tried to argue that owing to the transborder reputation, there is a spillover effect of ‘Alphard’  in the Indian markets and relied on MAC Personal Care and Keller Williams Realty to substantiate its arguments. However, the court rejected its reliance on these cases owing to the fact that these judgements were in the context of passing off and not rectification. So this should ideally mean that to establish the spillover effect of transborder reputation in case of rectification application, the petitioner has to satisfy a different standard of proof than the ones prescribed in passing off, correct? Well, the court is silent on this front. 

However, one shortcoming of the order was that it did not pay emphasis on the updated factual circumstances of the case. It does not talk about the rejection of Toyota’s mark but rather calls it “objected” in para. 4.7. Furthermore, it does not talk about Toyota’s objection to Techsquare’s applications in class 12 for vehicles as well.  While I am unsure of the justification for the former part, the latter lack of emphasis on the proceeding before the Registry could be because of the court’s reliance on Hypnos v. Hosur Coir Foam, wherein it was held that rectification proceedings are altogether different from the opposition proceedings and thus, they operate on completely different tenets. [Sidenote: the order has re-produced the relevant parts of the IPAB order in pg. 11-13. However, as highlighted by Gaurangi here, after the dissolution of the IPAB and removal of its website, openly accessible copies of such orders are not available.]

On Territoriality Principle

As pointed out by Eashan Ghosh in his piece here, Courts have been hesitant in applying the strict test as prescribed in the Prius judgement. However, the present order deviates from this. The single judge bench relies on the Prius and the IPAB order in Hypnos v Hosur Coir Foam to talk about the territoriality principle which is a determinant of transnational reputation. The Prius case provides that to enforce the territoriality principle, there must be a spillover of reputation and goodwill of the claimant’s mark in the territory the Claim has been brought into. The Hypnos case, apart from the principle discussed above,  provides a more specific test to claim transborder reputation that the mark is well known with a substantial segment of Indian consumers due to extensive usage in India or any other place. 

The Court said that sufficient proof was not shown, to demonstrate spillover of reputation, looking at the international brochures, annual reports, awards, worldwide trademark registration certificate/ renewal certificates and promotional material in respect of ‘ALPHARD’ placed on record. 

However, in Hermes v Crimzon the court pointed to the popularity of a mark within a ‘relevant section of the public’ for it to be considered as well-known and distinctive. Thus, playing the devil’s advocate here, would it have worked if Toyota had argued that it caters to a higher income group that is able to afford goods and is also aware of Alphard?  The mark ‘ALPHARD’ may not be distinct to the general public but there could have been a viable argument that it is distinct to the ‘relevant section of the public’ who are interested in MUVs/ Minivans and generally in foreign cars and automotive brands. 

Although this reasoning may seem coherent, it is also pertinent to note that, unlike Hermes’ case, Toyota’s minivans bearing ‘Alphard’ mark were not available in India. In fact, the court specifically identified that only a handful of shipment records have been found under the name of ‘Alphard’ and that too were placed by private parties and not Toyota. Furthermore, Toyota is selling the car under the name ‘Vellfire’ in India and not ‘Alphard’, something that the court recognized in the order and did not take kindly to. 

The repercussions of this order for Toyota can be extremely grave as the opinions expressed by the court regarding Toyota’s goodwill and reputation in the mark, can be used against its opposition to the ‘Alphard’ marks before the Registry. But even if that’s the case, not all hopes are lost for Toyota as it enjoys protection on the rebadged ‘Vellfire’ trademark in India for the same minivans (pdf) While any petrolhead would know that rebadging is not a new occurrence in the automobile industry, studying this order from the light of the concept can surely be an interesting topic for another post some other day!  

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2 thoughts on “Spill the Tee M: Discussing the Delhi High Court’s Order on Transborder Reputation in Toyota v TechSquare”

  1. Would I be mistaken to assume that decisions such as these might encourage Indian businesses to adopt identical coined trade marks of foreign origin, obtain registration/s for identical/similar goods/services and use such marks under the safety net of the fact that the original adopters will never be able to (or will have to undergo great difficulty) establish that the prior marks are well-known enough to a ‘substantial segment of Indian consumers’ and thus have no recourse against the latter mark?

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