THE EVOLUTION AND GROWTH OF THE CONCEPT OF TRANSBORDER REPUTATION IN

INDIA

Introduction
Trans-border reputation can be understood to be present when “a product and its trade
name transcend the physical boundaries of the geographical region and acquire a trans-
border or overseas or extra territorial reputation not only through import of goods but also
by its advertisements.”1

The origin of trans-border reputation in India can be traced back to the modern policies of
liberalisation, privatisation and globalisation introduced in the 1990’s that opened up the
Indian economy, making it vulnerable to competition from international companies by
blurring the concept of physical borders.

In the present era of digitalization and incessant use of the internet, easy travel and fast
fashion, wherein goods and services are available for consumption across countries, the
concept of territorial markets has ceased to exist, and we all identify ourselves as global
consumers in a common marketplace.

In view of the above, it became incredibly difficult for bona fide businesses to protect their
rights in their marks across countries; and despite spending considerable effort and money
on marketing, advertisement and brand promotion, businesses often find their trade marks
being diluted as a result of infringement and passing-off across jurisdictions.

Until the current Trade Marks Act, 1999 (hereinafter referred to as ‘the Act’) came into
force, foreign marks in India did not enjoy any specific statutory protection under the Act
and had to rely on the common law action of passing-off in order to safeguard their rights.
However, in line with the TRIPS Agreement as well as the optional guidelines promulgated by
WIPO's Joint Recommendation on the protection of well-known marks, the Act introduced
the concept of well-known marks into Indian Trade Mark law. Section 2(1)(zg) of the Act

1
NR Dongre v Whirlpool Corporation [(1996) 5 SCC 714 ]
defines well-known trade marks as ‘a mark which has become so to the substantial segment
of the public which uses such goods or receives such services that the use of such mark in
relation to other goods or services would be likely to be taken as indicating a connection in
the course of trade or rendering of services between those goods or services and a person
using the mark in relation to the first-mentioned goods or services.’ Further, protection is
granted to well-known trade marks under the Act under Sections 9 and 11.

The concept of transborder reputation also involves a thorough understanding of the

concept of reputation and goodwill, which though used interchangeably, have been
interpreted differently by courts. Goodwill can be understood as an asset of a business
whereas reputation refers to the common knowledge amongst the public of something with
respect to a particular feature that they possess which further acts as a source identifier.

Assessing the evolution in the concept of trans-border reputation vide case laws
The concept of transborder reputation in India has its origin in the landmark judgement of
N.R Dongre v. Whirlpool Corporation2 Ltd. In this case, the Respondent, a multinational
corporation incorporated in the United States of America, was engaged in the process of
manufacturing, selling, distributing and selling washing machines across numerous
jurisdictions. In India, the Respondent obtained registration of their mark ‘WHIRLPOOL’ in
the year 1956 in Classes 07, 09 and 11, however, their registration lapsed in 1977 due to
non-renewal. In the meantime, in 1992, the Appellant, an Indian company, got the trade
mark ‘WHIRLPOOL’ mala fidely registered for washing machines.

The issue before the Supreme Court was whether an act for passing off could be maintained
in view of the fact that the Respondent had no valid registration in India post 1977. The
Supreme Court was of the view that the Respondents, due to long prior use and extensive
sale and advertising, had spill over or transborder reputation in the Indian market and the
relevant section in India, associated the mark ‘WHIRLPOOL’ with the Respondent only. The
Court further went on and opined that the Appellant had no plausible explanation for
adopting an identical mark for identical goods, apart from the intention to trade upon the

2
NR Dongre v Whirlpool Corporation [(1996) 5 SCC 714 ]
transborder reputation of the Respondent. Further, the Court observed that the fact that the
cost of Appellant’s washing machine was 1/3rd of the cost of the Respondent’s washing
machine was enough to substantiate the argument that the Appellant’s washing machines
were not of the same engineering standard and were inferior in quality to the washing
machines of the Respondent.
While upholding the rights of the Respondent in their mark ‘WHIRLPOOL’ the Supreme Court
held as follows:
“The knowledge and awareness of a trademark in respect of the goods of a trader is not
necessarily restricted only to the people of the country where such goods are freely available,
but the knowledge and awareness of the same reaches even the shores of those countries
where the goods have not been marketed. When a product is launched and hits the market in
one country, the cognizance of the same is also taken by the people in other countries almost
at the same time by getting acquainted with it through advertisements in newspapers,
magazines, television, video films, cinema, etc. even though there may not be availability of
products in those countries because of import constrictions or other factors. In todays world
it cannot be said that a product and the trademark under which it is sold abroad, does not
have a reputation or goodwill in countries where it is not available. The knowledge and
awareness of it, and its critical evaluation and appraisal travels beyond the confines of the
geographical area in which it is sold. This has been made possible by the development of
communications systems which transmit and disseminate the information as soon as it is
sent or beamed from one place to another. Satellite television is a major contributor of the
information explosion. Dissemination of knowledge of trademark in respect of a product
through advertisement in media amounts to use of the trademark, whether or not the
advertisement is coupled with the actual existence of the product in the market.”

Similarly, in Haw Par Bros. International Ltd v. Tiger Balm Co. (P) Ltd. and Ors. 3, the Court
held that prior use of a mark has more significance than prior registration of a mark and as in
this case, the Appellants were the first to use the mark ‘TIGER BALM’ and ‘TIGER’ in English
and Chinese as well as the leaping tiger device extensively within and outside India, and as a
result, the Appellant had acquired transborder reputation in its mark. The Court held that

3
Haw Par Bros. International Ltd v. Tiger Balm Co. (P) Ltd. and Ors. 1996 (16) PTC 311(Mad).
the right of the Appellants to institute the said suit were not barred in lieu of non-
registration of trade mark in India as the Appellant’s reputation had transcended in the
Indian market.

The concept of transborder reputation was further discussed in the case of Milmet Oftho
Industries and Ors. a. Allergan Inc.4 In this case, both the Appellant and the Respondent
were pharmaceutical companies manufacturing a drug under the mark ‘OCUFLOX’. The
contention of the Respondent being that they were the prior users of the mark globally and,
the contention of the Appellant being that since the product of Respondent was not
introduced in India, the Respondent was not entitled to an injunction. The Court ruling in
favour of the Respondent held that the ultimate test should be who is first in the world
market. The judgment in this case gave a whole new dimension to the law on protection of
foreign trade marks as according to the ratio of this judgment, foreign claimants could now
protect their marks solely on the basis of their prior use in the world provided an intention
of doing business in India could be shown.

In view of the above cases, we can construe that the Indian courts were following the
universality principle. The universality principle states that an action of passing off can be
maintained if a trademark has a widespread international reputation even though the goods
under the mark are not available in the domestic market.

However, there has been a gradual shift in the understanding of transborder reputation by
the Indian Courts. In Mac Personal Care Pvt. Ltd. and Ors. v. Laverana Gmbh & Co. KG. 5, the
Respondents i.e. Laverana Gmbh & Co. KG, were using the trade mark ‘LAVERA’ and their
Indian application at that point was pending registration. The Respondents’ however had
presence across numerous jurisdictions like Germany, Denmark, Hong Kong, Italy, France,
Singapore etc. and the mark had earned goodwill and reputation. Further, the products
under the said mark of the Respondents were available for sale on e-bay and other online
retail stores accessible to all. On the other hand, Mac Personal Care Pvt. Ltd., having its

4
Milmet Oftho Industries and Ors. a. Allergan Inc. 2004 (12) SCC 624.
5
Mac Personal Care Pvt. Ltd. and Ors. v. LaveranaGmbh & Co. Kg. 2016 (65) PTC 357 (Del).
business operations in India, started manufacturing and marketing goods under the mark
‘MAC’S LAVERA’ and later applied for registration of the same. While upholding the rights of
the Respondents in their mark, keeping in mind the evidence relied upon like large number
of Indians traveling overseas; in flight catalogues/magazines etc.; large number of students
from India to countries where the Respondents’ goods are extensively sold, online
availability of its products etc., the Court criticized that in cases of passing off, many a times,
interim injunctions are granted on the basis of global nature of reputation without insisting
on any localized business. In this case, the court did not follow blindly the universality
principle but focussed also on what all came under the ambit of ‘use’ and ‘goodwill’ in the
context of transborder reputation.

Further in E.I. Du Pont De Nemours & Co V. Gemini Distilleries Ltd.6, the IPAB held that
while the Appellants were the rightful proprietors of the mark ‘DU PONT’ with respect to
alcoholic drinks such as whisky, brandy, gin and beer in several jurisdictions around the
world, they could not prove that their reputation had spilled over to the Indian market and
therefore, they failed to succeed in seeking any relief against the Respondents, who were
using the mark ‘DUPONT’ in India. The IPAB further opined that the evidence provided by
the Appellants comprising of trade mark certificates in numerous jurisdictions and sales
figures in other countries does not suffice to prove that the Appellants have a presence in
India and the Appellants should adduce cogent evidence in the form of extensive advertising
in journals, magazines, presentations at fairs, exhibitions etc. to prove its spill over
reputation in India. Therefore, to stop the Respondents from using their mark DUPONT
would be detrimental to the Respondents who have bona fidely used the mark.

The most recent landmark case on transborder reputation has been the Toyota Jidosha
Kabushiki v M/S Prius Auto Industries Ltd.7 case which has been adjudicated taking a
different approach from what the norm has been.

6
E.I. Du Pont De Nemours & Co V. Gemini Distilleries Ltd. 2004 (28) PTC 663 (IPAB).
7
Toyota Jidosha Kabushiki v M/S Prius Auto Industries Ltd. 2016(67)PTC 374(Del).
The Plaintiff i.e. Toyota is one of the largest automobile companies in the world and claims
to have launched its first hybrid car in the world by the name ‘PRIUS’ in the year 1994 and
the same was sold in Japan in 1997. The Indian application for the same was filed in 2009
and was pending registration. In the meantime, the Plaintiff came across the Defendant’s
registration of the mark ‘PRIUS’ and use of the same as a part of its corporate name. The
Defendant is engaged in the business of manufacturing automobile spare parts and had
constituted the Company in the year 2002. The Plaintiff filed for obtaining a permanent
injunction against the Defendant on the ground of their spill over reputation in India and
resulting mala fide intention of the Defendant to trade upon it for illegal gains. The issue
before the Court was to determine whether the Defendant is guilty of passing off its goods
as that of the Plaintiff; and whether to follow the territoriality principle or the universality
principle.

The main contention of the Plaintiff was that since 1997, the mark ‘PRIUS’ of the Plaintiff
was widely advertised and publicized across several leading newspapers and magazines
across the world and that recognition and reputation of a trade mark are not subject upon
the actual sale of the goods under the mark in India. The Defendant on the other hand
contended that it adopted the mark ‘PRIUS’ bona fidely in April 2001 and explained that the
adoption came from the sentiment ‘Pehle Prayaas’ in view of the Defendant’s first attempt.
Further, it contended that the Plaintiff had not adopted the mark in India until 2009 and
more importantly, the Plaintiff had no presence in India vide advertisements at the time
when the Defendant entered the market. The Defendant argued that there is no evidence
put forward by the Plaintiff corroborating spill over reputation and goodwill of the Plaintiff’s
mark to the Indian market prior to April 2001 i.e. date of adoption of the mark by the Prius
Auto Industries.

The Supreme Court, while relying on the Starbucks (HK) Ltd. and Anr. v British Sky
Broadcasting Group PLC. and Anr. case which states that ‘where the claimant's business is
carried on abroad, it is not enough for a claimant to show that there are people in this
jurisdiction who happen to be its customers when they are abroad. The Court must be
satisfied that the claimant's business has goodwill within its jurisdiction’, held that the
territoriality principle was way forward and that the Plaintiff to succeed in an action of
passing off should be able to establish that its reputation had spilled over to the Indian
market prior to the date of adoption of the mark by the Defendant.

The Court, while ruling in favour of the Defendant, held that the Plaintiff failed to give
satisfactory evidence to show that it has acquired goodwill under the name 'PRIUS' in the
Indian market prior to April 2001. The Court was of the opinion that “The advertisements in
automobile magazines, international business magazines; availability of data in information-
disseminating portals like Wikipedia and online Britannica dictionary and the information on
the internet, even if accepted, will not be a safe basis to hold the existence of the necessary
goodwill and reputation of the product in the Indian market at the relevant point of time,
particularly having regard to the limited online exposure at that point of time, i.e., in the year
2001.” Further, the Court held that not all motor vehicles which are sold by Toyota in various
foreign jurisdictions become known in India.

In view of the above, if a foreign entity wants to protect its marks in India, it would have to
establish its trans-border reputation by proving knowledge of its marks amongst the relevant
section of public in India. For doing so, the reputation of the mark of the foreign entity must
reach a substantial segment of consumers in India via extensive advertising in magazines,
journals, social media etc, which have wide circulation among the relevant public in India.
Further, the foreign entity cannot claim transborder reputation by mere use in India at
places like duty free shops or shops with limited public access. In addition to establishing
spill over reputation in India, the foreign entity must not delay in initiating appropriate
proceedings against the offender. While it is not necessary for the foreign entity to have a
branch or an office in India or have extensive sales in India, it is necessary for the foreign
entity to provide cogent and clear evidence to showcase the spill over of its reputation to
the Indian market.

Conclusion
The concept of transborder reputation in India has evolved with the growth of Intellectual
Property awareness in the country. Each of the above-mentioned cases has at length
discussed the different facets contained in the concept. Over the years, we can see a gradual
but steady shift from the universality principle to the territoriality principle. The Indian
Courts, while deciding whether a mark has transborder reputation in India focus on the
publicity and awareness of the mark amongst the relevant public within India as opposed to
the mark having a reputation internationally. It has become pertinent for foreign claimants
to prove that their mark has acquired distinctiveness in India and the relevant public
associates the mark with the foreign claimant exclusively. This new approach also in turn
protects the rights of the Indian proprietors who may have bona fidely adopted and used a
mark.

Avanee Tewari
Associate | Attorney-at-Law
Chadha & Chadha, An Intellectual Property Law Firm