Sunday, April 3, 2011

TRADE MARK: CROSSBORDER REPUTATION - CONFLICTS

With the passage of time our entire world has become almost like a big city in view of the tremendous advancements made in the field of today's technology. Today's world is a world of computers and internet, which are the basis of our technological achievements. These achievements are reflected in the field of transport such as railways, ships, and airlines also.

 In the current era, if a particular product is launched in a country its goodwill and reputation, which is the sole authority of the seller that he attained by selling his products in the market, is not limited to the four corners of that particular country. The status and benevolence of those goods are of inherent importance and shall reach to every nook and corner of the world through magazines, newspapers, television, telephone, cinemas and Internet. Thus it is a known phenomenon that when a commodity hits the market of a particular country anywhere in the world its trade mark surpasses the physical frontier of a geographical region and gains a trans-border or extraterritorial reputation even though it is not imported to that particular country. This happens because in today's world the information about the goods of an overseas trader and his product trade mark is available in any region where his goods are not being imported and therefore not being used.

This is where the importance of protecting trans-border or spillover of international trademark reputation of foreign companies arise. As the passing over of time and technology it has become imperative to recognize and protect such intellectual property rights among countries around the globe. Cross-border reputation, has its origin under the English law and is put forth in Section 35 of the Indian Trade Mark Act, 1999 by which the courts in India have recognized action by overseas plaintiff on the basis of passing off exclusively upon the reputation or status of his goods or services on the foreign land

Indian courts have protected such trans-border or spill over international trade mark reputation by way of various significant precedents. A Supreme Court judgment in 1996 clearly established that international companies that have an international trademark and enjoy a cross border reputation outside of India, can protect their IPR in India without the need of having an actual presence in India.[1]

In re N.R. Dongre v. Whirlpool Corporation, 1996 PTC (16) 583 (SC) the court considered the doctrine of "cross-border reputation" for the first time in detail. The plaintiff herein had registered their trademark Whirlpool in India in 1977. Nevertheless, the renewal of the mark had not been done after the expiry date. The said mark had a world-wide reputation and the defendant had been using this mark on their washing machines. The plaintiffs sold some of their machines to the US Embassy in India. They have made advertisements in quite a few internationally circulating magazines also which had circulation in India. As a result the plaintiff moved to file a suit against the defendant for passing-off. The Delhi High Court granted injunction which was latter reaffirmed by the Supreme Court. The court in its verdict held as follows:

"… a product and it’s trade name transcends the physical boundaries of a geographical region and acquires a transborder or overseas or extra-territorial reputation not only through import of goods but also by it’s advertisement. The knowledge and awareness of the goods of a foreign trader and it’s trade mark can be available at a place where goods are not being marketed and consequently not being used."

It was further held that "In today’s world it cannot be said a product and the trade mark 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 old."

"Dissemination of knowledge of a trademark in respect of a product through advertisement in media amounts to use if the trademark whether or not the advertisement is coupled with the actual existence of the product in the market."

The drift towards broader protection of cross-border trade reputation seems likely to continue. It has a broadly based consensus in common law jurisdiction. [2] The main circumstance for this sort of transnational concern is the common law proceedings in passing off. The decisions of Orkin in Ontario and Disney (mall proceedings) [3] in Alberta have established a previously apparent trend to construe the tort of passing off widely enough to afford transnational reputation or business goodwill. The perception and principle on which the passing-off action is based is that a man cannot sell his own goods under the guise that the goods are produced by another man.

It is necessary for a seller to safeguard his right of previous use of a trade mark as the benefit of the name and reputation received by him cannot be taken advantage of by another seller by imitating the mark and getting it registered before he could get the same registered in his favour. It is necessary for a business that is looking to prove sufficient reputation in a market in which it have  not yet started to trade must have cogent direct evidence that its product is known to a considerable number of people in that market.

The Delhi High Court coined the concept of ‘first past the post’ which settled the law in relation to different approaches towards cross-border reputation. With the opportunities in the field of economy and broader terms of globalization the concept has gone through various swings. The principle of cross-border reputation hails well known trade marks, whose legal protection is clearly well-established in the jurisdiction of trademark. In acknowledgement to the most modern notion of trademark protection, the Trade Marks Act, 1999 guarantees protection to the well-known trademarks thereby abiding the requisite of Article 16 of TRIPs, which grants protection of trademarks.

Even though courts in India were very keen in protecting well-known trademarks, constitutional recognition is a stride to the right direction. A symbol is not possible to register if it is fallaciously similar to a well-known mark in India and by using it could take unwarranted benefit of, or be harmful to the unique character or reputation of the previous trademark. In addition, the most significant characteristics with respect to well-known trademarks are:

(i)                 Acquaintance or recognition of the trademark in the significant parts of public
(ii)               Advertisement of trademark
(iii)             Duration, geographical area and extent including registration and use

This standard follows even the trademarks of overseas companies, and so the characteristic of well-known trademark is not just limited to the field of Indian trademarks community, but the effects are reflected world-wide to the globalization and cross-border reputation of the mark. Even though courts have put forth numerous limitations or restrictions for deciding a case on the basis of cross-border reputation there are still several loopholes in the functioning of the concept. The question of cross-border or spill over international reputation has been considered in numerous cases by the courts leading to important judicial precedents.

No one can disagree with the fact that courts dealing with intellectual property in India have recognized the notion of cross-border reputation in the recent period. But the views expressed by different high courts are different at several point of time. The Bombay High Court in Kamal Trading Co., Bombay v. Gillette U.K.Limited Middle Sex, England, 1988 PTC 1, held:

 “…It is necessary to note that the goodwill is not limited to a particular country because in the present days, the trade is spread all over the world and the goods are transported from one country to another very rapidly and on extensive scale. The goodwill acquired by the manufacturer is not necessarily limited to the country where the goods are freely available because the goods though not available are widely advertised in newspapers periodical, magazines and in other medias. The result is that though the goods are not available in the country, the goods and the mark under which they are sold acquires wide reputation. Take for example, the televisions, and Video Cassette recorders manufactured by National, Sony or other well Japanese concerns. These televisions and V.C.R’s are not imported in India and sold in open market because of trade restrictions, but is it possible even to suggest that the word "National" or "Sony" has not acquired reputation in this country? In our judgment, the good will or reputation of goods or marks does not depend on its availability in a particular country. It is possible that the manufacturer may suspend their business activities in a country for short duration but that fact would not destroy the reputation or goodwill acquired by the manufacturer.” [4]

In Apple Computer Inc. Vs. Apple Leasing & Industries,1993 IPLR 63 DEL, while adopting the same notion Delhi High Court held that it is not necessary in the context of the present day circumstances that the free exchange of information and advertising through newspapers, magazines, video television, movies, freedom of travel between various parts of the world, to insist that a particular plaintiff must carry on business in a jurisdiction before improper use of it’s name or mark can be restrained by the court.[5]

In Kabushiki Kaisha Toshiba vs. Toshiba Appliances Co.,1994 PTC 53, the Calcutta High Court relied significantly to ‘use of mark’ in relation to goods than cross-border reputation. The observation was that there are no goods at all in physical existence, there could be no use of the mark in relation to those. It is the same, if the goods are in the physical existence somewhere else than in Indian market. For, however big the foreign market of a trader might be, and however famous his trade mark might be all over the world, yet to qualify for use of the mark in relation to the goods within Trade & Merchandise Marks Act of 1958, such use must be made in India and not abroad. [6]

Furthermore, the court held that a mere use of the mark in advertising on other publication media is insufficient as ‘use’ because if it were not so, trafficking in trade marks could be legally indulged in, for a mark could be registered and then kept alive merely by advertisement without ever putting any goods into the market.[7]

Although, the Division Bench of the same court in M/s J.N. Nicholas (Vimto) Limited v. Rose and Thistle,1994 PTC 83, declared that the use of a trade mark does not necessarily imply actual sale of the goods bearing such mark. Use can be in any form. Mere advertisement without having even the physical existence of the goods in the market can be said to be a use of the mark.[8]

In re of Aktiebolaget Volvo v. Volvo Steels Limited , 1998 PTC 18 the Division bench of Bombay High Court again reiterated the principles established with regard to the doctrine of cross-border reputation where the court considered subsequent events like the intention of the party to go into the Indian market as touching the balance of convenience which is a factor that governs the prudence of the courts in granting injunctions in the case involving the subject matter. Nonetheless, with respect to cross-border reputation the division bench relied on the Whirlpool case and held that cross-border reputation is recognized in India and to constitute the same actual sale is not necessary for the plaintiff to ascertain its reputation and goodwill in India.

When considering the case of Milmet Oftho Industries & Ors. Vs. Allergen Inc., (2004) 12 SCC 624, the Supreme Court finally established the law related to cross-border reputation. The appellant was an Indian pharmaceutical company who manufactured "Ocuflox". The same product was manufactured by an overseas company, who was the respondent in the case. Both products were a medical preparation for the eyes. The claim of the respondent was that they have been using the mark from September 1992 and thereafter they marketed the product in different countries around the world and have not yet entered the Indian market. The appellant obtained registration from the Food and Drug Control Administration in August 1993, i.e., almost a year after the respondent. In view of that the respondent filed a suit for injunction against the appellant for passing off and the court held in favor of the respondent stating as follows:  " the mere fact that the respondents have not been using the mark in India would be irrelevant if they were first in the world market”

Another case in which the Supreme Court gave a verdict affirming the doctrine was the Blenders Pride Case. In this particular case the plaintiffs were the manufacturers of Blenders Pride Whisky which having world famous reputation around the world from the year 1973 onwards. The product was available in almost all countries of the world and it was known in India. The plaintiff had a desire to exploit the Indian market as well. They applied for approval for the manufacture of whisky by the name Blenders Pride and upon getting the approval they started manufacturing it by the name Blenders Pride in India since 1995. Nevertheless, they had manufactured it for a couple of months in the year 1993 to 1994 and stopped the same sometime in 2005. The production was stopped almost for 11 months. The Court held the following:

  “the Plaintiffs having come out with ‘Blenders Pride’ whisky first in the international market were first past the post; even though the Defendants were the first to do so in India. The fact that the product of the plaintiffs was not manufactured or sold in India from 1973(when it first entered the market) till 1995 when it became freely available in India, is of no consequence.”[9]

Today international trade is rapidly growing in a pace with the developing technology and innovations in every field. These changes make it imperative that intellectual property rights need to be appropriately recognized and protected as a global community. Indian judiciary in its various decisions have increasingly recognized cross-border reputation of trademarks thereby repeatedly safeguarding spillover reputation even if the mark is not actually used in India. Most of the decisions reflect the concern in relation to the misappropriation of foreign marks. However, it is pertinent for overseas traders who hold such marks to act proactively for implementing their goodwill internationally established through their products by registration of those trademarks and instituting timely action and suitable proceedings for enforcing the same.






Submitted by
Vinitha Prasannan
Sources:
[1] http://www.mondaq.com/article.asp?articleid=87398
[2] http://books.google.co.in/books?id=951eZzbuxjEC&pg=PA106&lpg=PA106&dq=trademark+spillover+reputation&source=bl&ots=sti2WMZvxA&sig=wsHw9m-1IsSYgIlwTBTHoR1FUd8&hl=en&ei=1tn-SoffKMm9kAWSr5zzCw&sa=X&oi=book_result&ct=result&resnum=4&ved=0CBIQ6AEwAw#v=onepage&q=trademark%20spillover%20reputation&f=false
[3] Orkin Exterminating Co.Inc. V. Pestco of Canada and Walt Disney Productions v. Triple Five Corp., 1985 supra note 14.
[4] http://unitedipr.com/subpage.php?id=19&subid=37
[5] Ibid
[6] Ibid
[7] Ibid
[8] Ibid
[9]http://74.125.153.132/search?q=cache:5ltT0WR701MJ:www.patentoffice.nic.in/whats_new/Trademark_Potential_IP_Tools.pdf+blender%27s+pride+case&cd=8&hl=en&ct=clnk&gl=in&client=firefox-a
http://ns2.ipo.gov.uk/o05809.pdf


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