Businesses highly value their goodwill and reputation in the market, as these aspects represent how their potential customers perceive their brand. When a brand’s reputation transcends from the jurisdiction where it originated to other countries where it might not be used, be it through imports or advertisements, this reputation is known as Trans-border Reputation.
Even though the goods are not physically present in a foreign country and the mark is not registered, the proprietor shall still have a right to protect their mark from passing off if the mark has acquired goodwill and reputation in that foreign country.
To familiarize yourself with the idea of transborder reputation, you must also have an understanding of ‘reputation’ and ‘goodwill’.
- Goodwill: It can be considered to be an asset of the business.
- Reputation: It is what people commonly know about your brand (usually a specific feature of the brand).
The increasing recognition of the ‘
universality of reputation’ underscores the need to safeguard marks against unauthorized exploitation. This paradigm shift acknowledges the evolving dynamics of a globally integrated world and seeks to address the potential harm caused by misappropriation of reputation.
By giving protection to famous/well-knows marks, countries aim to mitigate confusion among consumers and ensure the integrity of established brands. Such measures acknowledge the significance of reputational goodwill and aim to maintain a harmonious environment for businesses operating across the world.
Origin of the Concept of Trans-Border Reputation
The idea of trans-border reputation was first introduced in the 1990s alongside the policies of privatization, liberalization and globalization. These policies basically wiped out the idea of physical borders and opened the gates of Indian economy to international companies. As such, it also made the Indian economy vulnerable to the competition in the global market.
As trade expanded beyond national boundaries, the concept of territoriality in trademark protection faced many challenges. These policies as well as the rapid growth of e-Commerce erased the nation’s physical boundaries; this helped trademarks’ reputation transcend across countries and not be limited to where it originated.
These policies and foreign competition have actually made it difficult for genuine businesses to safeguard their trademarks around the globe. Although they put in a significant amount of effort and money, they often find their trademarks being infringed upon in foreign countries, which can highly impact their brand reputation in the market.
In this context, Indian Judiciary has been very keen towards protecting the brands from counterfeit, passing off or infringement of the foreign well-known brands in India.
In India, the idea of trans-border reputation first came about during the Supreme Court of India’s hearing in the case of
N.R. Dongre vs. Whirlpool Corporation. In this case, the Respondent (Whirlpool Corporation), a multinational organization that was incorporated in the US, was involved in manufacturing, distributing and selling washing machines in numerous countries. While the Respondent had registered their mark – WHIRLPOOL – in India in 1956, it expired in 1977 due to them failing to renew the same. On the other hand, the Appellant, which was an Indian company, registered the trademark ‘WHIRLPOOL’ for their own washing machines.
The Supreme Court basically had to determine whether the Appellant’s action could be deemed legal as the Respondent had failed to renew their registration for the trademark after 1977. The Supreme Court stated that the Respondent had trans-border reputation in the Indian market since it has been extensively advertised, sold and used the mark for a long period across the globe. As such, the Supreme Court’s opinion favored the Respondent, and it stated that the Appellant had no reasonable explanation for registering a similar mark for similar goods.
The Supreme Court upheld the rights of the Respondent in their judgement and stated that:
‘the reputation of a trademark with respect to a trader’s goods is not necessarily bound by the borders of the country of its origin, but it often makes its presence felt in different countries around the globe where they haven’t been sold or marketed as well. When a product is launched in one country, people of other countries take notice of it through advertisements, movies, magazines, etc. as well. This is applicable even for countries that do not have the specific product available for sale.’ The apex court also pointed out that in current times, a product and its trademark are not only valid in the country of its origin but across borders in other nations too. The demand, reputation and appreciation for goods are not bound by any nation’s borders. This is majorly due to the advancement in communications technology, which allows for quick dissemination of even the smallest details of products across the globe. Satellite television is known to play a vital role in marketing products in this way.
The above landmark judgment by the Supreme Court of India brought remarkable change in the history of Trademark laws which recognize the concept of Trans-Border Reputation.
Overall, the origin of trans-border reputation of trademarks stem from the changing dynamics of international trade, technological advancements, and legal developments aimed at adapting trademark protection to the realities of an interconnected world. This recognition humanizes the impact of trademarks, acknowledging the intangible value they hold and the role they play in shaping consumer preferences and choices across national boundaries.
Judicial Approaches in India
- In the Haw Par Bros. International Ltd v. Tiger Balm Co. (P) Ltd. and Ors case, the Karnataka High Court held the fact that prior usage of a mark is more significant than prior registration of trademark. As the Appellant, in this case, was the entity who first use ‘TIGER BALM’ and ‘TIGER’ in English and Chinese in India as well as other foreign countries, they had gained transborder reputation for this mark. The Court stated that the rights of the Appellant was not limited due to the non-registration of their mark in India as it had gained a reputation for the mark in other nations as well. In this case, the Court upheld and valued the concepts of transborder reputation and prior-use.
- Another case where the idea of transborder reputation was recognized was Milmet Oftho Industries and Ors. vs. Allergan Inc. In this case, both parties were pharmaceutical companies that were manufacturing a drug under the same name, ‘OCUFLOX’. The Respondent claimed that they were the first to use the mark in question globally and, since the Appellant’s claim was based on the fact that the Respondent’s product was never introduced in India, the Respondent was not entitled to an injunction. The Court’s ruling favored the Respondent as they held that the final result should be based on who was the first one to enter the global market.
| This judgement changed the entire landscape of laws associated with the protection of foreign trademarks, as it now meant foreign entities could safeguard their trademarks simply based on them using it first in the world, considering they can present their plan to conduct business in India. |
As per the observations made above, it can be understood that Indian Courts adhere to the
‘universality principle’. As per this principle, a reputation of a mark can be realized if the trademark has significant reputation around the globe, even though the products under that mark are still not available in the domestic market.
- In Toyota Jidosha Kabushiki Kaisha v. M/S Prius Auto Industries Ltd. and Ors, the Supreme Court of India emphasized the importance of the 'Territoriality Principle.' It held that a mark must provide substantial evidence of acquiring trans-border goodwill specifically in India, even if it had gained substantial goodwill in other countries. Additionally, the court ruled that in a passing-off action, the claimant must establish their goodwill in the jurisdiction where the alleged infringement is taking place and demonstrate the possibility of confusion among the public, rather than actual instances of confusion.
| This case sets an important precedent, emphasizing the need for a claimant to establish both trans-border goodwill in the relevant jurisdiction and the likelihood of confusion among consumers when asserting rights against potential infringers. |
- In fact, in 1988, in the case of Kamal Trading Co. vs. Gillette UK Limited, the Bombay High Court barred the usage of the 7 O’Clock mark for toothbrushes due to the trust and reputation of the mark with respect to the Respondent’s products, i.e., razors and shaving creams. The Court, while expressing dissatisfaction, noted that goodwill and reputation do not fade out simply due to the product not being available in the country. Keeping in mind that trading and transporting goods around the globe is not as big of a deal now as it was before, the goodwill earned by a brand cannot be bound even if the product is not available in the country in question.
Based upon the above precedents, there is no doubt that the Indian judiciary was very keen to protect the foreign trademarks. It created a layer where the foreign entity can protect its mark in India even though the mark is not registered, in case the entity can establish the reputation, goodwill and likelihood of confusion associated with the mark.
Challenges in Trans-Border Reputation
The trans-border reputation of trademarks presents several challenges and problems in the legal landscape.
One of the key issues is the potential for unauthorized use and infringement of trademarks across jurisdictions. As a trademark's reputation extends beyond its country of origin, it becomes vulnerable to exploitation by unauthorized parties seeking to capitalize on its goodwill and consumer recognition. This can lead to confusion among consumers and dilution of the trademark's distinctiveness, ultimately harming the rightful owner.
Another challenge is the difficulty in proving trans-border reputation in legal proceedings. Establishing trans-border reputation often requires substantial evidence, including extensive advertising campaigns, media coverage, and consumer recognition in foreign jurisdictions.
Overall, the trans-border reputation of trademarks raises challenges related to unauthorized use, evidence gathering, legal enforcement, and the impact of digital commerce. Addressing these challenges requires international cooperation, harmonization of legal standards, and robust mechanisms for trademark protection in an increasingly interconnected global marketplace.
Conclusion
In conclusion, the rapid growth and globalization of international markets underscore the importance of recognizing and protecting the transborder reputation of trademarks in different countries. Indian courts have demonstrated a commitment to acknowledge and safeguard such reputation. To minimize conflicts, it is advisable for foreign traders to register their marks in multiple countries. Currently, in India, unregistered and foreign trademarks enjoy recognition and protection based on their transborder reputation.
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