On A Worse Footing: Toyota v. Tech Square and Transnational Reputation Revisited

I n December 2017, the Supreme Court decided Toyota v. Prius.

The decision stood behind the legal position that the effects of trademark reputation must be felt domestically for the underlying trademark right to gain favour under Indian law. However, it did not stop there. Toyota ruled that the effects of this reputation cannot merely spill over across borders. They must be supported by substantial evidence of goodwill, if not use, within India. In holding this, Toyota broke from Supreme Court precedent, did not acknowledge that it did so, and made a handful of categorical legal errors besides.

To say that post-Toyota courts have been hesitant to hold Claimants to its ‘substantial evidence’ standard puts it mildly. Several foreign Claimants — Christian Louboutin, Giorgio Armani, Haflinger, Harry’s, Monster Energy, H&M, BMW, L’Oréal, Exxon, and Marriott International among them — have won trademark injunctions in India with zero post-Toyota scrutiny. Extended treatments of Toyota have, in fact, read down the Toyota Supreme Court’s insistence on evidence of domestic use to tether claims by foreign trademark owners. In sum, Toyota’s immediate legacy has been a rare one in the annals of Indian trademark law: benignly nodded along to in form, but largely left stranded in substance.

It is of some interest, then, to notice a sincere attempt to work with the ramshackle tools Toyota has saddled later courts with. A decision out of the Delhi High Court last week does precisely this. Ironically, Toyota v. Tech Square involves the same Claimant as was before the Supreme Court in 2017. Happily, the later decision works with the earlier one in a way that offers some genuine encouragement that the Toyota impasse may yet be broken.

In this story, I will examine this latest decision and place it in the field of post-Toyota precedent.

Facts

A batch of 2018 trademark cancellations are at stake in Toyota v. Tech Square. The tussle is over the trademark ALPHARD, registered by Tech Square in Classes 9, 12 and 27 for car accessories. Tech Square applied for ALPHARD on an intent to use basis in 2015. Toyota, meanwhile, are the proprietors of ALPHARD abroad. They adopted the trademark in 1986, bequeathed it to a vehicle line, of which they have sold over 850,000 units since its launch in 2002. Toyota’s Indian trademark application for ALPHARD arrived in November 2017 in Class 12, also as an intent to use. It promptly ran into Tech Square’s existing registrations. This caused Toyota to seek cancellation against Tech Square in 2018. Those actions were disposed of by Mr Justice Bansal at the Delhi High Court last week.

The factual setup has two further wrinkles.

One is that Toyota has never used the ALPHARD trademark in India in relation to the car accessories for which Tech Square has registrations. This puts the squeeze on Toyota to establish its own rights in Classes 9 and 27 in particular, since these do not impede Toyota’s trademark application in Class 12. Toyota is therefore forced to climb uphill here, in the sense that it must establish not just reputation from abroad that has found a home in India but also that this reputation elevates ALPHARD above Tech Square’s otherwise unobstructive Class 9 and 27 applications. The other thing to say is that Tech Star has made good its original intent to use by furnishing proof of use since 2015. If its registrations must go, they must go because of Toyota stipulating to its own use of ALPHARD in India prior to 2015.

Evidentiary Assessment

M r Justice Bansal’s reading of Toyota Supreme Court is faithful and accurate.

He finds, first, that transnational reputation cases turn on whether the foreign Claimant has produced sufficient evidence to support its position that its trademark carries transnational reputation that has spilled over into India. This stitches together — considerably better than Mr Justice Gogoi managed in Toyota itself — how the principle of transnational reputation can still support trademark claims if supported by sufficient domestic evidence. Much of the conversation post-Toyota has been a search for a clean extraction of its burden on foreign Claimants. I do believe that Mr Justice Bansal has hit upon it here.

Mr Justice Bansal notices, also, that Toyota is not especially clear on what this ‘sufficient evidence’ is. He is therefore forced to call back to the fact that advertisements in international magazines and internet materials were considered insufficient proof of domestic presence by the Toyota Supreme Court. This impresses me as a sensible position to take. At least it fills in some positive content into a standard that is otherwise empty.

With this standard in mind, Mr Justice Bansal takes an approach ideally suited to cancellation-style proto-evidentiary proceedings. He sifts through Toyota’s evidence, and then examines their best case on relevancy.

Hard evidence of domestic use of ALPHARD by Toyota is thin on the ground. Sales, promotional material, trademark registrations, and so on largely speak to use abroad. Import-export records are similarly feeble as far as goodwill in India goes. They do not, finds Mr Justice Bansal, rise to the standard of sufficient proof of goodwill and reputation in India.

There is more.

Media reports on the proposed India launch of the ALPHARD vehicle, says Mr Justice Bansal, do not make out a case for cancellation since this material follows — rather than precedes — Tech Square’s own use. Why? Because Toyota had disqualified similar evidence when there was a Toyota product in the Indian market. Here, however, Toyota’s own February 2020 launch branded the vehicle VELLFIRE, rather than ALPHARD. Toyota’s mainstream domestic use of ALPHARD, therefore, simply never arrived. The product did launch in India, but never under the ALPHARD trademark.

If anything, says Mr Justice Bansal, the present case stands on a worse footing than Toyota.

Grappling With Post-Toyota Precedent

The rest of the Toyota-ALPHARD case for cancellation relies on post-Toyota precedent.

One of these is MAC v. Laverana, a 2016 Delhi appeals decision. Mr Justice Bansal discards it here because he finds that the issue of spillover reputation in India was not before the MAC Court. This is not entirely true. MAC did, in fact, find that a foreign Claimant had met a prima facie threshold for transnational reputation. However, Mr Justice Bansal is correct in observing that MAC is pre-2017, and therefore, submerged by Toyota.

The other decision propping up the Toyota-ALPHARD cancellation is another Delhi decision, this time from April 2020.

Keller Williams v. Dingle Buildcons, as I wrote about at the time, does not defer to Toyota in any meaningful way. Instead, it whittles Toyota down to a narrow, almost truistic use-based proposition. It merely asks whether the foreign Claimant had continuous use in India after securing its own Indian registration. The Toyota rubric is implicated in this inquiry, but only incidentally. This would be an acceptable reason to discard Keller Williams on the Toyota-ALPHARD facts.

Disappointingly, that is not what Mr Justice Bansal does. He chooses to discard Keller Williams because it addressed a passing off action rather than a cancellation action. The absence of transnational reputation that spills over into India was one of multiple factors to deny a foreign Claimant an injunction in Keller Williams, he finds. This is true.

The real question, of course, is why does this matter? How does the treatment of a foreign Claimant’s transnational reputation as an evidentiary issue in a passing off claim differ from the same material being assessed where the foreign entity plays the role of a cancellation Petitioner? Is the standard of evidence demanded in one proceeding different from the other? Toyota itself does not suggest so.

Is there a stylistic difference between these proceedings? The passing off claim requires a strong prima facie case by the foreign Claimant. The cancellation action requires evidence strong enough to knock back an entry in the Trade Marks Register. Is there a difference between them perceptible enough to prevent litigants in one type of proceeding relying on precedent from another? If there is such a difference — procedural, burden-based, historical, or otherwise — I must confess that I am at a loss to see it. It is at least certain that Mr Justice Bansal makes no attempt to outline any such difference.

Prognostication

O n balance, Toyota v. Tech Square is still an important step forward. On the positive side of the ledger, it makes plenty from the little that was left to it by the Toyota Supreme Court. It shows a sustainable method — perhaps the brightest one yet — of applying Toyota’s ‘sufficient evidence’ standard. It also shows how substantive trademark inquiries can benefit immensely from splitting use claims into their corresponding time periods in a manner that chimes with the underlying purpose of separating transnational reputation from domestic reputation.

On the negative side of the ledger, as I have suggested, is the uneasy position that the decision occupies in the post-Toyota landscape. That problem, I suspect, will persist for a while yet (and really is a reflection on the poor reception Toyota has received out of the gate). I have no doubt that such difficulties can be smoothed out with trademark courts applying Toyota consistently.

Whether these difficulties will be smoothed out, however, depends entirely on judges willing to make as much sense of Toyota as Mr Justice Bansal has done here.

That, certainly, is no guarantee.