By, Yash Raj and Smriti Shukla
The Automobile Sector has been the subject of numerous trademark infringements by various third party spare parts manufactures. The prevalent trade practice among the automobile manufacturers is that they either manufacture the spare parts themselves or authorize OEMs (Original Equipment Manufacturers) for manufacturing of such spare parts which are not manufactured by them directly. The OEMs are licensed to use the trademark of the automobile manufacturer and also authorized to sell such spare parts in the market bearing the trademark of the automobile manufacturer. Such use of the trademark makes the product being treated by the consumers as original and establishes a necessary trade connection between the OEMs and the automobile manufacturers, thereby, assuring the consumers of the quality of the spare parts sold by OEMs. However, there has been a fair share of controversy on the matter due to widespread availability and sale of third party spare parts in the market which generally uses either the name of the automobile manufacturer or their trademark indicating the suitability of a spare part to a particular automobile.
Nominative Fair Use Provision
The defence of Nominative Fair Use under Section 30(2)(d) of the Trade Marks Act, 1999 is generally taken by such third-party manufacturers for the use of the trademark in their products. Nominative Fair Use relates to the use of a registered trademark by a person in relation to goods adapted to form part of or to be accessory to, provided that such use is ‘reasonably necessary’ in order to ascertain the compatibility with trademarked goods.
The scope of such an exceptional use has been deliberated upon by the Delhi High Court in Hawkins Cookers Ltd. v. Murugan Enterprises[i], where a registered trademark was being used in relation to parts of pressure cookers being manufactured by a third party. The law on the point was aptly discussed by the learned Single Judge and the same was upheld by the Division Bench[ii], providing that the use of a registered trademark in spare parts and accessories would not be an infringement,
1) if it is reasonably necessary to indicate that the products were so adapted,
2) if such use is not likely to indicate a trade connection between the trademark holder and the third party manufacturer, and
3) if such use is done as an honest trade practice and not to take an unfair advantage.
The test for Nominative Fair Use was subsequently discussed by the Madras High Court in Consim Info Pvt. Ltd v. Google India Pvt. Ltd.[iii], holding on similar lines providing for a strict sense of scrutiny for such an exception.
The increasing number of counterfeit spare parts being available in the market has been a long-standing concern for the OEMs, as well as the consumers being duped by the use of their registered trademarks. Owing to the lack of the safety regulations in place for third party spare parts and no assurance of the quality of such products, the strict application of the exception of the nominative fair use provision under Section 30(2)(d) of the Trade Marks Act, 1999 ensures such third party manufacturing is done extremely cautiously. The Courts have devised certain measures which have proved to be an effective method for distinguishing the spare parts of such third party manufacturers from the one manufactured by the automobile maker themselves or OEMs.
Interim Arrangement in the Toyota Controversy
The landmark judgment in regard to trademark infringement of spare parts of automobiles is the case of Toyota Jidosha Kabushiki Kaisha[iv] where a dispute arose between Toyota and Prius Auto Industries pertaining to the infringement of the well-known trademarks of Toyota and passing off the mark PRIUS in manufacturing of automobile spare parts. The matter was first adjudicated by a single judge bench of Justice Manmohan Singh of the Delhi High Court which passed an interim injunction restraining the use of the said marks. However, the said order was challenged by way of an appeal and the Division Bench, via order dated 10th August 2010, ordered imposition of an interim arrangement whereby the defendants were directed to replace the term “Genuine Accessories” with “Genuine Accessories of PRIUS Auto Industries Limited” and also required to be ensured that the said trademarks were not written in the same font.[v] The Single Judge ultimately passed a permanent injunction restricting the use of the said marks by the defendants.[vi] The matter finally went to the Supreme Court where the challenge was only with regard to the claim of passing off the mark PRIUS and the court while discussing the territoriality of trademark reputation held that evidence must be adduced for establishing goodwill in India and therefore, set aside the claim of passing off for the mark PRIUS.[vii]
Twin Judgments of the Delhi High Court
In the case of Elofic Industries Limited v. Mobis India Limited[viii], the plaintiff placed reliance on the landmark judgment of Toyota Jidosha Kabushiki Kaisha, where the court devised an interim arrangement between the parties. The plaintiffs, were also willing to similarly indicate on their packaging, that the subject product is “Genuine Accessory of ELOFIC INDUSTRIES LIMITED”. However, the plaintiffs wanted to continue to use the words “SUITABLE FOR HYUNDAI ACCENT”.
The Single Judge Bench of the Delhi High Court while distinguishing the said judgment of the Supreme Court with the case at handheld that mere fact, that the packaging of the plaintiffs, besides displaying the trademark of the defendants, also displays the trademark of the plaintiffs, is of no avail. The same does not cease to distinguish the said goods as associated with the defendants. Such use by the plaintiffs, of the trademark of the defendants, is “likely to be taken” as used as a trademark, within the meaning of Section 29(1) of the Act and constitutes infringement by the plaintiffs of the trademark of the defendants.
The Court while enunciating the law on the point held that “if there is even an iota of doubt that use of the trademark for indicating that the goods are adapted to form part of or to be accessory to goods with respect to which trademark is registered and is being used will have the effect of indicting a trade connection between the registered proprietor of the trademark and the person so using the trademark, either the said use be stopped and held to be not within the scope of Section 30(2)(d) or to remove such doubt.”[ix]
Use of the trade mark of the defendants, as sought by the plaintiffs, is likely to indicate a similar trade connection between plaintiffs and defendants as between defendants and their OEMs. The court concluded that the plaintiffs will have to substitute the words “Suitable for” with the words “Adapted to form part of” and further, they, immediately below the words “Adapted to form part of” preceding the trademark/trade name and/or brand of the defendants, shall endorse in the same font “WE HAVE NO TRADE CONNECTION WITH HYUNDAI”.
On similar facts, in Mahle Filter System Private Limited v. Mobis India Limited[x], the Delhi High Court reiterated the above judgment and directed the plaintiffs to substitute the words “Suitable for” with the words “Adapted to form part of” in a similar font and in the same place on the packaging and also directed to mention “WE HAVE NO TRADE CONNECTION WITH HYUNDAI” immediately below it.
Manufacturing of automobile spare parts has been a prevalent practice by many third-party manufacturers, which most of the time also involves the use of trademarks of the automobile manufacturers to indicate the suitability of the product with a specific automobile. The Courts from time to time have held such use to be an infringement of the trademark and have passed injunctions restraining such use. The Courts have also devised certain measures which must be adhered to by the third-party manufacturers in order to avoid infringement of trademarks of the automobile makers and to avoid the conveyance of a trade connection between them to the consumers. The test for Nominative Fair Use as propounded by the Courts ensures that the check is maintained on third party manufacturers of spare parts. Courts have necessarily held that all steps must be taken keeping in mind that the consumers can differentiate the products of the OEMs from that of the third party manufactures and consequently any confusion can be averted from the minds of the consumers as to the origin and quality of a product. Thus, the third party manufacturers must adhere to the aforesaid practices for manufacturing of automobile spare parts so that effective competition is maintained in the market.
[i] 2008 (36) PTC 290 (Del).
[ii] Hawkins Cookers Ltd. v. Murugan Enterprises, 2012 (50) PTC 389 (Del).
[iii] 2011 (45) PTC 575 (Mad).
[iv] CS (OS) No. 2490 of 2009.
[v] FAO (OS) No. 248 of 2010.
[vi] Toyota Jidosha Kabushiki Kaisha v. Deepak Mangal, 2016 (67) PTC 374 (Del).
[vii] Toyota Jidosha Kabushiki Kaisha v. Prius Auto Industries Ltd., (2018) 2 SCC 1.
[viii] 2019 (77) PTC 128 (Del).
[ix] Id. at ¶34-N.
[x] 2018 SCC OnLine Del 13089.