In the modern times where we can receive and transfer information in a single click of finger, the two well-known concepts namely transborder reputation and principle of territoriality in the domain of intellectual property have become double edged swords. According to the territoriality principle intellectual property rights are just confined to the territory of the State where such rights have been conferred upon. It does not recognize the principle of universality which favors transborder reputation. According to the latter principle, if a trademark has been registered in one country it would be recognized in other countries as well depending upon its reputation in the foreign country
The concept of transborder reputation is not recent. It first emerged in the English Courts where the main test was to determine the goodwill and reputation of business in the country where the trademark hasn't been registered. In India however, the concept saw the light in the year 1988 in the case of Kamal Trading Co. v. Gillette UK Ltd. where the Bombay High Court opined that the goodwill of a trade cannot be bounded by territory because of global trade.
Another landmark judgment was the case of Whirlpool Corporation v. N.R. Dongre where the court considered advertisement as a major tool of spreading goodwill of a trade in a nation where the trade isn't actually been carried. The 'knowledge' and 'awareness' of a foreign trader were considered enough to establish his goodwill and reputation.
The two doctrines have their own set of costs and benefits. The Courts in various jurisdictions have decided cases relying on these doctrines. The recent case of Meenaxi Enterprise Inc. v. Coca Cola Co. is yet another classic example of these two doctrines coming into play and the Courts determining the validity of the same.
Background
Coca Cola bought Thums Up cola and Limca lemon lime soft drink from Parle (India) in the year 1977 and 1971 respectively and acquired Parle's trademark for the same. In the year 2014, the High Court of Delhi declared Thums Up mark as "famous" and "well known" in India and Limca marks were declared the same in the year 2011. Meenaxi Enterprises has been selling Thums Up and Limca to the Indian population in the United States since 2008 and it has also been registered in the States.
In the year 2016, Coca Cola alleged Meenaxi for misrepresentation of its mark under the Lanham Act and sought for the cancellation of such registration before the Trademark Trial and Appeal Board. The Board opined that since the Thums Up and Limca marks are "well known" in the Indian market, it is likely to be familiar to the Indian population living in the States. It was held that the reputation of Coca Cola was compromised due to the fraudulent use of deceptive marks by the Meenaxi Enterprises which jeopardized the goodwill of Coca Cola. Meenaxi Enterprises filed an appeal against the decision of the Board.
Decision
Meenaxi Enterprise filed an appeal before the U.S. Court of Appeals for the Federal Circuit. While deciding the case the court relied on the principle of territoriality which entitles right within the sovereign territory of the country where such right has been assigned. The court opined that the sale by the Meenaxi Enterprise was not illegal because its right was protected by the principle of territoriality. Coca Cola had no sale of Limca in the US and the sale of Coca Cola was restricted to only two US States. Coca Cola failed to provide any evidence to show any decline in sales. Further the court opined that future plans of an enterprise to commence a business in a foreign country is not enough to protect it's right in the said country. The reputational injury which was claimed by Coca Cola was not entertained by the court since Coca Cola reported no loss in sales. The order given by the Board was reversed by the Appellant Court and the alleged trademarks were restored.
Conclusion
Either the principle of territoriality or universality also known as transborder reputation cannot be said to have an overriding effect over the other. Their relevance in modern world cannot be subsumed by one another. It is true that with the growth of technology, communication and transfer of information have become cake walk. Therefore, it would be imprudent to not consider its hand in the rise of global trade information.
With the advent of technological advancements, it has become more vital for the courts to take a broader approach while deciding such cases. For instance, in the present case, on one hand the Board relied on the transborder reputation and principle of universality, the Appellant court on the other hand relied on the principle of territoriality to reach an amicable decision.
Principle of territoriality serves great purpose in some cases where the domestic enterprises struggle due to the major influence of the international companies. However, it is equally important to understand that reputation and goodwill of a company is not restricted to the sovereign walls of a nation in the today's digital world. Therefore, it is pertinent for any judicial body to look at both the sides of the table before reaching a decision in the light of greater good.
Author: Ananya Kishore – student of NMIMS School of Law (Mumbai), in case of any queries please contact/write back to us via email chhavi@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney.
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