Goodwill And Reputation In India, The Prerequisites To Successful Trade Mark Passing Off Action Based On Prior International Use

In an interesting case of a prior international use of a trade mark claiming passing off by an entity in India, the Delhi High Court reiterated the law laid down in Prius case [(2018) 2 SCC 1], that the party claiming prior international use and spill over/transborder reputation in India, is under an obligation to establish its ‘goodwill’ and ‘reputation’ in India, in order to successfully enforce its claim of passing off.

The Plaintiff, Keller Williams Realty Inc. is an International Real Estate Franchisor based in the US, founded in 1983, instituted a suit against the Defendants, Dingle Buildcons Pvt Ltd & others, for permanent injunction to restrain them from infringing their trademarks ‘KW’, 968078a.jpg and/or ‘KELLER WILLIAMS’ and passing off their services as that of the plaintiff. The plaintiff stated that it deals with residential real estate brokerages and real estate affairs under the above marks. The plaintiff also relied on its registration for the marks ‘KW’ and ‘KELLER WILLIAMS’ in India in classes 35 and 36 since March 2012. Further, the Plaintiff claims to have acquired common law rights in the aforesaid trademarks owing to extensive use and campaigns across the world. Furthermore, the Plaintiff also stated that it has garnered immense goodwill and reputation in India as well since:

  1. It has served various Non-Resident Indian (NRI) clients and has trained various agents resulting in spillover of reputation in India;
  2. it has various real estate agents of Indian origin or NRI’s, as Keller Williams Signature Agents,
  3. it is the owner of domain names and it is the owner of domain names and since the year 1995 and 2005, respectively, and
  4. it has a worldwide presence on social networking sites including its website since the year 1999 which appears on the Indian section of the search engine Google and has a large number of hits from India.

Placing reliance on all of the above, the Plaintiff objected to Defendant’s use of the ‘KW’ marks-968078b.jpg and 968078c.jpg. The Defendant, in its response, relied on its earlier registration of the ‘KW’ formative marks since 2011 in classes 14, 16, 17, 20, 21, 28, 35, 36, 37, 41 & 42. They also submitted that they have adopted the trade mark “KW” from surname of the founder, late Umadhar KesarWani who ventured in the real estate business, initially as a broker in the year 1998 and they also argued that the Plaintiff’s claim of passing off is not maintainable as it has failed to establish not only prior user but also continuous extensive user and tremendous goodwill and reputation under the ‘KW’ marks in India and that the Plaintiff’s registration ought to be removed from the register on account of non-use.

The Court looked into the submission of both the sides and noted that though the Plaintiff was a prior international user of the mark, it had not used the mark in India. The Court held that the Defendant was a prior user of the mark and the first use by the Plaintiff outside India of the mark had not had much reportage in India.

The Court noted that the Plaintiff had no business, customers, agents, or franchisees in India and had not been instrumental in establishment and/or operation of any real estate brokerage in India. Except for producing e-mails from some Indians expressing interest in becoming agents of the Plaintiff in India, the Plaintiff had not been able to show spill-over of its reputation and goodwill in India.

As the Plaintiff was not able to establish that its reputation had spilled over the Indian market prior to the commencement of the use of the trade mark by Defendants in India the relief for interim injunction qua passing off action was not granted.

The Court further pointed out that the business of real estate brokerage was very different and distinct from the business of development and construction of real estate.  The Plaintiff does not claim to be in business of or having reputation and goodwill in the construction and development of real estate.  Rather the Plaintiff does not even claim to be carrying on business of real estate brokerage.

It was also noticed that the Plaintiff had used the bare alphabets “KW” and there existed an inherent possibility of another using the same alphabets.

Though the Indian Trademarks law acknowledges the doctrine of transborder reputation, foreign brand owners, while enforcing its rights, will still have to produce sufficient documentary evidence to claim transborder reputation in India as it is a sine qua non if they wish to protect their common law rights in India and, mere holding a registration may not block a prior and bona fide user in India to use the contended mark.

Article by Omesh Puri and  Ruchi Sarin, 1st published on Mondaq.