ANALYZING THE SIGNIFICANCE OF TRADE MARKS IN THE AUTOMOBILE SECTOR

May 27, 2020

 

 

INTRODUCTION

 

“Within every brand is a product, but not every product is a brand”, a highly pragmatic phrase by David Ogilvy is capable of encapsulating the dominance of trade marks in shaping consumer choices. As of 2019, the Indian automobile market holds the position of being the fourth largest in the world, with the scale of production increasing 9.5 per cent every year. [1]With an unprecedented scale of demand, most of the global automotive giants are battling to dictate the Indian market. The Indian consumership, as has been determined by a large number of market studies is a highly diverse group with varied choices. It is not surprising that in order to cater to population of over 1 billion, brands leave no stone unturned in establishing what is commonly known as “consumer association” as well as “brand value”. Brand value is determined if a consumer is willing to pay more for one brand over the other and it is not always the product that determines the brand value. Brand value creates an image of desirability. A classic example of the same is the case of the “BMW” trade mark that the mark has become synonymous to the brand. The significance of trade marks in establishing brand goodwill is evident by the fact that leading car companies like TOYOTA had to pay special attention to make its name and trademark a global success.[2] They modified the name Toyoda to Toyota to make it catchier in 1936 and the logo started appearing in 1990- 91. There are brands which were defined by products: The current Toyota Mark consists of three ovals: the two perpendicular center ovals represent a relationship of mutual trust between the customer and Toyota. These ovals combine to symbolize the letter "T" for Toyota. The space in the background implies a global expansion of Toyota's technology and unlimited potential for the future. Hence, trade marks play an inevitable role in establishing the reputation of a brand amongst both actual as well as potential buyers.

 

TRADE MARK DISPUTES IN THE AUTOMOBILE SECTOR

 

The inclination of automotive giants towards the Indian market is not new, neither are the trade mark disputes in the automobile sector. In 1982, the Indian automobile market welcomed Suzuki Motor, a Japanese automobile company which collaborated with the Government of India and Maruti Udyog Limited to manufacture cars in India. This highly anticipated entry of a Japanese pioneer received a strange welcoming as an Indian company registered itself by the name of Suzuki (India) Limited in the year 1982 which marked the beginning of a long-going battle,which lasted for over two decades. However, the Hon’ble Court, while recognizing the rights of the Japanese tycoon, accorded “SUZUKI” the recognition of a well-known trade mark in India[3].  The said recognition is a testimony of the Indian judiciary recognizing the conversance of the Indian consumers with automobile brands.

 

The expansion of trade marks in the automobile sector across the Indian territory has led to the emergence of a variety of complicated issues revolving around the same. An example of this is the highly publicized case of Toyota Jidosha Kabushiki Kaisha v. M/S Prius Auto Industries Ltd. & Ors[4][5]., which led the Indian courts to extrapolate the concept of “transborder reputation”. The Apex Court of India, while deciding the said matter in finality held “that while interpreting the meaning of trans-border reputation, merely just acquiring goodwill globally would not be sufficient and it is important that the mark has earned goodwill in India at the relevant time i.e. before the date of adoption of the mark by the opposite party”. It is pertinent to note that the said judgement paved a path of caution for brand owners, especially multinational conglomerates to exercise greater vigilance in protecting their IP rights while entering the Indian market.

 

With automotive giants expanding their scope of operations to cater to the Indian market, a peculiar trend of “mass deterrence” has been undertaken by brands to prevent unauthorized use of their trade marks. Brands often undertake legal proceedings even against small time manufacturers in order to augment their position in the market. The trend in the automobile sector is no different. In a recent victory against infringers, Luxury Bavarian carmaker BMW won its court case against an Indian e-rickshaw manufacturer for using a name it said was too similar to its own. Om Balajee Automobile (India) Private Limited has been selling an e-rickshaw under the name “DMW” since 2013. The automaker approached the Delhi High Court in 2017 to open a case, claiming use of the DMW name “appears to be a dishonest act with an intention of trying to take advantage of the reputation and goodwill” of BMW. While the defendant expressed concerns over the lateness of the filing, the judge ruled that the delay was not sufficient to hinder justice in the present matter.The Court also rejected the Defendant's argument based on the different nature of the products manufactured by the two companies as well as the difference in relevant consumership. The court also agreed the DMW logo was “visually and phonetically similar” to BMW’s, and “is likely to mislead an average man of ordinary intelligence.” The said judgement had a rippling effect in assessing standards for trans-border reputation, well-known mark and passing off claim. [6]

 

In the recent past, a large number of disputes in the automobile sector have surfaced against non-automobile companies. An epitome of this scenario is the recent case of Monte Carlo Fashions Ltd entering into an agreement with Skoda Auto India Pvt. Ltd under which the former has given a license to the car maker to allow it to use its trademark Monte Carlo. [7]The agreement comes a year after a Delhi court had admitted a trademark violation plea for infringement of trademark “MONTE CARLO” owned by Monte Carlo Fashions Ltd against Skoda Auto India from using the brand name with respect to a new ‘Monte Carlo’ edition car. Under the agreement between the two corporate organizations, Skoda India has obtained a License from Monte Carlo Fashions Ltd to use its trademarks Monte Carlo, in the whole of India in respect of its products comprising only of cars, cars accessories and spare parts as well as on packaging, promotional and advertising material associated therewith.

 

COUNTERFEITING IN THE AUTOMOBILE SECTOR

 

Counterfeiting has plagued the global market for the past several decades and the automotive industry is no exception to this epidemic and has been rallying against counterfeits for many years. In a study commissioned by the FICCI Committee Against Smuggling and Counterfeiting Activities Destroying the Economy (CASCADE), researchers identified that the Indian automobile sector is one of the most vulnerable to counterfeiting in the country.  The said study showed that nearly 30% of the automobile components market in India is counterfeit. Intellectual property rights have played an integral role in providing necessary protection to IP owners against counterfeits. In the year 2015, the Competition Commission of India (CCI) imposed a penalty of INR 420,000,000 (approx. 5535091.75 USD) against Hyundai Motor India Ltd. and several other auto companies for not making their original spare parts freely available in the Indian markets, leading to unfair trade practices and giving rise to counterfeiting. The CCI further rejected Hyundai’s claim that the drawing/designs of their spare parts are protected by unregistered copyright and trade secret and refused to grant Hyundai an exemption under Section 3(5) of the Competition Act, 2002, which protects exclusive rights granted under intellectual property rights[7]. Though, the said order was subsequently stayed by the Apex Court of India, it elucidated the seriousness of the Indian institutions to tackle the invasion of counterfeiting in the Indian automobile sector.

 

While the remedies available to trademark holders against instances of counterfeiting are enshrined in the Trade Marks Act, 1999 under Sections 102, 103 and 135 which penalize falsification of trademarks, other preventive measures that brand owners can adopt include consumer awareness and proactive enforcement of their trademark rights via criminal raids and recording their trademarks with the Customs Authority of India for monitoring. The government can also employ industry specific remedies, such as introduction of certifications for automotive components and spare parts, introduce legislations to increase consumer protection on e-commerce websites and provide strict penalties that can act as a deterrent to counterfeiters.

 

                                                                CONCLUSION

 

“Products are made in the factory, but brands are created in the mind”, a quote by Walter Landor elucidates the imminent association of trade marks and the automobile sector. In the 21st century, when automobiles represent much more than what a machine does, automotive giants rely immensely on their image and reputation amongst consumers. With the dynamic changes in the field of branding and marketing, it can be safely concluded that trade marks play an extremely significant role in facilitating the consumer consortium with automobile brands.

 

 

 

[1] Automobile Industry in India, Indian Brand Equity Foundation, accessible at https://www.ibef.org/industry/india-automobiles.aspx

 

[2] Role of Intellectual Property in Auto Industry, Patentwire, November 2009

 

[3] Well-known trade marks, IP INDIA

 

[4] AIR 2018 SC 167 

 

[5] Delhi HC restrains DMW e-rickshaw from using mark deceptively similar to that of German automobile, Bar and Bench, can be accessed at https://www.barandbench.com/news/litigation/delhi-hc-restrains-dmw-erickshaw-from-using-mark-deceptively-similar-to-that-of-german-automobile-manufacturer-bmw

 

[6] Monte Carlo Gives License to Skoda India for Using its Trademark after Infringement Case, Everythingexperiental, can be accessed at http://everythingexperiential.businessworld.in/article/Monte-Carlo-Gives-License-to-Skoda-India-for-Using-its-Trademark-after-Infringement-Case/22-02-2019-167460/

 

[7] CCI fines Hyundai Rs420 crore for anti-competitive practices, LiveMint, accessible at https://www.livemint.com/Politics/9PXN0uRt1xlFH6piW4XlDJ/Competition-Commission-fines-Hyundai-Rs420-crore.html

 

The article was  originally posted  on www.lexology.com on May 26, 2020 and can be accessed here.

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