From Flintstones to Jetsons: The Principle of Territoriality in Digital Era

In a digitally connected world, a byte of data can boost or bite your brand

-Bernard Kelvin Clive

Introduction: Objectives and Rights under Trade Mark Regime

What is in the name?” the famous Shakespeare quote is, perhaps, the most widely cited piece of literature which goes against the principles of trademark law.

In the 21st century, with the advent of digitization, globalization, and commercialisation; trade and commerce have become the life line of an economy. A consumer, blessed by such headway, has a myriad of products and brands to choose from. In such an era of competitive economy, the goods are traded by their names or logos which indicate their quality and identity as distinct from others.

These marks, when, as laid down under the law, are represented graphically and distinguish the goods or services of one person from others, are called trade marks.  As rightly put by KankanalaA Trade Mark is a company’s persona and identity in the marketplace.” 

The object of law of trade mark is to provide legal protection to trademarks of goods and services. Upon obtaining registration of the trade mark, the proprietor attains certain rights with it. For instance, he has, inter alia, right to exclusive use, right to assign, right to seek legal remedies against infringement, etc.

The Principle of Territoriality: General Principle of Law

The principle of territoriality, is a foundational principle of the law of trade marks. It essentially states that the rights bestowed upon an individual for their trade mark do not go beyond the territory of the sovereign state in which the rights have been recognised. Simply put, an individual who is the registered proprietor of the trade mark in a particular state cannot claim rights over that trade mark in a country other than where it is registered.

This principle was also recognized (read “popularly”) in the case of Jones Investment Co Vs. Vishnupriya Hosiery Mills. In the said case, the erstwhile Intellectual Property Appellate Board ruled against the notion of preventing Indian companies from using trademarks even though the MNCs had no intention to introduce their product in Indian market.

The principle of territoriality also gained substance and recognition in Toyota Jidosha Kabushiki Kaisha Vs. M/S Prius Auto Industries Limited where the Hon’ble Supreme Court of India held that it must necessarily be determined if there has been a spill over of the reputation and goodwill of the mark used by the claimant who has brought the passing off action in the country in question.

Transborder Reputation: Exception to General Law

In several cases, owing to the well- known status of a trade mark, the universality doctrine is upheld leading to recognition of the rights of the owner of the trade mark. Such an owner is not a registered proprietor of the trade mark in the country where such recognition takes place.

According to the Universality doctrine, when a third party misuses trade marks of an entity in a country where the entity has not obtained registration of their trademark, the court’s rely on the brand’s goodwill and/or trans-border reputation which has spilled over in the territory of dispute.

In the case of Milmet Oftho Industries & Ors Vs. Allergan Inc., the Hon’ble Supreme Court, recognised the trans-border reputation of the Respondents and laid down the “first in the world” principle. It stated that “the mere fact that the Respondents have not been using the mark in India would be irrelevant if they were first in the world market.” The case was decided by the Hon’ble Supreme Court in 2004, much before the Toyota vs. Prius case was decided by it in 2018.

Effect of Emergence of Digitisation: Transgressing Territoriality

The digital world is a world without borders and hence its emergence has led to pouring in of innumerable brands in lives of consumers. Hence, depleting requirement of physical presence of brands and thus likelihood of confusion in the minds of consumers.

In such a digitised economy where products and services are bought and cancelled or returned with just “one- click”, it is not essential that only well- known marks would be known across borders. Therefore, it may be possible that a mark which may not have subsisted over several years or would match the threshold of popularity, would still have trans- border recognition as well as reputation.

Even though the Courts have recognised both, the territorial principle as well as universal principle under the trade marks disputes, the recognition of territorial principle weighs over the exceptional law of recognition of trans- border reputation.

At the core of Principle of Territoriality, lies commercial morality, and therefore, even though digitisation has blurred the borders and significance of territories, the idea of commercial morality keeps the applicability of the territorial recognition intact.    

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