Doctrine of ‘nominative fair use’ under Trademark law

A registered ‘trademark’ accords its owner a negative right to prevent third parties from inter alia adopting, using or registering an identical or a deceptively similar trademark. However, such a right is not absolute and subject to the exception of ‘fair use’. The doctrine of ‘fair use’ is encapsulated under Section 30 of the Trade Marks Act, 1999 (“Act”), which is an affirmative defense available against a claim of infringement by proprietor of a registered trademark. Specifically, Section 30(1) of the Act lays down the following broad conditions:

a)      Use is in accordance with honest practices in industrial or commercial matters [bona fide use];

b)      Use is not such as to take unfair advantage of or be detrimental to the distinctive character or repute of the trademark.

‘Fair use’ of a trademark by any party, other than the proprietor, may be broadly categorized into –

1)      Descriptive fair use – which relates to use of a registered trademark in a descriptive manner i.e. used in relation to goods or services indicating the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of services or other characteristics of goods or services, under Section 30(2)(a) of the Act; and

2)      Nominative fair use – which relates to use of a registered trademark by a person in relation to goods adapted to form part of or to be accessories, provided it is ‘reasonably necessary’ in order to indicate that the goods so adapted are compatible with the goods sold under the trademark, under Section 30 (2)(d) of the Act.  Nominative fair use generally applies to news, commentary, criticism, parody, comparative advertising and any other non-commercial use of a registered trademark.

The more problematic and hence controversial of the two is the doctrine of ‘nominative fair use’ where someone else’s trademark is used to refer to the mark owner’s goods or services, without the mark owner’s consent. The Courts in India have therefore subjected ‘nominative fair use’ defense to an enhanced scrutiny.

The Madras High Court in Consim Info Pvt. Ltd vs Google India Pvt. Ltd[1], relied upon two U.S. Ninth Circuit judgments[2], to interpret the meaning of the words ‘reasonably necessary’ under Section 30(2)(d), and held that for any unauthorized use of the trademark to be considered a ‘nominative fair use’, it must meet three tests viz., (i) the product or service in question must be one not readily identifiable without use of the trademark; (ii) only so much of the mark or marks may be used as is reasonably necessary to identify the product or service; and (iii) the user must do nothing that would, in conjunction with the mark, suggest sponsorship or endorsement by the proprietor of the trademark.

In Hawkins Cookers Ltd. vs Murugan Enterprises [3], which involved use of the registered trademark ‘HAWKINS’ on gaskets by the defendant, the Court held that use of the trademark by the defendant in relation to refills, spare parts and accessories adapted for use in or with the goods of the proprietor may not amount to infringement, if the defendant establishes, (1) that the use of the mark is reasonably necessary for describing that the article is adapted for use with the plaintiff’s goods; (2) that the use was bona fide, and (3) that the effect of the use complained of is not likely to deceive the public as to the trade origin. In appeal, the Division Bench of the Delhi Court held[4] that the original defendant while writing – ‘Suitable for Hawkins Pressure Cookers’, had given undue importance to the word “HAWKINS”, by printing it in a distinct red color, and hence disallowed defense of nominative fair use under Section 30(2)(d).

The Delhi High Court, in the landmark judgment, Prius Auto Industries Ltd. vs. Toyota Jidosha Kabushiki Kaisha[5] dealt with the nominative fair use defense, against unauthorized use of the plaintiff’s trademarks ‘TOYOTA’, TOYOTA Device and INNOVA in connection with the defendant’s car accessories and spare parts.  While the Single Judge of Delhi High Court set aside[6] the ex parte injunction order[7] passed retraining the defendants from using the plaintiff’s registered trademarks, the Division Bench[8], which balancing equities, imposed an interim arrangement (pending disposal of suit) between parties with their consent, wherein the defendants – (1) were restrained from using plaintiff’s registered marks, except for the purposes of identifying that the defendant’s products can be used in the cars; (2) were to ensure that the words ‘TOYOTA’ and ‘INNOVA’ were not written in the same font as written by Toyota; and (3) were to use the words “Genuine Accessories” only in conjunction with the defendant’s (manufacturer of spare parts) name.

In view of the foregoing, the key factors which the Courts in India look at for assessing applicability of the ‘nominative fair use’ defense are – (1) whether such use is bona fide and reasonably necessary for identification purposes; (2) whether such use is intended to suggest sponsorship or endorsement with the proprietor; (3) whether such use is likely to lead to consumer confusion or deception as to the source of origin; and (4) the manner in which the brand owner’s trademark is used and whether stylization and font is copied.

Indian Courts have reinforced that the defense of ‘nominative fair use’ is an exception to trademark infringement and therefore is limited in its applicability, aimed at protecting the rights and interest of the brand owner.

Authors:
Nandan Pendsey, Partner
Sudeshna Panigrahi, Associate

Endnotes:

[1] Consim Info Pvt. Ltd vs Google India Pvt. Ltd (2010(6) CTC 813)
[2] New Kids on the Block vs. News Am. Publ’g Inc., 971 F.2d 302, 308 (9th Cir. 1992); Caims vs. Franklin Mint Co. 292 F.3d 1139, 1153-55 (9th Cir. 2002)
[3] Hawkins Cookers vs. Murugan Enterprises (2008) 36 PTC 290 (Del).
[4] Hawkins Cookers vs. Murugan Enterprises (2012) (50) PTC 389 (Del-DB).
[5] CS(OS) No. 2490/2009 and I.A. No. 14981/2014 decided on July 8, 2016
[6] I.A. Nos. 16776/2009, 110 and 1156/2010 and Crl. M.A. No. 1032/2010 in CS (OS) No. 2490/2009 decided on March 19, 2010.
[7] CS(OS) 2490/2009 decided on December 22, 2009
[8] FAO (OS) No.248/2010 decided on August 10, 2010

Date: December 20, 2019