Fair use of trademarks on parts, accessories and ancillary products

The fair use of brands by third-party manufacturers of genuine parts which are intended to be ancillary or used as an accessory to the core goods of another party is a much-debated topic. It has both legal implications and high-stakes commercial ramifications in the manufacturing sector. The use of these brands by third parties is necessary to identify the core goods, thereby informing the consumer of the adaptability or compatibility of a part, spare part or accessory with the core goods in question.

In addition to consumers' interests, in such matters the legalities often revolve around the claim that third parties are using a well-known brand in relation to the sale of parts or accessories in order to take unfair advantage of the goodwill and reputation subsisting in the brand for commercial gain. In this context, how such brands are used on ancillary products or packaging is paramount.

The observations and directives issued by the Delhi High Court in Toyota Jidosha Kabushiki Kaisha v Mangal (CS (OS) 2490/2009, July 8 2016), and acknowledged in the Division Bench judgment in Prius Auto Industries Ltd v Toyota Jidosha Kabushiki Kaisha (December 23 2016), specifically pertained to the use of the plaintiff’s brands Toyota and Innova, and Toyota’s logo, by the defendants on their auto-ancillary products.

According to Section 30(2)(d) of the Trademarks Act 1999, the use of an entity’s registered trademark by another party does not amount to infringement of the former’s statutory rights, and falls under the scope of fair use if such use is reasonably necessary (in the case of products or accessories adapted to form part of or be used in another party's trademarked goods) to indicate that the adapted goods are compatible with the goods sold under the trademark. Such use must also fulfil the criteria that neither the purpose nor the effect thereof is to indicate a trade connection between the user and the trademark owner (unless such connection exists). It is this latter aspect which makes the manner of use of the mark on ancillary product packaging relevant in order to safeguard the mark user against an infringement claim.

In this regard, the first-instance judgment in the case above, taking a cue from Hawkins Cookers Limited v Murugan Enterprises (April 13 2012), observed that undue prominence should not be given to the trademark of another party in regard to the other content appearing on the ancillary product’s packaging. Further, it is important to ensure that use of the brand is only for indicative purposes or for benchmarking the ancillary products with respect to the core goods.

Therefore, the court issued the following directives to the defendants in order to maintain acceptable use of the trademarks:

• The trademarks TOYOTA and INNOVA must be used only to identify the cars for which the concerned auto-ancillary products could be used.
• The marks must not be written in the same font as used by the owner, and the logos must not be used at all.
• Use of the expression "Genuine Accessories" by the defendants must be replaced with "Genuine Accessories of PRIUS Auto Industries Limited" (the full name of the defendant entity).
• The defendants must ensure that the words “the vehicle name(s) (proprietor’s trade mark(s)) is (are) used for item identification only” were mentioned conspicuously.

These guidelines will play a pivotal role in safeguarding honest entities which, due to genuine need, use the trademarks of other parties only in order to inform about the relationship between their products and the core goods of another entity for which the trademark may be famous. Although the guidelines are not exhaustive in nature, it is hoped that they will help manufacturers, dealers and sellers of ancillary products to understand the scope and manner of fair use of brands for item identification purposes.