Groupon’s trademark battle in India: a valuable lesson for online business

Losing control of a domain name is a nightmare scenario for any business, but more so for those that operate purely online.

Groupon Inc, the US-based ‘deal of the day’ internet business with more than 35 million registered users, was faced with this scenario after an Indian business registered the domain name 'groupon.in' and the word mark GROUPON under Indian law. For reasons that are unclear, Groupon had neither blocked the domain name nor opposed the defendant’s trademark application.

However, the Delhi High Court recently confirmed an interim injunction against the Indian infringer in a lawsuit for passing off which Groupon had filed three years ago (the order can be accessed here).

Facts
Groupon's lawsuit was not without precedent. In countless cases foreign businesses which have not entered the Indian market have had their valuable trademarks usurped by local businesses. The landmark Supreme Court judgment in NR Dongre v Whirlpool Corp (1996 PTC 583) provided a lifeline for foreign rights holders which had lost their trademarks to Indian businesses, provided that they could establish prior use through the cross-border reputation of theirmarks in India. In that case the Supreme Court allowed advertisements in international magazines with circulation among the relevant Indian consumer class to be considered as evidence of cross-border reputation.  

WHIRLPOOL was a relatively old trademark and had been registered in India at one time. However, unlike in Whirlpool, the first global use of the GROUPON mark by Groupon in the United States was on October 14 2008, a mere three years before the lawsuit was filed. To compound the situation, at that time Groupon did not yet offer services in India, and the word mark had been registered as an Indian trademark by the defendant, which started transacting business through the 'groupon.in' domain name on February 11 2011.

Groupon faced a serious challenge in terms of trying to establish its reputation in India because of the short time period between the first uses of the trademark by either party. Most cases in which cross-border reputation has been successfully argued have involved trademarks that have built up their reputation over decades.

In a bid to prove its cross-border reputation in this case, Groupon submitted evidence in the form of Indian media coverage of Groupon’s rise in the world of online business, along with independent reports demonstrating that least 30,000 Indian residents had visted the Groupon website in the quarter before the defendant launched its service in India.

Decision
The evidence of 30,000 residents visiting the Groupon website appears to have been key for the Delhi High Court. Making reference to it, the court noted that:

“[p]rima facie, this establishes that Indian consumers were aware of the plaintiff’s mark and the services in respect of which it was used, and may have even availed of services on the plaintiff’s website, as Indians who travel abroad can purchase coupons on the plaintiff’s website in respect of services being offered in the local territory they may be visiting.” 

This evidence, combined with the evidence that Groupon had registered several other country-specific domain names (eg, 'groupon.sg', 'groupon.ca' and 'groupon.kr'), led the court to find that there was a strong prima facie case for Groupon's global use of the trademark, as well as for its cross-border reputation in India.

In light of this evidence, taken alongside precedents in similar cases, the Delhi High Court confirmed its earlier ex parte interim injunction against the defendant. However, the judgment was rather abrupt in its reasoning on the ‘balance of convenience’ and ‘irreparable injury’ factors that are required to be considered by any court granting an interim injunction. Theoretically, this position may change after a trial, once both parties submit evidence. 

Comment
The interim injunction against the defendant in this case restrained it only from using the GROUPON trademark. The legal battle to revoke the defendant’s registration of that mark under the Trademarks Act 1999 will be a longer fight before the Intellectual Property Appellate Board (IPAB). Whether the IPAB is swayed by the Delhi High Court's interim order remains to be seen.