TESLA V. TESLA: TRADEMARK CONUNDRUM OVER CONSUMER PERCEPTION

TESLA V. TESLA:

TRADEMARK CONUNDRUM OVER CONSUMER PERCEPTION

INTRODUCTION

“There is only one boss. The customer.”

– Sam Walton

The abovementioned quote by Sam Walton emphasizes the importance of consumer and his perception with respect to the seller and the product/service. The trademark law a solely based on the fact that the trademark should be distinctive and should be able to distinguish the goods and services on one entity from the other so that the consumers will not be in state of confusion. For the same, it confers rights to the trademark holder so that he/she can protect his/her trademark and eliminate the possibility of confusion for the consumers. The current case of Tesla Inc vs Tesla Power India Private Limited & Ors is the latest demonstration of trademark dispute on the basis of consumer perception.

Background:

There have been multiple instances in the past where the court, both at national and international level, have emphasized the importance on consumer perception and weighed it over any other contention. For instance, in the case of Starbucks Corporation v. Sardarbuksh Coffee & Co. where both the brands are coffee brands, it was observed by the court that these are deceptively similar and can cause confusion in the mind of the consumers. It led to the changes in the brand name and logo by the defendant (Sardarbuksh).

However, there are cases where even after having the similar or same brand name, the verdict was in favour of the defendant. The same had been demonstrated in the case of Burger King Company LLC v. Virendra Kumar Gupta.

Hence, the question arises is “When does the consumer perception matter and how is it implemented from case to case?”. This research essay will analyse the importance and interpretation of consumer perception in the light of the facts of the Tesla case and the landmark judgements in the past.

Research Outline:

This research article is divided into four sections which are as follows:

Ø Section 1: Facts of the case and contention of both parties

Ø Section 2: Origin of the Doctrine of Consumer Perception

Ø Section 3: Important Judgements dealing with consumer perception and cross-class trademark protection

Ø Section 4: Author’s POV

LITERATURE REVIEW AND DISCUSSION

Section 1: Facts of the case and contention of both parties:

Facts:

In the case of Tesla Inc. v. Tesla Power India (P) Ltd., 2024, Elon Musk’s Tesla Inc. filed a case against the Tesla Power India Limited under Order 11 Rule 1(4) of the Code of Civil Procedure, 1908 seeking permanent injunction and damages for trademark infringement, passing off and unfair trade practices under Section 27, and Section 29 of the Trademark Act, 1999.

The issue came up in April, 2022 when Tesla Inc. discovered that Tesla Power India (TPI) was using its brand name “Tesla Power USA” where the TPI was advertising on huge scale regarding its entry in Tesla Inc.’s core market, i.e., electronic vehicle business category (Tesla Inc. v. Tesla Power India (P) Ltd., 2024). A cease-and-desist notice was prompted on the end of Tesla Inc. directing the TPI to stop using the brand name ‘Tesla Power USA’ on 18th April 2022(Tesla Inc. v. Tesla Power India (P) Ltd., 2024). After continuous negotiations till March 2023 when TPI did not stop using the brand name, Tesla Inc. opted the path of legal proceedings (Tesla Inc. v. Tesla Power India (P) Ltd., 2024).

Tesla Inc. claims and contention:

As aforementioned, Tesla Inc. filed the law suit on the grounds of trademark infringement, passing off and unfair trade practices. Detailed explanation is as follows:

Section 27:

Plaintiff contested that the defendant’s use of Tesla trademark misrepresented the origin of the goods from Tesla Inc. when they are not (Litoria, 2024). It can lead to the damage to the goodwill of the brand. Plaintiff work in the field of advanced battery technologies and his is registered in multiple countries all over the world including India under multiple classes (Litoria, 2024). This way, the defendant committed the passing off of plaintiff’s trademark.

Section 29:

Tesla Inc. argued that the products and services of TPI are likely to cause confusion among the consumers with respect to the registered trademarks and pending trademark application in India (Litoria, 2024). Hence, the use of ‘Tesla Power’ by defendant constitutes trademark infringement (Litoria, 2024). Along with this, defendant is taking advantage of the established brand reputation and goodwill of the defendant which constitutes to the unfair trade practices (Litoria, 2024).

Tesla Power India (TPI)’s claims and contention:

TPI’s contention mainly based upon its core business of batteries for automobiles, invertors, and UPS systems which is different from the core business of the plaintiff who is primarily involved in the manufacturing of electric vehicle (Litoria, 2024). Also, in defence of the advertisements, TPI contested that the promotional advertisements were to market their alliance with the EV (electric vehicle) manufacturer “E-Ashwa” (SCC Online, 2024). Along with this, TPI gave a declaration confirming to refrain itself from using Tesla’s logos and using the brand name for promoting electric vehicle (Litoria, 2024).

Current Status:

During the hearing on 28 May 2024, the plaintiff pointed out that even after the declaration given by the defendant, EV scooters are on sale (SCC Online, 2024). The court directed the defendant disclose the number of Ev scooters sold (SCC Online, 2024). On 04 July 2024, the defendant requested the court to direct the matter for mediation after which Justice Mini Pushkarna referred the matter for mediation before the Delhi High Court Mediation and Conciliation Centre (SCC Online, 2024).

Section 2: Origin of Doctrine of Consumer perception:

Consumer perception plays prominent role in deciding the trademark disputes. While consumer perception can make a generic term a trademark after gaining secondary meaning, it can lead to revocation of a trademark after its genericization. Consumer perception can make or break a trademark. The Consumer perception doctrine or the public perception test has its origin in the case of Bayer Co. Inc. v. United Drug Co. In this case, the court held that the answer to the question “‘What do buyers understand by the word for the use of which the parties are contending?” decides the validity of trademark.

Trademark is used to identify the origin of the product. Considering the facts of the current case, Tesla Inc. is widely known and famous brand for electric vehicles have a registered trademark over multiple jurisdictions including India. On the other hand, TPI manufactures batteries for inverters, automobiles and UPS devices. Now the question arises is that what is consumer perception about the brand name Tesla and how widely it is know to the normal public. However, there are multiple judicial precedents and interpretation are available to decide the question which will be discussed in the next section.

Section 3: Important Judgements dealing with consumer perception and cross-class trademark protection:

v Polaroid Corp. v. Polarad Elecs. Corp.:

The court gave the eight ‘polaroid factor’ to determine the possibility of confusion in this case which are as follows:

• Popularity and strength of plaintiff’s mark determines the likelihood of confusion (Stim, n.d.).
• Level of similarity between the two marks (Stim, n.d.).
• If the goods and services of the parties at dispute are related or not (Stim, n.d.).
• Likelihood of the senior mark (the mark with respect to which the infringement has been claimed) to bridge the gap, i.e., if it can be expended to the area of goods/services of the junior mark (the mark that is accused for infringement) (Stim, n.d.).
• What was the intention of defendant behind adopting the mark? (Stim, n.d.).
• If any evidence is available to prove that the public is being misled (Stim, n.d.).
• Are consumers able to distinguish between the two brands (Stim, n.d.).
• Quality of the product/service under the junior mark (Stim, n.d.).
• Whether defendant acted in good faith or bad faith? (Stim, n.d.).

v Benvenuti & Bonfant v. Congo:

In this case, the court case the Triple Identity Test to determine the trademark infringement which involves examination of the fact on the basis of identical mark, goods, and trade channels.

v Dharampal Satyapal Limited & Anr. v. Youssef Anis Mehio & Ors. (CS(COMM) 1255/2018)

In this case, the plaintiff was the world’s largest selling flavoured paan masala and the defendant was accused of infringing the trademark as well as the trade dress of the plaintiff’s brand.

The Delhi High Court held that on the basis of the triple identity test held the defendant guilty of trademark infringement along with having similar packaging and trade dress (SCC Online, 2022).

v Daimler Benz Aktiegesellschaft & Anr. v. Hybo Hindustan:

In this case, the famous German car company Benz filed a suit against the defendant for use of its trademark ‘Benz’ and the three-pointed human being in underwear.

The court held that “defendant cannot dilute, that by user of the name “Benz” with respect to a product like under-wear” and hence the defendant has to stop use of the mark Benz along with the three-pointed human for undergarments with immediate effect (Rastogi, 2014).

v Nandhini Deluxe v. Karnataka Cooperative Milk Producers Federation (KCMPF) Ltd.:

According to the facts of the case, Nandhini Deluxe applied for trademark protection for its brand name being used for edible products which was opposed by the defendant as the defendant has a registered trademark ‘Nandini’ (Kalro, n.d.).

While the deputy registrar decided the case in favour of Nandhini Deluxe, the IPAB, and Karnataka High Court Decided the case in favour of KCMPF (Kalro, n.d.). At last, the Supreme Court decided the case in favour of Nandhini Deluxe saying that,

Section 4: Author’s POV:

From the facts mentioned under Section 1, it can be seen that:

Ø Tesla Inc. took timely action with respect to the infringement caused by the defendant.

Ø Tesla Inc. is a widely known brand for electric vehicles all over the world.

Ø Tesla Inc. has registered trademark in India.

Ø Repeated infringements by the defendant even after notice of the plaintiff, submission of declaration in the court, the directions of the court indicate towards the deliberate attempt of infringement of the plaintiff’s mark.

Ø Plaintiff work in the field of EVs and advanced battery technologies and defendant makes batteries. It indicates that the working field of the plaintiff can possibly be extended up to the defendant’s field pf work. This implies that chances of confusion among the consumers are high.

Hence, based on the Polaroid factors and the triple identity test, it can be said that Tesla Inc. can rightly claim the infringement of its trademark and get adequate relief.

However, currently the matter has been referred for medication before the Delhi High Court Mediation and Conciliation Centre with the consent of both the parties and the final judgement is yet to be received.

REFERENCE NOTES

1. Bayer Co. v. United Drug Co., 272 F. 505 (S.D.N.Y. 1921).
2. Burger King Company LLC v. Virendra Kumar Gupta, 2023 SCC OnLine Del 7735.
3. Dharampal Satyapal Limited v. Youssef Anis Mehio, 2022 SCC OnLine Del 3307.
4. Kalro, P. (n.d.). Nandini v Nandhini: A Case Analysis. Let’s Get Legal. https://letsgetlegal.in/nandini-v-nandhini-a-case-analysis/.
5. Litoria, K. P. (May 16, 2024). Tesla v. Tesla Power India: Tesla files lawsuit in Delhi High Court. The Trademark Lawyer. https://trademarklawyermagazine.com/tesla-v-tesla-power-india-tesla-files-lawsuit-in-delhi-high-court/.
6. Nandhini Deluxe v. Karnataka Co-Operative Milk Producer Federation Pvt. Ltd. (KCMPF)-(Civil Appeal 2943 of 2018).
7. Polaroid Corp. v. Polaad Electronics Corp., 287 F.2d 492 (2d Cir. 1961).
8. Rastogi, A. (June 26, 2014). Daimler Benz Aktiegesellschaft & Anr. v. Hybo Hindustan. Indian Case Law. https://indiancaselaw.in/daimler-benz-aktiegesellschaft-anr-v-hybo-hindustan/.
9. S.A.R.L. Benvenuti & Bonfant v. People's Republic of the Congo, ICSID Case No. ARB/77/2.
10. SCC Online. (June 26, 2024). [Tesla v. Tesla] Delhi High Court refers trade mark dispute between Tesla Inc and Tesla Power India to mediation. https://www.scconline.com/blog/post/2024/07/06/tesla-v-tesla-delhi-hc-refers-trade-mark-dispute-between-tesla-inc-and-tesla-power-india-to-mediation/.
11. SCC Online. (October 11, 2022). Delhi High Court held RAJNIPAAN guilty for infringement for adopting deceptively similar mark and replaced ‘GANDHA’ with ‘PAAN’ with an intention to ride upon goodwill and reputation of RAJNIGANDHA. https://www.scconline.com/blog/post/2022/10/11/delhi-high-court-held-rajnipaan-guilty-for-infringement-for-adopting-deceptively-similar-mark-and-replaced-gandha-with-paan-with-an-intention-to-ride-upon-goodwill-and-repu/.
12. Starbucks Corporation v. Sardarbuksh Coffee & Co., CS (COMM) 1007/2018.
13. Stim, R. (n.d.). Likelihood of Confusion: How Do You Determine If a Trademark is Infringing?. NOLO. http://nolo.com/legal-encyclopedia/likelihood-confusion-how-do-you-determine-trademark-infringing.html.
14. Tesla Inc. v. Tesla Power India (P) Ltd., 2024 SCC OnLine Del 4594.