This is the principal question that the Court of Appeal was asked in the case of Toyota Motor Corporation v. SubayaMetalware Nigeria Limited and the Registrar of Trademarks CA/L/1003/2016 decided late last year.
Background
Subaya Metalware Nigeria Limited (Subaya) had instituted an action at the Federal High Court (the court of first instance) against Toyota Motor Corporation (Toyota) for trademark infringement and passing off. Subaya claimed that as a result of several suits pending at the court of first instance between Subaya and Toyota, Toyota was aware of Subaya’s ownership of trademark, “Lexus” in Classes 9 and 11 of the trademarks register. By going ahead to apply for registration of the mark, “Lexus and Device”, using the “Lexus” mark in advertising its products and causing the Registrar of Trademarks to publish the fact of application in the trademark journal, Subaya claimed that Toyota acted in bad faith and infringed upon its (Subaya’s) trademark. During the course of the suit, Toyota withdrew its application for trademark registration and the Registrar of Trademarks issued appropriate acknowledgement of the withdrawal.
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| 2019 Lexus NX |
Issues raised on appeal
In his lead judgment, Justice Tijiani Abubakar identified 3 issues raised by the parties while holding that the other issues relating to damages for trademark infringement would amount to an academic exercise given that the claim for trademark infringement was not proved. Page 45 of the judgment.
Whether sections 5(1) and 9(1) of the Trademarks Act, can be a basis upon which to found the legal personality of a party, so as to have the requisite locus standi, without the production in evidence of the certificate of incorporation?
Toyota contended that parties joined issues on the juristic status of Subaya. The Court of Appeal held that this was not so because Toyota did not properly deny Subaya’s averment in its Statement of Claim regarding the fact of its incorporation. Accordingly, that averment having not been properly denied was taken to have been established. See page 32 of the Judgment. Having taken the matter of Subaya’s juristic status as established, the Court of Appeal did not resolve the question of whether sections 5(1) and 9(1) of the Trademarks Act can be the basis upon which to found the legal personality of a party.
Whether, by applying for registration of the mark, LEXUS & Device despite being aware of Subaya’s registration in Classes 9 and 11, Toyota had infringed on Subaya’s said trademark
In resolving this issue, the Court of Appeal considered section 5(2) of the Trademark Act, which stipulates the elements that must be established to succeed in a claim for trademark infringement. The Court held that a Claimant seeking reliefs for trademark infringement must show that (a) the defendant is not the trademark owner or a permitted registered user and (b) the defendant has used the mark or a similar mark in the course of trade and in a manner that is likely to deceive or cause confusion. See page 39 of the Judgment.
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| Lexus Dome Camera |
Comments
The Court of Appeal rightly identified the elements that must be proved in an action for trademark infringement. However, in holding that an application for trademark registration cannot be an infringement of trademarks, the Court of Appeal did not define the concept of “use in the course of trade”. The Court did not also consider Subaya’s claim for passing off.
The meaning of “use in the course of trade” was a crucial factor in the appeal and it would have been helpful if the court proffered a definition. That is not say that the Court of Appeal’s decision was wrong – evidence of application for trademark registration is compliance with statutory requirement. Such cannot amount to evidence of trademark infringement.
Subaya hinged its claims at the court of first instance and its arguments at the Court of Appeal on Toyota’s “prior knowledge” and “bad faith”. See pages 6 and 18 of the Judgment. It also led evidence that Toyota advertised the Lexus mark after the Registrar of Trademark issued Toyota with a letter of acceptance of its application for registration. See page 24 of the Judgment. Subaya appears not to have considered the question of what should be the import of prior use of a mark before application for registration.
Most companies make use of a proposed mark for a period of time before approaching the trademark registry to apply for the registration of such mark. Afroleopa has had the opportunity to handle product registration at the National Agency for Food and Drug Administration and Control (NAFDAC) and is aware that applicants are required to provide their certificate of trademark registration. At the application stage, proof of application for trademark registration will suffice. In Afroleopa’s view, one of the underlying reasons for such requirement is to ensure that the applicant intends to trade in or is already trading in the product. In such circumstances, what should be the import of submitting such proof of application to NAFDAC? Should such conduct constitute use in the course of trade? Or can it sustain an action in passing off?
It is opined that such prior use of a mark before applying for registration may not only show bad faith but may provide evidence of use in the course of trade. If there has been no use of the mark prior to application for registration and no prior knowledge of another firm’s ownership of a similar mark, these issues may not arise. But where there was use of the mark prior to application for registration, such application is no longer a mere compliance with section 18 of the Act. It is now a business decision to cement and protect business reputation. In such instance, it is hoped that the courts would lean more towards protecting businesses from those who may seek to take undue advantage of their business reputation and by extension, consumer interests. That is the end game for the trademark protection in the first place.
Afroleopa is grateful to Davidson Oturu for obliging her with a copy of the judgment of the Court of Appeal discussed here.
