ZEO v/s EZIO: Trademark Lessons on Passing Off and the Use of House Marks

Explaining the recent Delhi High Court decision in Gensol v. Mahindra, Tanishka Goswami analyzes the Court’s findings on the importance of house marks in infringement assessment, and the nature of the relevant market. Tanishka is an advocate at the High Court of MP. She graduated from National Law University, Delhi in 2023 & enjoys reading and writing on copyright laws. Her previous posts can be found here.

Images of Mahindra Zeo and Gensol Ezio. Images from here and here

ZEO v/s EZIO: Trademark Lessons on Passing Off and the Use of House Marks

By Tanishka Goswami

The Delhi HC’s (“the Court”) recent judgment in Gensol EV v Mahindra Last Mile Mobility centered around the use of the marks “ZEO” and “EZEO” by the defendant (Mahindra Mobility) against the registered mark “EZIO” of the plaintiff (Gensol EV). In the events that transpired, the Court refused to grant an interim injunction in favor of the plaintiff,  especially focusing on the application of the “passing off” test and the use of house marks in case of identical marks. I attempt to: firstly, present the facts and proceedings that played out before the Court; and secondly, analyze the dimensions weighed by the Court in arriving at its decision.

What Transpired Between Gensol and Mahindra Mobility?

The plaintiff, Gensol EV creates a range of Electric Vehicles (“EVs”) to cater to diverse urban mobility needs. In pursuance of its goal to accelerate EV adoption, it developed a new vehicle design and coined the same “EZIO”. Gensol EV also created a “ezio” logo for the vehicle design and secured a registration of the word mark “EZIO” on a “proposed to be used basis” (Class 12) with the Trade Marks Registry. The vehicle was further tested in January 2024 after successful completion of the development stage. In the same year, the plaintiff discovered the launch of an EV under the mark “eZEO” by the defendant, Mahindra Mobility. The defendant had also applied for registration of “ZEO” and “eZEO” in Class 12. What followed was the plaintiff seeking a permanent injunction, restraining the defendant from infringing and “passing off” its trademark.

Arguments Advanced and Legal Nuances Involved

Mahindra Mobility argued that: firstly, adoption of “ZEO”/“eZEO” as acronyms for “Zero Emission Option” followed its plans to launch a commercial electric four-wheeler vehicle; and secondly, it had scanned the Trade Marks Registry and duly performed market research.

To assuage the plaintiff’s concerns, it had also discontinued the “eZEO” mark in favor of “Mahindra ZEO” for its vehicle. Basing its argument on the classical trinity test on “passing off”, the defendant contended that the plaintiff neither possessed any prior goodwill for automobiles, nor was there any likelihood of damage to it owing to the sophisticated and sensitive nature of the EV consumer base, while also emphasizing the credibility of its house mark.

The Delhi High Court’s Observations: Passing Off, House Marks & Other Factors

  1. Were the Marks Identical?

While the marks “EZIO” and “eZEO” were almost identical to one another, the modification by the defendant to “Mahindra ZEO” defeated an automatic presumption of confusion covered under Section 29(2)(c) of the Trademarks Act, 1999. Citing a flurry of judgments on dissimilarities between contested marks (such as “PROTOVIT” v/s “DROPOVIT” in F. Hoffman, or “ORTHO-GYNOL” v/s “UTO-GYNOL” in Mount Mettur Pharmaceuticals), the Court settled on the addition of “Mahindra” being a differentiating factor herein.

  1. Application of the “Passing Off” Test

Relying on Goenka Institute of Education and Research, the Court identified the following factors in analysing the “passing off” test, ultimately ruling in the defendant’s favor:

  • Market Presence and Goodwill: The Court noted how the defendant is a well-known player in the “commercial EV” segment, with its sales turnover exceeding Rs. 3000 crores. In contrast, Gensol EV had no goodwill in relation to its vehicles.
  • Well-Researched Bona fide Decision: The defendant’s adoption of the “eZEO/ZEO” marks followed thorough research on the Trademark Registry’s Search Portal. Further, the plaintiff launched its mark in September 2024, around three weeks after the defendant.
  • Nature of Product and Purchasing Patterns: Relying on the judgments in Cadila Healthcare and Khoday Distilleries, the Court noted that commodities such as baby products, liquor, or other expensive/important items attract well- informed crowds which are not prone to deception and make purchasing decisions cautiously.
  • Use of House Mark was Material: Lastly, the addition of “Mahindra” to the defendant’s mark was not trivial. Rather, it was a consequential addition, precluding the scope of an infringement.

Takeaways from the Verdict: Is Balancing EZE-Or Challenging?

  1. Is the Use of House Mark Enough to Avoid Infringement?

One of the key focus areas of the Court was on the use of the house mark “Mahindra” by the defendant. Despite citing the cases of V. Guard Industries and Radico Khaitan, both of which held that the use of house mark cannot conclude adequate distinction between two identical marks, the Court found their inapplicability to the present suit. The rationale was the modification made by the defendant to its mark from “EZEO” to “ZEO”.

The Court may have engaged more with the following comments by the Delhi HC in V. Guard Industries: one, despite Crompton Greaves boasting of an 84-year legacy, its use of the impugned mark “PEBBLE” registered earlier by the plaintiff V. Guard Industries was not warranted; two, use of the house mark “Crompton” as a “source identifier” would not render the identical nature of the secondary marks futile. This becomes especially pertinent since V. Guard Industries marked a shift from the landmark verdict in Meso Pvt. Ltd. v Liberty Shoes Ltd., wherein house marks were deemed to be the primary factor in a consumer’s decision-making.

Hence, while Mahindra Mobility’s decision to adopt the mark “ZEO” as an acronym for “Zero Emission Option” was not arbitrary, the modification to still introduce the house mark as an identifier ought to have been examined further. This examination must not have been rendered unnecessary merely because of the humongous sales turnovers posted by the defendant.

  1. Earning Goodwill in a Novel Market: Challenges for New Players

It has often been argued that determination of goodwill while assessing trademark disputes inevitably favors monopolistic advertising and promotion by the stronger market competitors. In the instant case, the Court emphasized the defendant’s Rs. 3000 crore+ annual turnover as a “pertinent” factor in concluding the existence of its goodwill in the EV market, while stating that “it cannot be said the plaintiff has any goodwill in the market in relation to its vehicles.”

While Gensol EV is a new player in the commercial EV segment, Gensol Engineering, its parent company has built a goodwill in the clean energy ecosystem for close to two decades now. In fact, the company has received 30,000 pre-orders for its EZIO and EZIBOT models in a single exhibition held last month. If an appeal against the Delhi HC verdict reaches the appellant court, would it be safe to say that impactful steps towards building goodwill in the EV segment have been taken by Gensol, given the consumer response, an important factor in this determination?

  1. Timing Market Presence as a factor in Trademark Disputes

Even though the plaintiff may have taken a planned business decision to make an announcement of its mark “EZIO” in late-September, 2024 despite having registered the same a year ago, the defendant was the “first to use” the “ZEO/eZEO” marks. As discussed on the SpicyIP blog here, the “first to use” system allows an entity the right to continue usage of its mark as the rightful owner, even when it is registers the same later than affected party, owing to its active efforts in brand-building and marketing of such mark. Though the merits of the “first to use” system in trademark law may be debatable, in case of marks that are not arbitrary (like ZEO abbreviating “Zero Emission Option”), timely market positioning becomes a critical factor in decision-making. This might be a lesson for several entities prodding into novel markets.

Concluding Remarks

The instant case has shed light on several aspects of trademark law, ranging from the application of the passing off test and use of house marks, to the relevance of the “first to use” system. Moreover, this is not Mahindra’s first trademark suit in the EV space – in December 2024, InterGlobe Aviation Ltd. sued Mahindra Electric Automobile Ltd. over the name BE ‘6e’, which is identical to the ‘6E’ mark held by the former. The way these disputes unravel will impact trademark jurisprudence in multifarious ways, and pose interesting questions for policy in the near future.

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