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Territorial Jurisdiction Under Trademark And Copyright Law In India

Jaspreet Singh Kapur
21 Aug 2020 5:42 AM GMT
Territorial Jurisdiction Under Trademark And Copyright Law In India
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The question as to which court has the territorial jurisdiction to try and entertain a suit pertaining to trademark and/ or copyright infringement or passing off has been debated for a long time in India. With the passage of time and precedents laid down by the Courts, it is believed that the position of law relating to territorial jurisdiction in trademark and copyright disputes is fairly settled. This article focusses on landmark judgments of High Courts and Supreme Court discussing various aspects of the law relating to territorial jurisdiction in trademark and copyright litigation.

But before we delve into the judgments, we must peruse the relevant provisions of law which would help us understand the legal basis on which those judgments were founded.

CODE OF CIVIL PROCEDURE, 1908

As we are all aware, Sections 15 to 20 of the Code of Civil Procedure, 1908 are the provisions which relate to 'Place of Suing' or territorial jurisdiction for institution of Civil Suits. For the purpose of this article, we are concerned with Section 20 of the CPC which reads as under:

"20. Other suits to be instituted where defendants reside or cause of action arises.—Subject to the limitations aforesaid, every suit shall be instituted in a Court within the local limits of whose jurisdiction—

  • the defendant, or each of the defendants where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain; or

  • any of the defendants, where there are more than one, at the time of the commencement of the suit, actually and voluntarily resides, or carries on business, or personally works for gain, provided that in such case either the leave of the Court is given, or the defendants who do not reside, or carry on business, or personally works for gain, as aforesaid, acquiesce in such institution; or

  • The cause of action, wholly or in part, arises.

[Explanation].—A corporation shall be deemed to carry on business at its sole or principal office in [India] or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place.

Suits relating to trademarks and copyright are governed by Section 20 of the CPC. Therefore as per Section 20, suits relating to Trademarks and Copyright must be instituted at a place where:

  1. The Defendant/ any of the Defendants voluntary resides, or carries on business, or personally works for gain; or
  2. The cause of action, wholly or in part, arises.

TRADEMARKS

The first enactment in India providing for civil remedies for trademark rights violation was the Trademarks Act, 1940. Prior to that, civil remedies relating to trademarks violation in India were governed by the principles of common law and equity. Section 73 of the Trademarks Act, 1940 read as under:

"73. No suit for the infringement of a trade mark or otherwise relating to any right in a trademark shall be instituted in any Court inferior to a District Court having jurisdiction to try the suit."

The 1940 Act was repealed by the Trade and Merchandise Act, 1958. Section 105 of the Trade and Merchandise Marks Act, 1958 provided as follows:

"105. Suit for infringement, etc., to be instituted before District

Court. No suit--

(a) for the infringement of a registered trade mark; or

(b) relating to any right in a registered trade mark; or

(c) for passing off arising out of the use by the defendant of any trade mark which is identical with or deceptively similar to the plaintiff' s trade mark, whether registered or unregistered; shall be instituted in any court inferior to a District Court having jurisdiction to try the suit."

It can be seen that there is a lot of difference in the language used in both the above provisions, however, the effect of both the provisions was the same i.e. suits relating to infringement, passing off or any other right in a registered/ unregistered trademark was not to be instituted before any court that is inferior to a District Court having jurisdiction. What is important to note here is that in both the above provisions, the "District Court having jurisdiction" is the District Court having jurisdiction as per Section 20 of the CPC. Both the aforementioned provisions do not provide for an additional forum or option.

Thereafter, the Trade and Merchandise Marks Act, 1958 was repealed by the Trademarks Act, 1999 which continues to be in force till today as amended from time to time. Section 134 of the Trademarks Act, 1999 provides as under:

"Section 134. - Suit for infringement, etc., to be instituted before District Court.

  • No suit—
    1. for the infringement of a registered trade mark; or
    2. relating to any right in a registered trade mark; or
    3. for passing off arising out of the use by the defendant of any trade mark which is identical with or deceptively similar to the plaintiff's trade mark, whether registered or unregistered,

shall be instituted in any court inferior to a District Court having jurisdiction to try the suit.

  • For the purpose of clauses (a) and (b) of sub-section (1), a "District Court having jurisdiction" shall, notwithstanding anything contained in the Code of Civil Procedure, 1908 (5 of 1908) or any other law for the time being in force, include a District Court within the local limits of whose jurisdiction, at the time of the institution of the suit or other proceeding, the person instituting the suit or proceeding, or, where there are more than one such persons any of them, actually and voluntarily resides or carries on business or personally works for gain.

Explanation.--For the purposes of sub-section (2), "person" includes the registered proprietor and the registered user."

In Section 134 of the Trademarks Act, 1999, the legislature has added clause (2) which essentially states that suits for trademark infringement, passing off and related rights under the statute may be instituted at a place where the Plaintiff actually and voluntarily resides or carries on business or personally works for gain. Therefore from a reading of the above sections, it is clear that though in the earlier enactments, no additional forum was provided, however, in the Trademarks Act, 1999, an additional option has been given to the Plaintiff to sue the Defendant at a place where he actually and voluntarily resides or carries on business or personally works for gain.

COPYRIGHT ACT, 1957

The Copyright Act, 1957 repealed the Copyright Act, 1914, Section 13 of which provided that "Every suit or other civil proceeding regarding infringement of copyright shall be instituted and tried in the High Court or the Court of District Judge."

Section 62 of the Copyright Act, 1957 came in place of Section 13 and is quite similar to Section 134 of the Trademarks Act, 1999 having the same effect. It reads as under:

"Section 62. - Jurisdiction of court over matters arising under this Chapter.

  • Every suit or other civil proceeding arising under this Chapter in respect of the infringement of copyright in any work or the infringement of any other right conferred by this Act shall be instituted in the district court having jurisdiction.

  • For the purpose of sub-section (1), a "district court having jurisdiction" shall, notwithstanding anything contained in the Code of Civil Procedure, 1908 (5 of 1908) or any other law for the time being in force, include a district court within the local limits of whose jurisdiction, at the time of the institution of the suit or other proceeding, the person instituting the suit or other proceeding or, where there are more than one such persons, any of them actually and voluntarily resides or carries on business or personally works for gain.

Therefore as per Section 62 (2) of the Copyright Act, suits relating to copyright infringement or any other right under the statute may be instituted at a place where the Plaintiff actually and voluntarily resides or carries on business or personally works for gain.

  1. DEEMED TO CARRY ON BUSINESS

The interpretation of the Explanation of Section 20 CPC was called in question before the Supreme Court in the case titled Patel Roadways Ltd., Bombay vs. Prasad Trading Company & Ors. – (1991) 4 SCC 270. In this case, the Hon'ble Supreme Court was concerned with question as to where a 'Corporation' shall be 'deemed to carry on business' as laid out in Explanation of Section 20 CPC. The argument raised by Patel Roadways was that a Corporation shall be deemed to carry on business at both places, i.e. at the principal or sole office of the Corporation and the subordinate office where cause of action has arisen. However, it was held by the Court as follows:

"On a plain reading of the Explanation to Section 20 of the Code we find an apparent fallacy in the aforesaid argument. The Explanation is in two parts, one before the word "or" occurring between the words "office in India" and the words "in respect of" and the other thereafter. The Explanation applies to a defendant which is a corporation which term, as seen above, would include even a company such as the appellant in the instant case. The first part of the Explanation applies only to such a corporation which has its sole or principal office at a particular place. In that event the courts within whose jurisdiction the sole or principal office of the defendant is situate will also have jurisdiction inasmuch as even if the defendant may not be actually carrying on business at that place, it will "be deemed to carry on business" at that place because of the fiction created by the Explanation. The latter part of the Explanation takes care of a case where the defendant does not have a sole office but has a principal office at one place and has also a subordinate office at another place. The words "at such place" occurring at the end of the Explanation and the word "or" referred to above which is disjunctive clearly suggest that if the case falls within the latter part of the Explanation it is not the Court within whose jurisdiction the principal office of the defendant is situate but the court within whose jurisdiction it has a subordinate office which alone shall have jurisdiction "in respect of any cause of action arising at any place where it has also a subordinate office"."

Therefore, as per Patel Roadways (supra), a Corporation shall be deemed to carry on business only at a place where the Corporation has its subordinate office and the cause of action has also arisen at such place. In such a case, the Corporation shall not be deemed to carry on business at the place where it has its principal office.

  1. COMPOSITE SUITS

The Supreme Court was posed with the question of extent of territorial jurisdiction of a civil court in composite suits filed for violation under the Copyright Act, 1957 and the Trade and Merchandise Marks Act, 1958 in the case of Dhodha House and Ors. vs. S.K. Maingi and Ors – (2006) 9 SCC 41. The Supreme Court was deciding two appeals, and in both the cases, suits were instituted before Courts where Plaintiffs carried on business. The suit courts were having jurisdiction to entertain the suits as per Section 62 (2) of the Copyright Act, but not under the Trade and Merchandise Marks Act. The question for consideration before the Supreme Court was whether a composite suit would be maintainable in a court only because it has jurisdiction to entertain the same in terms of Section 62 (2) of the Copyright Act, 1957? The Supreme Court answered this question in negative and held as under:

"A cause of action in a given case both under the 1957 Act as also under the 1958 Act may be overlapping to some extent. The territorial jurisdiction conferred upon the court in terms of the provisions of the Code of Civil Procedure indisputably shall apply to a suit or proceeding under the 1957 Act as also the 1958 Act. Sub-section (2) of Section 62 of the 1957 Act provides for an additional forum. Such additional forum was provided so as to enable the author to file a suit who may not otherwise be in a position to file a suit at different places where his copyright was violated. The Parliament while enacting the Trade and Merchandise Marks Act in the year 1958 was aware of the provisions of the 1957 Act. It still did not choose to make a similar provision therein. Such an omission may be held to be a conscious action on the part of the Parliament. The intention of the Parliament in not providing for an additional forum in relation to the violation of the 1958 Act is, therefore, clear and explicit. The Parliament while enacting the Trade Marks Act, 1999 provided for such an additional forum by enacting sub-section (2) of Section 134 of the Trade Marks Act. The court shall not, it is well well-settled, readily presume the existence of jurisdiction of a court which was not conferred by the statute. For the purpose of attracting the jurisdiction of a court in terms of sub-section (2) of Section 62 of the 1957 Act, the conditions precedent specified therein must be fulfilled, the requisites wherefor are that the plaintiff must actually and voluntarily reside to carry on business or personally work for gain."

"….For the purpose of invoking the jurisdiction of a court only because two causes of action joined in terms of the provisions of the Code of Civil Procedure, the same would not mean that thereby the jurisdiction can be conferred upon a court which had jurisdiction to try only the suit in respect of one cause of action and not the other. Recourse to the additional forum, however, in a given case, may be taken if both the causes of action arise within the jurisdiction of the court which otherwise had the necessary jurisdiction to decide all the issues."

In another case titled Dabur India Ltd. vs. K. R. Industries – (2008) 10 SCC 595, similar question arose as to whether the plaintiff can combine the two causes of action, one under the Copyright Act and the second under the Act of 1958, in a situation where the Court has the jurisdiction in so far as cause of action under the Copyright Act is concerned but has no territorial jurisdiction to entertain the cause of action relating to Act of 1958. The Single Judge as well as the Division Bench of the Delhi High Court relied on Dhodha House (Supra). The Division Bench held that the Delhi High Court had jurisdiction to try and entertain the suit insofar as the relief of infringement of copyright is concerned and returned the plaint only with respect to the relief of passing off. The Supreme Court while affirming the judgment of the Division Bench, inter-alia held as under:

"What then would be meant by a composite suit? A composite suit would not entitle a court to entertain a suit in respect whereof it has no jurisdiction, territorial or otherwise. Order II Rule 3 of the Code specifically states so and, thus, there is no reason as to why the same should be ignored."

The aforementioned two judgments are landmark judgments on the law point that any Court entertaining a composite suit must have territorial jurisdiction to try and entertain all causes of action based on which relief is claimed. A composite suit, otherwise, shall not be maintainable.

  1. EXPLANATION TO SECTION 20 CPC READ DOWN

In Indian Performing Rights Society Ltd. vs. Sanjay Dalia & Ors. – (2015) 10 SCC 151, mischief rule of Heydon was pressed into service before the Supreme Court while interpreting Section 62 of the Copyright Act, 1957 and Section 134 of Trademarks Act, 1999. It was contended on behalf of the Respondents that due to the enactment of the aforementioned provisions and the interpretation being accorded thereto, disproportionate counter mischief had arisen. The aforementioned provisions were enacted to cure the defect/mischief that the Plaintiffs/authors/proprietors of registered trademarks were faced with to file infringement proceedings as per Section 20 CPC i.e. at a place where the Defendant resides or carries on business or works for gain. Section 62 and Section 134 as aforementioned provided for an additional forum to the Plaintiffs to institute infringement proceedings at a place where they reside, carry on business or work for gain. However, the interpretation that the Plaintiff Companies can institute such proceedings at any of their branch offices in the country, even if the cause of action has arisen at another place where also the Plaintiffs have their branch/principal office, was causing undue harassment to the Defendants, which could not have been the intention of the legislature while enacting the said provisions.

The Plaintiffs/ Appellants on the other hand contended that words of the statute are clear and unambiguous and therefore Heydon's rule of mischief cannot be applied. The intention of the parliament is to be gathered from plain and natural meaning. Section 134 of Trademarks Act and Section 62 of Copyright Act are special rights created in favour of the Plaintiff and the Court cannot invoke the doctrine of reading down. The Plaintiffs/ Appellants relied on the decision of Dhodha House (supra) to contend that accrual of cause of action wholly or in part is not necessary in the case of Section 134 and Section 62.

The Supreme Court after considering the provisions contained in Section 20 of CPC, Section 62 of Copyright Act and Section 134 of Trademarks Act and the object of enactment of the said later provisions observed that interpretation of these provisions has to be such which prevents mischief of causing inconvenience to the parties. Taking note of such counter mischief, the Supreme Court held as under:

"The avoidance of counter mischief to the Defendant is also necessary while giving the remedy to the Plaintiff under the provisions in question. It was never visualised by the law makers that both the parties would be made to travel to a distant place in spite of the fact that the Plaintiff has a remedy of suing at the place where the cause of action has arisen where he is having head office/carrying on business etc. The provisions of the Copyright Act and the Trade Marks Act provide for the authors/trade marks holders to sue at their ordinary residence or where they carry on their business. The said provisions of law never intended to be oppressive to the Defendant. The Parliamentary Debate quoted above has to be understood in the manner that suit can be filed where the Plaintiff ordinarily resides or carries on business or personally works for gain. Discussion was to provide remedy to Plaintiff at convenient place; he is not to travel away. Debate was not to enable Plaintiff to take Defendant to farther place, leaving behind his place of residence/business etc. The right to remedy given is not unbridled and is subject to the prevention of abuse of the aforesaid provisions, as discussed above. Parliament never intended that the subject provisions to be abused by the Plaintiff by instituting suit in wholly unconnected jurisdiction. In the instant cases, as the principal place of business is at Mumbai the cause of action is also at Mumbai but still the place for suing has been chosen at Delhi. There may be a case where Plaintiff is carrying on the business at Mumbai and cause of action has arisen in Mumbai. Plaintiff is having branch offices at Kanyakumari and also at Port Blair, if interpretation suggested by Appellants is acceptable, mischief may be caused by such Plaintiff to drag a Defendant to Port Blair or Kanyakumari. The provisions cannot be interpreted in the said manner devoid of the object of the Act."

Relying on a case titled Sonic Surgical vs. National Insurance Co. Ltd. – 2010 (1) SCC 135, the Supreme Court held that plain and literal meaning of the words in a statute can be departed from in order to avoid absurdity. Patel Roadways' (supra) interpretation of Section 20 CPC was relied upon by the Supreme Court to confirm that no practical or undue difficulties or disadvantage would be caused to the Plaintiff if such interpretation is adopted. The Supreme Court, therefore, read down the Explanation of Section 20 CPC into Section 134 of Trademarks Act and Section 62 of Copyright Act to mean that in cases of infringement proceedings initiated under the said statutes, Plaintiff Corporation shall be deemed to carry on business at a place where its sole or principal office is situated, or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place. The decision in Dhodha House (supra) was not considered to be relevant as the issue with which the Supreme Court was dealing in IPRS was different.

This reading down of the Explanation to Section 20 CPC in IPRS (supra) was relied upon by the Division Bench of the Delhi High Court in the case titled Ultra Home Construction Pvt. Ltd. vs. Purushottam Kumar Chaubey and Ors. – 2016 (65) PTC 469 (Del) as under:

"By virtue of the Supreme Court decision in Sanjay Dalia (supra) this deeming provision contained in the explanation in section 20 of the Code has been read into section 134(2) of the Trade Marks Act, 1999 and section 62(2) of the Copyright Act, 1957 for the purposes of isolating the place where the plaintiff can be said to carry on business. It will be noted that though the expression "carries on business" is used in all the three provisions (i.e., section 20 of the Code, section 134(2) of the Trade marks Act, 1999 and section 62(2) of the Copyright Act, 1957), the deeming provision contained in the Explanation in section 20 of the Code has not been expressly incorporated in the other two provisions. But, the Supreme Court has, in the said decision, given the expression "carries on business" used in relation to a corporation in the context of a defendant in section 20 of the Code the same meaning when it is used in relation to a plaintiff under the said sections 134(2) and 62(2)."

The Division Bench of the Delhi High Court in the aforesaid decision contemplated four situations in the context of Plaintiff being a Corporation/Company and clarified in a tabulated form as to where the territorial jurisdiction would lie in each case. The said table is reproduced below:

S. No.

Place of Plaintiff's Principal Office

(Sole office in S. no. 1)

Place of Plaintiff's subordinate/ branch office

Place where cause of action arose

Place where Plaintiff can additionally sue under Section 134 (2) and Section 62 (2)

A

--

C

A

A

B

A

A

A

B

B

B

A

B

C

A

The IPRS and Ultra Home judgments have been followed by all High Courts and District Courts across the country in order to determine the question of territorial jurisdiction in trademark and copyright matters.

  1. "CARRIES ON BUSINESS" OR "PERSONALLY WORKS FOR GAIN"

Dhodha House (supra) is also an authority on interpreting the expression "carries on business". In the said judgment, the Supreme Court explained the difference between the expressions "carries on business" and "personally works for gain". The Supreme Court held that for the purpose of carrying on business, personal presence of the man or company is not necessary. What is necessary is that the person or the company has an interest or control in a business at that place, or a direct profit or share in the business. The Supreme Court laid down three conditions which must be satisfied in order to conclude that a person/company is carrying on business at a particular place namely a) Exclusive agent acting on behalf of the person/ company, b) Agent in the strict sense of term and c) Essential part of business must take place at that place.

In Archie Comic Publications Inc. vs. Purple Creations Pvt. Ltd. – 2010 (44) PTC 520 (Del), the Division Bench of the Delhi High Court was concerned with a fact situation where the Appellant claimed to be "carrying on business" in New Delhi on the basis of its books being imported there. The Appellant relied upon a single invoice issued by them to one Variety Book Depot, New Delhi to contend that it was carrying on business in New Delhi through such imports. The Appellant's claim was that Courts in Delhi had the territorial jurisdiction to try and entertain the suit by virtue of Section 134 of the Trademarks Act, 1999. The Division Bench relied on Dhodha House (supra) and came to a conclusion that Variety Book Store was not a special agent of the Appellant and the Appellant had no control over it. Therefore it held that it cannot be said that the Appellant carries on business in Delhi or personally works for gain in Delhi to vest the Delhi Courts with jurisdiction.

There is still uncertainty on the question as to whether an Indian licensee subsidiary of a foreign company who is the registered proprietor of the trademark can be said to be carrying on business in India for the purposes of Section 134 (2) of the Trademarks Act. A Single Judge of the Delhi High Court had taken a view in Exxon Mobil Corporation & Ors. vs. P. K. Sen – MANU/DE/2127/2016 that the foreign registered proprietor company was carrying on business in India through its licensee subsidiary within the meaning of Section 134 (2) of Trademarks Act, as it complied with all the three conditions of 'carrying on business' as laid down in Dhodha House (supra). The Single Judge relied upon the Supreme Court judgment of Exphar SA Vs. Eupharma Laboratories Ltd. - (2004) 3 SCC 688 where it was held that an agent of the copyright owner impleaded in the suit as the second plaintiff is a 'person instituting the suit' within the meaning of Section 62 (2) of the Copyright Act and hence through him, the copyright owner was carrying on business within the jurisdiction of the Delhi High Court. Such an agent may not be entitled to any relief in the suit but that is no reason for holding that it was not a person who had instituted the suit, within the meaning of Section 62(2) of the Copyright Act. However, in appeal titled as P. K. Sen vs. Exxon Mobil Corporation and Ors. – 2017 (69) PTC 271 (Del), the Division Bench of the Delhi High Court reversed the said view and held that a 'permitted user' has no right to institute a suit for trademark infringement as per Section 53 of the Trademarks Act. The suit filed on the basis of averments that the foreign registered proprietor (Plaintiff No. 1) was carrying on business in Delhi through its permitted user (Plaintiff No. 2) was returned on the ground of lack of jurisdiction. A Special Leave Petition was filed challenging the said judgment of the Division Bench, however, the same was dismissed in limine.

The uncertainty in this position of law flows from the subsequent judgment of the Delhi High Court in the case titled Zenner International GMBH & Co. Kg and Ors. vs. Anand Zenner Company Pvt. Ltd. - 2018 (73) PTC 618 (Del), where the Delhi High Court dismissed the application of the Defendant filed under Order VII Rule 10 CPC for return of plaint, inter-alia on the ground that Plaintiff No. 1 who was a German Company was carrying on business in Delhi through its licensee i.e. Plaintiff No. 2 and hence the Delhi Courts would have territorial jurisdiction to try and entertain the suit as per the averments made in the plaint. The Ld. Single Judge held that there is a judgment passed by the Division Bench of the Bombay High Court i.e. Harman Overseas v. Dongguan TR Bearing Company Limited – 2017 (72) PTC 55 (Bom), which has taken a contrary view to that of the DB of Delhi High Court in P. K. Sen (supra). In light of the contrary views, the Ld. Single Judge in another case titled H&M Hennes & Mauritz AB and Ors. vs. HM Megabrands Pvt. Ltd. and Ors. – 2018 (74)PTC 229 (Del), has held that the judgment of the DB of Delhi High Court in P. K. Sen (supra) needs "reconsideration".

  1. CAUSE OF ACTION - OBJECTION BY WAY OF DEMURRER

In addition to Section 134 of the Trademarks Act and Section 62 of the Copyright Act, Plaintiffs also resort to Section 20 (c) of the CPC in order to invoke jurisdiction of a particular court. The mere fact that Plaintiff has averred in the plaint that cause of action has arisen in the territorial jurisdiction of a particular court is considered enough for that court to entertain the suit. It has been held in the case of RSPL Ltd. vs. Mukesh Sharma and Ors. - 2016 (68) PTC 178 (Del) that for the purpose of deciding an application under Order VII Rule 10 CPC, averments made in the plaint have to be taken as correct. The Court in the said case was faced with a situation where the Plaintiff had averred in the plaint that the "defendants are committing the impugned acts within the jurisdiction of this Court by 'conducting, soliciting, rendering the impugned services under the impugned trade name'." The Ld. Single Judge allowed the application of the Defendants on the ground that the Plaintiff has made vague assertions in the plaint bereft of any particulars and without any documents. The Division Bench in appeal placed reliance on the judgment of Exphar SA and Ors. vs. Eupharma Laboratories Ltd. and Ors. - (2004) 3 SCC 688, overruled the decision of the Single Judge and held that objection of territorial jurisdiction when taken by way of a demurrer, averments made in the plaint must be taken to be true, and since the Plaintiff had made a specific assertion in the plaint that the Defendants were conducting, soliciting and rendering the impugned services in Delhi, Delhi Courts would have territorial jurisdiction to entertain the suit. The Court held that the Plaintiff was not required to prove its averments at the stage of adjudication of the application under Order VII Rule 10 CPC.

  1. CAUSE OF ACTION - QUIA TIMET

As per Black's Law Dictionary, Quia Timet means "because he fears". It is a legal doctrine that allows a person to seek equitable relief from future probable harm to a specific right or interest. We have seen that the Quia Timet actions are brought by Intellectual Property Rights owners against the Defendants if they have a reasonable and credible apprehension that the impugned product is going to be launched/marketed/sold by the Defendants. This reasonable and credible threat constitutes a cause of action as held in the judgment of Allied Blenders and Distillers Pvt. Ltd. vs. R. K. Distilleries Pvt. Ltd. - 2017 (69) PTC 493 (Del). In the said case, the Plaintiff had pleaded in the plaint as under:

"…The scale of business and activity of the Defendant is not known at present and it is apprehended as being highly likely that the product sold under the impugned mark "Regular Choice" will be made available in New Delhi. As the scope and extent of the Defendant's business is not known at present, it is believed that they have a reasonably large scale business around India and it is therefore strongly apprehended that they will launch the impugned product in New Delhi and would be available within the jurisdiction of this Hon'ble Court. It is submitted that the threat that the Defendants will sell and / or offer for sale the impugned product within the jurisdiction of this Hon'ble Court is credible and imminent. There is a reasonable apprehension that the Defendant is likely to sell its products bearing the impugned mark and label within the jurisdiction of this Hon'ble Court. Thus, giving rise to a substantial and integral part of the cause of action within the jurisdiction of this Hon'ble Court. This Hon'ble Court therefore has the necessary jurisdiction by virtue of Section 20 of the Code of Civil Procedure, 1908."

The Division Bench of the Delhi High Court while relying on various judgments on the aspect of Quia Timet actions including Teva Pharmaceutical Industries Limited vs. Natco Pharma Limited - 2014 210 DLT 591 (DB) and Pfizer Product Inc. v. Rajesh Chopra and Others - 2006 (32) PTC 301 (Del) held that:

  1. Reasonable and credible threat/ apprehension are ingredients of a quia timet action and constitute cause of action for instituting a suit.
  2. Considerations with regard to territorial jurisdiction under Order VII Rule 10 CPC are different from that in the context of an injunction application under Order 39 Rules 1 and 2 or an issue framed in the suit with regard to territorial jurisdiction. With regard to Order VII Rule 10, averments made in the plaint must be taken to be correct. Whereas with regard to Order 39 Rules 1 and 2 and issue framed in the suit with regard to territorial jurisdiction, the standard of proof is higher, and the court examines the pleadings of both parties prima facie. An injunction can even be refused if the Defendant proves prima facie that there is a highly debatable case of lack of territorial jurisdiction.

  1. MEANINGFUL READING OF THE PLAINT

Although, the principle that 'averments in the plaint must be taken to be correct' while deciding a challenge to territorial jurisdiction by way of a demurrer, is well established and recognized in a catena of judgments, it cannot be denied that such a principle can also be misused by the Plaintiffs to deliberately harass the Defendants by forum shopping. A vague or unprecise statement in the plaint by the Plaintiff regarding a cause of action (actual or quia timet) having arisen within the territorial jurisdiction of a particular Court may be enough for the Plaintiff to invoke jurisdiction of that Court, at least till the trial begins. There have been instances where the Courts have noted that the Plaintiffs have tried to invoke jurisdiction of a particular court by clever drafting of the plaint. The Delhi High Court in Radico Khaitan Ltd. vs. Nakshatra Distilleries & Breweries Ltd. and Ors. - 2017 (70) PTC316 (Del) while deciding an application under Order VII Rule 10 CPC in a quia timet action held that clever drafting and use of the words such as 'dynamic effect' and 'credible and imminent threat' cannot be permitted to create territorial jurisdiction of the Court. The Court in the said case noted that for the Defendant to be able to launch its products in Delhi, it should have atleast applied for an Excise license in Delhi. It was an admitted case that the Defendant had not obtained approval from the Excise Authorities which was a mandatory procedure. Such procedure having not been initiated, it could not be said that the alleged threat to the Plaintiff that the Defendant will launch its products in Delhi was real or imminent so as to constitute a cause of action for a quia timet action. The Court also held in spirit of IPRS judgment (supra) that "where sales have already been commenced at place of subordinate office of the plaintiff and there is merely a threat at the place of principal office of plaintiff and the defendant is located at the place of subordinate office, applying the principles of forum conveniens, Section 134 can be invoked at place of subordinate office and not place of principal office of the plaintiff."

The aforesaid judgment has been challenged in appeal before the Division Bench and an interim order was passed by the DB staying the effect and operation of the aforementioned order of the Single Judge which is continuing till date.

  1. CAUSE OF ACTION - WEBSITES

In todays' day and age of digitization, and also globalization, more and more commercial transactions are taking place online on websites as well as mobile/desktop applications. The reach of internet is such that websites or mobile applications can be accessed from anywhere in the world. The consumer sitting at his/her home can enter into a commercial transaction with a vendor who is thousands of miles away physically.

Intellectual Property disputes are also quite common in the online world. A website may be advertising a mark which infringes a registered trademark, or selling products under the infringing mark. Similarly, copyright in a work may be infringed online if the same is published online without the consent/permission/license of the copyright owner, subject to exceptions. In case of all disputes arising online, including IP disputes, the question that became relevant was as to which Court would have the territorial jurisdiction if a dispute takes place between the parties involved in an online commercial transaction.

The Hon'ble Delhi High Court in the case of Banyan Tree Holding (P) Ltd. vs. A. Murali Krishna Reddy and Ors. – 2010 (42) PTC 361 (Del) was dealing with a passing off suit where neither the Plaintiff nor the Defendant was located within the territorial jurisdiction of Delhi Courts. The Plaintiff's registered office was in Singapore whereas the Defendants were located in Hyderabad. However, the Defendants were operating a website namely www.makprojects.com and they had advertised their new project "Banyan Tree Retreat" on the said website at the URL www.makprojects.com/banyantree. The Plaintiff had invoked jurisdiction on the basis of Section 20 (c) of CPC claiming that the cause of action has arisen within the jurisdiction of Delhi High Court inasmuch as the Defendants were soliciting their project under the impugned mark "Banyan Tree Retreat" through the above mentioned link which was accessible in Delhi. The Plaintiff averred that the said website was not a passive website but sought feedback and input from its customers through an interactive web page.

The Single Judge noted that there were disparate decisions of the Single Judges of the Delhi High Court in the cases of Casio India Co. Ltd. v. Ashita Tele Systems Pvt. Ltd. - 2003 (27) PTC 265 (Delhi) and India TV v. India Broadcast Live - 2007 (35) PTC 177 on the issue of territorial jurisdiction in trademark and copyright cases relating to internet based activity. In Casio (supra), the Court had held that the access to the website is sufficient to vest the Court with jurisdiction. Whereas in India TV (supra), the Court took a narrower approach and held that mere accessibility of the website would not clothe the Court with jurisdiction. The website needs to be interactive permitting the browsers to subscribe to the services. Even the level of interactivity is to be taken into account and limited interactivity may also not be sufficient for a Court to exercise jurisdiction.

The Single Judge therefore referred the matter to the Division Bench for an authoritative consideration which after examining the law as developed over time in the USA, UK, Canada and Australia answered the questions as follows:

"For the purposes of a passing off action, or an infringement action where the Plaintiff is not carrying on business within the jurisdiction of a court, and in the absence of a long-arm statute, in order to satisfy the forum court that it has jurisdiction to entertain the suit, the Plaintiff would have to show that the Defendant "purposefully availed" itself of the jurisdiction of the forum court. For this it would have to be prima facie shown that the nature of the activity indulged in by the Defendant by the use of the website was with an intention to conclude a commercial transaction with the website user and that the specific targeting of the forum state by the Defendant resulted in an injury or harm to the Plaintiff within the forum state."

"…For the purposes of Section 20(c) CPC, in order to show that some part of the cause of action has arisen in the forum state by the use of the internet by the Defendant the plaintiff will have to show prima facie that the said website, whether euphemistically termed as "passive plus" or "interactive", was specifically targeted at viewers in the forum state for commercial transactions. The plaintiff would have to plead this and produce material to prima facie show that some commercial transaction using the website was entered into by the Defendant with a user of its website within the forum state resulting in an injury or harm to the plaintiff within the forum state."

"…The commercial transaction entered into by the Defendant with an internet user located within the jurisdiction of the forum court cannot possibly be a solitary trap transaction since that would not be an instance of "purposeful" availment by the Defendant. It would have to be a real commercial transaction that the Defendant has with someone not set up by the plaintiff itself. If the only evidence is in the form of a series of trap transactions, they have to be shown as having been obtained using fair means. The plaintiff seeking to establish jurisdiction on the basis of such trap transactions would have to aver unambiguously in the plaint, and also place along with it supporting material, to prima facie show that the trap transactions relied upon satisfy the above test."

Banyan Tree (supra) over the years has been the most cited judgment in challenges relating to territorial jurisdiction of internet based disputes. It lays down the guidelines very specifically with regard to the amount of burden of proof on the Plaintiff to show that because of an activity on the internet, cause of action has arisen within the territorial jurisdiction of a particular Court. Most interestingly, the guidelines use the words "prima facie" which is a higher standard than the "averments in the plaint have to be taken as true" principle. Therefore, it is not enough for a Plaintiff to merely plead in the plaint that the website is interactive and that commercial transactions can be concluded through it. The Plaintiff in such cases has to prima facie prove these averments even if the objection of territorial jurisdiction has been taken by way of a demurrer. The use of the words prima facie by the Court also means that the Court in such cases while deciding an application under Order VII Rule 10 CPC can look into the written statement as well, as it has to come to a prima facie conclusion that there is 'purposeful availment', 'intention to conclude commercial transaction' and 'specific targeting of the forum state'. The Court also uses the words "produce material" which means that documents also are required to be filed by the Plaintiff to prove its averments prima facie. This higher standard of proving facts relating to territorial jurisdiction is a departure from the general rule and puts some responsibility of proof on the Plaintiff with regard to what it pleads even at the initial stage of the suit while invoking territorial jurisdiction of a particular court.

  1. WHAT CONSTITUTES CAUSE OF ACTION

In a recent but much relevant judgment of Burger King Corporation vs. Techchand Shewakramani & Ors. – 2018 (76) PTC 90 (Del), the Delhi High Court has comprehensively explained as to what constitutes cause of action in a trademark dispute. The Plaintiff in the said case was a US based company whereas the Defendants were located in Mumbai, Maharashtra. The Plaintiff was aggrieved of the Defendants' use of the mark 'Burger King Restaurant Pvt. Ltd.' and alleged that such use infringed its registered trademark 'Burger King'. The Plaintiff filed a suit in the Delhi High Court relying on Section 134 (2) of the Trademarks Act, 1999 and Section 20 (c) of CPC. It was averred by the Plaintiff that cause of action arose within the territorial jurisdiction of Delhi High Court as it was the apprehension of the Plaintiff that the Defendants would expand their operations under the impugned mark in New Delhi, and such a threat/apprehension was credible and imminent. The Plaintiff also averred that the Defendant No. 7 operated a website where it was advertising the mark 'Burger King Restaurant Pvt. Ltd.' and specifically targeting customers in Delhi. In order to prima facie prove these averments, the Plaintiff filed printouts from the said website of Defendant No. 7 which showed that the Defendant No. 7 provided for a franchise form on its website which people can fill and ask for being franchisee of the Defendants – Burger King. Perusal of the said webpage also revealed that under the 'Coming Soon' and 'Street Cart Locations' section, Delhi was clearly mentioned.

The Court also looked into a reply affidavit filed by Defendant No. 3 which revealed that in response to newspaper advertisements for franchisee of Burger King Restaurants Pvt. Ltd., numerous applicants applied from different parts of the country. The documents filed along with the said reply affidavit showed that there were many franchisee requests which were received from different areas of New Delhi. This prima facie enquiry led the Court to observe that the Defendants were actively promoting and intending to expand their business in New Delhi.

The Court then explained that in a matter relating to rights in a trademark, what constitutes cause of action is the 'use' of the trademark in the course of trade, and where 'use' takes place, that is the place of suing as per Section 20 (c) CPC. Use of a trademark can be 'upon' or 'in relation to goods'. The Court referred to Section 29 (4) to (7) and Section 56 (1) and (2) of the Trademarks Act, 1999 clarified that it is not necessary that the trademark must always be affixed to the goods or that there must be actual sale for it to be used in commerce. The acts of advertising/promotion of the mark in a territory, inviting franchisee queries from a territory, sourcing goods from a territory, manufacturing/assembling goods in a territory, undertaking printing of packaging in a territory, exporting goods from a territory would constitute 'use' of the mark in that territory. In this backdrop, the Court held that Defendants' acts of promoting, seeking franchisee requests, entertaining franchisee enquiries, expressing intention to expand in Delhi, allowing franchisees to apply through website would constitute use of the mark in Delhi, and hence Delhi High Court had the territorial jurisdiction to entertain the suit.

CONCLUSION

The main takeaways from the above cases are as follows:

  • A Company/ Corporation, as per the explanation of Section 20 CPC, is deemed to carry on business at a place where the Defendant has its sole or principal office, but if the Defendant has more than one office, then it is deemed to carry on business at such place where it has its subordinate office and the cause of action has arisen, and a suit under Section 20 (a) CPC can be filed only at such place.

  • The above interpretation of Explanation of Section 20 CPC has been read down into Sections 134 (2) of the Trademarks Act, 1999 and Section 62 (2) of the Copyright Act, 1957 in the IPRS judgment (supra) which means that in a suit for trademark/copyright infringement, where Plaintiff has more than one office, it shall be deemed to carry on business where it has its office and cause of action has also arisen. The Plaintiff cannot file a suit at the place of its principal office, in a case where cause of action has arisen at another place where it also has its subordinate office.

  • Composite suits filed seeking reliefs of Trademark/ Copyright infringement or passing off would not be entertained by the Court if it has the jurisdiction to grant one relief but not the other. The Court must have jurisdiction to grant all reliefs claimed in a suit, and the suit must be returned qua the relief the court does not have jurisdiction.

  • The expression 'carrying on business' does not mean that the person/entity must be personally present. A person/entity can carry on business at a particular place through an exclusive agent and if essential part of the business is taking place at that place. The position of law in Delhi, however, needs to be reconsidered as to whether subsidiary licensee of a foreign company who is the registered owner of the trademark can be said to be carrying on business at place on behalf of the said company.

  • Section 134 (2) of the Trademarks Act, 1999 as well as Section 62 (2) of the Copyright Act, 1957 have been held to be in addition to and not in exclusion of Section 20 of the CPC. Plaintiff can invoke jurisdiction of a particular Court only by making out a cause of action in that territory and no reference to Section 134 of the TM Act or Section 62 of the Copyright Act is required.

  • Suits can be instituted at a place where the Plaintiff believes and avers that there is a credible and imminent threat i.e. a Quia Timet action.

  • When an objection with regard to territorial jurisdiction has been taken by way of a demurrer, the Court only has to see the averments made in the plaint, and the same have to be taken as correct. The Court cannot go into truthfulness or falsity of the averments made in the plaint. The enquiry while deciding an application under Order VII Rule 10 CPC is different from a prima facie enquiry required in an application under Order 39 Rules 1 and 2 CPC. However, the Court must read the plaint meaningfully so as to avoid the possibility of forum shopping by the Plaintiff.

  • In cases where Plaintiff alleges cause of action having arisen at a particular place because of a website, it must be established prima facie by the Plaintiff that the website is an 'interactive plus' website i.e. it is not only interactive but is also capable of entering into a commercial transaction. The Plaintiff would have to produce material to show that the Defendant 'purposefully availed' and 'specifically targeted' customers in the forum jurisdiction to conclude a commercial transaction.

  • 'Cause of Action' in a trademark dispute means 'use of the mark in commerce'. 'Use of the mark in commerce' could be use 'upon' or 'in relation to' goods. Therefore not just the actual sale of goods bearing the impugned mark, but activities like advertising, promotion, manufacturing, printing, packaging, exporting, sourcing etc. also constitute use of the mark in commerce. As per Section 20 of the CPC, any place where such activities are being carried on would be considered a place where cause of action has arisen and would be sufficient to clothe the Court of that place with territorial jurisdiction.

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