EVASION OF JURISDICTION IN INTELLECTUAL PROPERTY INFRINGEMENT CASES (PART-1)
In the first part of this two-part blog series, the judicial approach to decide the jurisdiction in Intellectual Property Infringement cases when the issue of evasion of jurisdiction arises is discussed. Moreover, the second part of this blog series shall cover the loopholes and analysis in my conclusion. The jurisdictional aspect of Intellectual Property Rights is always a twofold territorial basis or pecuniary basis, and the aspect of evasion is overlooked in many cases so here the blog series is trying to highlight the impact of Evasion of Jurisdiction in IP Infringement Cases.
In 2017, there were 13.72 million patents across the world. Globally, the industrial designs grew by 5% to reach 3.75 million. In such scenario, majority countries have opted for the establishment of specialized chambers or divisions within existing civil or commercial courts that hear Intellectual Property (“IP”) cases exclusively or in addition to other disputes. Intellectual Property Rights (“IPRs”) are most of the national rights and globally we are not able to protect such rights much, in such a scenario jurisdiction of IP infringement cases always becomes questionable. Further, in recent times for all the IP holders, an evasion of jurisdiction is becoming a crucial point. The quality of justice surrounding IP disputes is material, there is a risk of harassment. On the other hand, there is a risk of wrong jurisdiction, to create havoc among all with weak infringement cases being brought in multiple jurisdictions. This is entirely unacceptable.
Insofar as the position in India is concerned, there is no long-arm statute as such which deals with jurisdiction on IP infringement cases, so sufficient connection and the cause of action is needed for reasonable exercise of jurisdiction. For deciding jurisdictions in every case ofIPR there are some bullet points like ‘carries on business’, and the application of the ‘effects’ test and the ‘sliding scale’ test is also very important. These tests cover specific injury or harm by the defendant to the Plaintiff in a particular jurisdiction but this cannot be measure in a territory aspect when harm and injury can be done by the defendant at more than one jurisdiction.
The court in the case of Burger King Corporation v. TechchandShewakramani & Ors noted that Section 134 of the Trademark Act and Section 62 of the Copyright Act are in addition to and not in exclusion of Section 20 of C.P.C, 1908 which covers territorial jurisdiction. The basic principle is that suits against infringement of IPR can be instituted only in the district court that exercises jurisdiction over the place where the cause of action wholly or partly arises, in the case where the plaintiff instituting the suit has an office in that jurisdiction. But in recent times deliberate evasion of jurisdiction is creating issues and jurisdiction must be established according to the place where wrong is done by Defendants.
In the case of Exxon Mobil Corporation v. Exoncorp Private Limited, the plea is based on Section 20 C.P.C., 1908 and the Defendant is offering services through an interactive website and he also promoted his business and services through various social media platforms. Here Plaintiff observed that the cause of action has arisen within Delhi but logically in website and online platform, a territorial jurisdiction cannot be determined as such.
In an extremely relevant IP case namely, Banyan Tree Holding (P) Limited v. A. Murali Krishna Reddy the plaintiff observed that the reputation and goodwill of the plaintiff’s business are affected through Defendant’s website which was being accessed in the forum state, here the forum state has territorial jurisdiction.TheCourt observed that the Plaintiff has to show that the Defendant engaged in some commercial activity in the ForumState by targeting its website specifically at customers within that State for establishing jurisdiction. Therefore, territorial jurisdiction is not limited to one place or forum state it covers all the places where the plaintiff would show the connection between the commercial activity of the defendant and the injury of the plaintiff.
Majorly three tests are always covered regarding jurisdiction, that is, (i) defendant purposefully availed himself of acting in a forum state, (ii) cause of action arises through the activity of the defendant and (iii) these acts must have sufficient connection.In the case of Indovax Pvt. Ltd v. Merck Animal Health and Ors, the Court held that it had territorial jurisdiction since the defendant's vaccines under the impugned trademark is available for sale in Delhi and also that the defendants through their agents are peddling their vaccines in Delhi. In such cases, jurisdiction cannot be territory-based and if defendants sell vaccines outside Delhi it will still be in the jurisdiction of Delhi. The question of jurisdiction upon an application under Order 7 Rule 11, the Court has to rely only on the averments of the plaint and accept it as gospel truth.
The reason is that there are so many cases which observed that the actual sale of the product within the jurisdiction of a Court is not essential for an act of infringement and passing off, on the contrary, an intention to sell is important for jurisdiction then the court has the territorial jurisdiction and evasion of jurisdiction cannot be held on the same footing of territorial jurisdiction.
Secondly, mere averments in the plaint are sufficient to invoke the jurisdiction of the Court. In the case Glen Raven Mills Inc. v. Vaspar Concepts Pvt. Ltd. & Anr, the Court observed regarding jurisdiction that the defendants must be responsible for sending out the good to the district and it must liable to deceive intending purchasers. Along with that, it is necessary to show that the supply is on a commercial scale. In such a scenario, if supply is done outside the territorial jurisdiction then jurisdiction would expand.
In Himachal Pradesh Horticulture Produce Marketing and Processing Corporation Ltd. v. Mohan Meakin Breweries Limited, the Court while dealing with the question of jurisdiction has held that defendant must have a commercial sale of the goods under the impugned trademark within the jurisdiction of the court. This case observed that the defendant can be dragged into litigation in any part of the country by only adducing flimsy kind of evidence that has been adduced in the present case. It established that evasion of jurisdiction is not on the same footing as that Court does not have territorial jurisdiction.
In the case of Laxman Prasad v. Prodigy Electronics Ltd and Another, the Supreme Court observed that the Delhi court has jurisdiction even when the agreement was executed in a foreign country and the defendant was a resident of Ghaziabad (Uttar Pradesh) but in both of the scenario it cannot take the jurisdiction of Delhi Court because of the averment made in the plaint clearly shows that a part of the cause of action had arisen within the local limits of Delhi and in such scenario, evasion is not at par with the territory. On the other hand, it has been enunciated that if only a small part of the cause of action has arisen within the territorial jurisdiction of a particular Court, it is not bound to entertain the petition.
In the case of Foundry Visionmongers Ltd. v. Satyanarayana Reddy S.,the Court observed that cause of action plays a crucial role in comparison of territorial jurisdiction and that is why evasion of jurisdiction is not the same as territorial jurisdiction. In times of evasion, the jurisdiction can be determined through various other tests.
In cases of commercial transaction, transaction takes place over the internet and the cause of action is deemed to have arisen at the place where the customer carried out his/her part of the online transaction in such scenario evasion of jurisdiction happens a lot and recently in the case of Impresario Entertainment & Hospitality Pvt. Ltd. v. S&D Hospitality, the Court clarified its position on jurisdiction for the cases where businesses have online accessibility and observed that effect test is necessary for the same.
In the case of Renaissance Hotel Holdings, Inc. v. B. Vihaya Sai, the Court refused to entertain the suit on the basis that online booking from Delhi of a hotel room situated in the USA or situated at Bangalore, the jurisdiction of the High Court of Delhi cannot be invoked based on territorial jurisdiction. Hence, this judgment in the case has re-defined the trend which must be followed by the Courts in such cases. In the case of Millennium & Copthorne International Limited v. Aryans Plaza Services Private Limited & Ors., the loophole of territorial jurisdiction is beautifully covered through the following words,
"Per my understanding, an interactive website cannot be targeted to any particular city or state of India and would be identically accessible throughout, at least India, wherever the reach of the internet is. I have been asking this question in several cases but have not got any reply thereto."
The same applies to sales and other actions. On these grounds, the Court can dismiss the application for rejection plaint under Order 7 Rule 11 of C.P.C., 1908 because in such a scenario territorial jurisdiction is required to entertain the suit. Regarding jurisdiction for IP disputes, there are so many key points like the purposeful availment, minimum contact or effect test but also the special provisions under the respective IP enactments in India.
In Archie Comic Publications Inc v. Purple Creations Pvt Ltd, Delhi High Court dealt with a case of infringement and passing off of the trademark “ARCHIES”. The defendant is operating their website from different parts of India, and it can be accessed from anywhere in India including Delhi and advertisement also took place so territorial jurisdiction is not limited to Delhi only.
In a very leading case Bensusan Restaurant Corp v. King, a trademark infringement case was brought by and a federal court declined to assert personal jurisdiction in New York because the claimed given by the website operator is that he didn’t receive any revenue from the forum state along with no advertisement and dissemination of telephone contact number to the residents of the forum states. The site only provided general information on Plaintiff’s location. This case observed that there is lacking “purposeful availment” on the part of the defendant. Here,no liability arises- this was also observed in the case of International Shoe Co v. Washington.For personal jurisdiction actual selling in the forum state is necessary. Moreover, all the places where selling would be done by Defendants, the court must have jurisdiction so evasion of jurisdiction cannot be overlooked through territorial jurisdiction.
This article has been written by Rachi Gupta, a final year law student at Vivekananda Institute of Professional Studies ,GGSIPU, New Delhi.