“The internet is becoming the town square for the global village of tomorrow.” – Bill Gates.
The commercial world has been significantly impacted by the internet. With the fast-moving commercial world online, it has become important to solve various legal questions that arise due to the challenges. The assessment of a court’s jurisdiction in cases of online transactions that result in trademark infringement is one of the contentious issues in the commercial market due to the evolving nature of intellectual property.
INTRODUCTION
Recently, the Delhi High Court in the case of Sivankalai v. The State and others has found that even if the defendant advertised its product while conducting business in Delhi, this did not provide the Delhi trial court jurisdiction to hear a trademark infringement lawsuit from the plaintiff. In the present case, owners of M/S Hari Ram and Sons, filed the petition, alleging trademark infringement by the defendant for using an identical name and conducting similar business. The defendant has objected to the petition on the ground that the trial court of Delhi has no territorial jurisdiction to try the suit.
Based on the defendant’s written declaration, the High Court concluded that the defendant’s economic activities were restricted to Uttar Pradesh and that there were no operations in the capital. The court further stated that Delhi was not the intended audience for the advertisement, which was primarily for clients in Uttar Pradesh. The court said, “It cannot be contended that the Delhi Trail Court would have gained the jurisdiction to accept the suit just because, in the course of their business, the defendants in the suit have advertised their products in various print media which may have spillover circulation in Delhi.”
The author in the blog post attempts to analyze the currently applicable jurisdiction of courts for trademark disputes in light of trademark law and leading rulings from the various Indian courts.
LEGISLATIVE FRAMEWORK
The most general provision relating to territorial jurisdiction in respect of trademark denotes under Section 20 of the Code of Civil Procedure, 1908 (CPC), which provides that a suit may be instituted at the court within whose jurisdiction:
- The defendant resides, carries on business, or personally works for gain; or
- Where a part of or the entire cause of action arises.
Section 134 of the Trademarks Act of 1999 expressly governs the matter of territorial jurisdiction (TM Act). In particular, Section 134 states:
“No suit (i) for the infringement of trademark; or (ii) relating to any right in a registered trademark; or (iii) for passing off arising out of the use by the defendant of any trademark which is identical or deceptively similar, is to be instituted in any court inferior to a district court having jurisdiction to try the suits”.
ANALYZING THE PRESENT SCENARIO
Intellectual property conflicts are rather common in the online world, where a website can be promoting a mark that violates a recognized brand or item. When a disagreement arises between the parties involved in an online business transaction, the question of which court would have territorial jurisdiction now becomes important. It can be exceedingly challenging to determine where a plaintiff or defendant can be considered to be doing business or where the cause of action arises in matters involving services offered through an internet website or other mobile applications.
In Dhodha House v. SK Maingi, the Supreme Court outlined three essential requirements that must be met to prove that an entity conducts business within the jurisdiction of a court:
A) The location must host an essential component of the business;
B) There must be an agent there who solely conducts business for the principal.
But in the instance of World Wrestling Entertainment Inc. v. Reshma Collection, the Division bench of the Supreme Court ruled that the sole need for web-based businesses is that their core operations take place within the court’s territorial jurisdiction.
The Banyan Tree Holding Ltd. v. A. Murali Krishna Reddy and Ors., is the most cited judgment, in cases related to the determination of territorial jurisdiction of internet-based trademark disputes.
- FACTUAL BACKGROUND
In the present case, while the defendant’s registered office was in Hyderabad, the plaintiffs were in Singapore. On the defendant’s website, www.makeprojects.com, they promoted their project, the “Banyan Tree Retreat.” The defendant was promoting their business through a website that was accessible in Delhi when the plaintiff filed a lawsuit in the Delhi High Court for trademark infringement.
- DECISION
The Delhi High Court referred the case to the Division bench for authoritative instructions on the subject due to the Single Judge bench’s inconsistent rulings on issues of territorial jurisdiction in matters of trademark infringement including internet-based activities. The Division Bench noted:
“For a passing off action, or an infringement action where the plaintiff is not carrying on his business within the jurisdiction of a court, and in the absence of a long-arm statute, to satisfy the forum court that it has jurisdiction, 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 showing that the nature of the activity indulged in by the defendant by the sue of use of the website was intended 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.”
- ANALYSIS
Therefore, the court established the following factors as necessary to establish that the internet was used in the jurisdiction to give birth to the cause of action:
- Specific targeting of those customers;
- Completion of a business transaction with those customers;
- Damage to the plaintiff’s reputation, business, or goodwill.
Thus, the court to restrict forum shopping puts a high standard on the plaintiff in cases of the jurisdiction in the matter of internet-based transactions. Even if the territorial jurisdictional objection has been raised via a demurrer, the plaintiff in such situations must prima facie demonstrate these averments. The Court also employs the phrase “produce material,” which suggests that papers must also be provided by Plaintiff to establish the plausibility of its claims. It deviates from the normal rule and places some burden of proof on the Plaintiff concerning the allegations it makes even at the outset of the lawsuit while claiming territorial jurisdiction of a particular court.
CONCLUSION
The development of the internet has made the possibility of legal action for infringement of protected marks on commercial transactions frequent. The court in Banyan Tree(supra) established a strict standard to establish the cause of action and jurisdiction in matters involving internet transactions. The same is true for claims that are brought in the future with the argument that jurisdiction is granted in the locations of the actual commercial transaction. These legal precedents have repeatedly challenged the argument that the plaintiff has forum shopping rights because of online product sales. What is required is a standardized procedure to be followed in jurisdictional disputes involving online transactions. Therefore, it is necessary to have particular laws that deal with the jurisdictional issue.
~Aaryan Dwivedi, GNLU, Gandhinagar
