FICCI Webinar on 'Jurisdictional Issues in Intellectual Property Cases’
In spite of the availability of various legal provisions to choose appropriate jurisdiction for suit proceedings in IP disputes, the Indian judicial system faces problems and dilemmas. The abundance of commercial electronic transactions and online marketplaces has resulted in consumers being able to avail products and services from any part of the world, thus making jurisdictional matters more complicated.
The webinar titled ‘Jurisdictional issues in Intellectual Property Cases’ was conducted by the Federation of Indian Chambers of Commerce and Industry (FICCI), on 16th July 2021. The panellists present were: Hon'ble Mr. Justice K. S. Jhaveri (Retd.) Former Chief Justice, High Court of Orissa, Mr. Anubhav Kapoor, Director, Legal Affairs, Ford India and Mr. Pratik Chaudhari, Partner, Y. J. Trivedi & Co. Major topics discussed in the webinar are:
How to determine jurisdiction in IP cases?
Jurisdiction under Patents Act, Trademarks Act, Copyright Act and Designs Act.
Judicial trend on deciding jurisdiction in IP Cases.
Issues left unaddressed by the current legislation.
How to determine jurisdiction in IP cases?
IP Law is international in scope but territorial in nature. When making an application to register one’s intellectual property, every aspect is to be in compliance with the country’s requirements. There is confusion when existing laws are applied to a case that requires the usage of a new framework of conflict analysis.
Over the years, the WIPO and other international IP organisations have tried to harmonize the various jurisdictional conflicts and procedural stipulations that arise during registration. Some of these conventions and treaties are valid internationally.
The Patent Cooperation Treaty (PCT) for instance, streamlines patent registration and regulations in multiple countries. The Madrid Protocol also helps the filing process and trademark registrations, where a single application grants protection in over a hundred countries. Similarly, the Hague System deals with industrial designs.
In India, suits related to infringement can be filed in any court not lower than a District Court, and appeals from the orders of the District Courts are heard by corresponding High Courts having appropriate territorial jurisdiction. The exceptions to this rule are: Delhi, Bombay, Calcutta, Madras, Shimla, and Jammu and Kashmir, where the High Courts have original jurisdiction.
An appeal against an order passed by a single judge of a High Court having original jurisdiction will lie with the Division Bench of the same High Court comprising two judges. Alternatively, petitions against such appeals can be carried up to the Supreme Court subject to a grant of special leave of absence by the apex court.
Decisions of IP registries such as the Patent Office and the Trademark Office can also be brought in front of High Courts in the form of writs.
In order to increase efficiency and the speed of trials, the Commercial Appellate Division of the High Courts categorized IP disputes as commercial disputes and modified the procedure to fit timelines. Currently, only the Delhi and Bombay High Courts have Commercial Divisions to handle IP suits.
In July (2021), an Intellectual Property Division (IPD) was introduced in the Delhi High Court. This was triggered by the Tribunal Reform Rationalization and Condition of Service Ordinance, 2021. The sole objective of this Ordinance is to resolve existing appellate bodies and transfer their functions to judicial bodies. The IPDs have already taken up over 3000 cases and suits. The Intellectual Property Appellate Board (IPAB) also resolved under the above ordinance, and the pending matters and fresh cases were given away to the appropriate High Courts.
The Chief Justice of the Delhi High Court constituted a committee under the leadership of Justice Pratibha Singh and Justice Narula to have a streamlined and comprehensive review process to accommodate a large number of cases transferred from the IPAB. This committee submitted a report based on which the IPD was constituted.
Jurisdiction under Patents Act, Trademarks Act, Copyright Act and Designs Act.
Certain sections in Indian law talk about jurisdiction concerning IP:
Section 134 of the Trademark Act, 1999
Section 62 of the Copyright Act, 1957
Section 22 of the Design Act, 2000
Section 20 of the Code of Civil Procedure, 1908
It is observed that while Section 134 of the Trademark Act and Section 62 of the Copyright Act are notwithstanding anything contained in the Code of Civil Procedure (CPC), section 22 of the Design Act does not say anything about the same. The person whose right is infringed under Section 22 of the Design Act has the right to choose jurisdiction.
Similarly, for patents, there is a unique provision: if a counterclaim is filed, and the revocation of the filing is done, the suit shall be transferred to the corresponding High Court for decision.
There are observable distinctions between the provisions contained in all the Acts: In case of encroachment of trademarks, the plaintiff is given legroom. However, the other acts do not permit as much flexibility to the plaintiff.
The sections of the Trademark and Copyright Act discussed above dictate that the provisions of the CPC will not be taken into consideration when these two acts are involved in a case. In other cases, CPC is the main governing act.
The first fundamental judgement concerning this distinction - the famous ONGC Case, 1994, is convenient case law for when the cause of action is wrongly selected and there is a need to impose a penalty (Malvalue or Maliciously filed).
In conclusion, in the two acts where the CPC is debarred, you have to be cautious, whereas in the other case, jurisdiction depends on where CPC is applied and the residence or business location of the Defendant.
Judicial trend on deciding jurisdiction in IP Cases:
A critical guideline that courts have followed over the years is to expose the infringer using inconvenience as a tool rather than having to compel the sufferer to pursue the infringer.
The Bombay High Court in the case of Ultratech Cement Ltd. held that even if one of the plaintiffs had a place of residence or business within the jurisdiction of the Court, the Court would have entertained the suit. The mere existence of a subsidiary or subordinate place of residence would have allowed the plaintiff to carry on business under the Court’s jurisdiction even if no cause of action arises. This could have allowed them to file a suit of infringement and passing off of the trademark.
The court expanded the scope of its jurisdiction under Section 134 (2) of the Trademark Act to allow the filing of an infringement suit even if one of the plaintiffs had a place of residence or business under the jurisdiction of the District Court. This special provision under the Trademark Act is a deviation from Section 20 of the CPC, which states that the organisation needs to be carrying out business at its principal office in India or its subordinate office.
In the case of foreign trademarks, companies grant Trademark licenses to Indian subsidiaries for commercial use. Here, the licensee is also a plaintiff during cases of infringement. To prevent harassment of the defendant by the plaintiff through choosing inconvenient locations for filing of the suit, Section 62 of the Copyright Act was interpreted to enable the cause of action to be filed at the place of residence or business where the cause of action arose from.
Three fundamental conditions that must be satisfied in order to allow an entity to continue business within a court’s jurisdiction:
Presence of an agent who carries out business exclusively in the name of the principal agency.
The essential part of the business ought to take place in the principal agency.
The performance of the business in question must be satisfactory.
In web-based instances, the first two conditions may not apply.
If the seller facilitates a transaction virtually from a place and creates a contract to deliver the promised goods to the customer’s address, the seller’s place of residence can be considered. By way of several judgements, it was also established that the service provider could attract jurisdiction at places where customers made orders or reservations.
On the subject of cause of action, the determination of jurisdiction in an online context has been examined in the Banyan Tree Case.The cause of action arises where infringement or passing off occurs. In addition to physical sales, advertisements and promotions that violate IP Acts are also infringement, and thus, cause of action can arise.
Issues left unaddressed by the current legislation:
All the acts in power that are used to handle IP cases were created at a time of minimal internet knowledge and experience. The interpretation of these acts must be done in such a way that it enlarges their scope to determine the outcome of jurisdictional IP issues today. In case the jurisdiction is wrongly chosen by the litigant, it could stall the suit because the defendant might potentially have leverage over the plaintiff.
The judgement in the case of World Wrestling Entertainment V. M/S Reshma Collection and Ors (2014) was based on the Supreme Court judgement in the case of Bhagwan Das Khedia (1959). Thus, it is observed that issues related to internet jurisdiction for an IP case in 2014 are still supported by concepts from a judgement passed in the year 1959, when there was not much knowledge of the internet.
With regard to intermediaries, websites like Amazon, Snapdeal and Flipkart are means of connections between a trader and a buyer. When a defendant sells a good via an intermediary, the good gets delivered to a place. This location serves as the place of delivery of the goods.
The Honourable Single Judge of the Delhi High Court in the case of Amway India Enterprises Pvt. Ltd. and Ors. vs. 1MG Technologies Pvt. Ltd. and Ors (2019) stated that the intermediaries could be held liable in a suit because the IP being infringed is a part of the website itself, although according to the Intermediary Guidelines, these websites are exempted from the proceedings. However, in order to remove the infringing goods from the website, one must have an order from the Court.
Combination of two or more infringements of trademark, copyright and passing off:
This combination is called a Composite Suit. All chartered High Courts have a provision called Clause XII of Letters Patent, under which a plaintiff may seek leave of the Court, claiming maintainability even though the cause of action for passing off may not have arisen within the Court’s jurisdiction. If the Court is convinced, all three causes of action will be combined for the sake of trial. This privilege is not available to other High Courts of India because they do not have the provision of Letters Patent.
Commercial Courts Act, 2015: In S.D. Containers Indore v. Mold Tek Packaging, the defendant challenged the validity of the plaintiff’s design registration on the grounds of Section 19 of the Designs Act. Such suits are transferred to Section 22 before the respective High Courts of the State where the suit was originally filed. However, this suit was filed under the Commercial Courts Act, but there was no commercial division of the Madhya Pradesh High Court, where it was supposed to be transferred to, because it did not possess ordinary original jurisdiction, which lies only with the five chartered courts. Thus, the case was transferred to the Calcutta High Court and finally, to the Supreme Court.
Under Section 12(1) D of the Commercial Courts Act, it has been stated that the specified value of the intangible right has to be construed. There is no clarity as to whether valuation of the IP ought to be done to file the suit or if it should be filed merely on the basis of damages to be claimed from the defendant.
Jurisdictional IP complexities, especially ones that come under the ambit of online violations, are complicated. Every country has its own legal system which means that no single solution can be implemented. Numerous treaties and attempts at procedural harmonization on the international level have been introduced to simplify issues. While these measures would certainly help provide effective IP protection, the real achievement will depend on the extent of initiative taken by judicial bodies of the country in question. Favourably, the Indian legal system has taken note of this and has led a revolution towards protecting the interests of IP holders, as illustrated in the article.
CS (OS) No. 894/2008
1966 AIR 543, 1966 SCR (1) 656
CS (OS) 410/2018, CS (OS) 453/2018, CS (OS) 480/2018, CS (OS) 531/2018, CS (OS) 550/2018, CS (OS) 75/2019 and CS (OS) 91/2019