JURISDICTIONAL ISSUES IN IPR LAWS IN THE AGE OF INTERNET
The principle of territoriality is being questioned with the advent of digitalization and globalization of trade and commerce where the scope of protection is not limited to a territory
IP is international in scope but very territorial in nature
Every country has its own patent, trademark and design law, and a person or company requiring to protect their intellectual property (IP) in a particular country must make an application for patent/trademark or design in that country, in accordance with the requirements of that country. Similarly, local laws can apply to patents, trademark, industrial designs copyright, and other forms of intellectual property in each jurisdiction. Though IP is international in scope, it is very territorial in nature. Organizations like World Intellectual Property Office (WIPO), have created a certain level of harmonization of laws practices and procedures set out in conventions, treaties allow for applications and registrations to be made on an international and regional basis. For example, The Patent Cooperation Treaty (PCT) streamlines the process of filing patents in multiple countries. By filing one patent application, applicants can concurrently seek protection in up to 152 countries all over the world. The Madrid Protocol also makes it easier to file for trademark registration in multiple countries; an applicant can concurrently seek protection in up to 100 countries. Similarly, the Hague System for the International Registration of Industrial Designs provides a practical business solution for registering up to 100 designs in over 66 territories through filing one single international application.
Concept of territoriality is inseparable from jurisdiction
The ever-escalating importance of intellectual property in international and domestic commerce is remarkable. Most obvious is the impact of electronic commerce and the growth of the internet as a selling medium, a forum that transcends national boundaries and bears no physical location. The digitalization and globalization of trade and commerce has enabled inventions, designs, brands or copyright works to easily cross physical and cyberspace borders. However, the concept of territoriality is inseparable from jurisdiction. Commercialization and infringement of intellectual property in the true sense have become multi territorial. These are giving rise to issues of jurisdiction and applicable law in cases where the intellectual property rights' (IPR) protection is not limited to a territory. The notion of territoriality as applied in the classical framework of conflict analysis is ambiguous. The principle of territoriality is being questioned with the advent of digitalization and globalization of trade and commerce where the scope of protection is not limited to a territory. Protecting intellectual property in the global markets poses serious challenges as infringement in case of Intellectual property are frequently connected to more than one country, either because the infringer or the right holder is located abroad or because the infringement has been committed in a different country.
Jurisdictional challenges in today's digital age
Globalization and commercialization of intellectual property activities has created multiple challenges. The process of globalization has not only paved the way for evolution of international norms for protection of intellectual property but has also changed the face of the law protecting it. The world has witnessed that the International convention on the Trade Related Aspects of Intellectual Property Rights (TRIPs) has brought certain fundamental changes in the world of intellectual property. The trend of progressive harmonization of Intellectual Property laws will lead to greater simplification and expediency in the acquisition and protection of intellectual property. This is likely to affect the very foundation of the framework of the substantive and procedural laws. The jurisdictional challenges in today's age of fast communication, have invited various viewpoints from academicians, the judiciary and legislators for their resolution including significant changes in the existing legal framework. Internet being one of the most significant changes in the field of information technology requires more than mere adjustment in the law governing it. Therefore, the principle of Law that intellectual property and the rules governing intellectual property rights are territorial by nature becomes more complex. In order to file a complaint, it is essential to determine which courts have jurisdiction over the case. Jurisdictional rules provide for the nexus between the state, activity and the person involved in any litigation.
Jurisdiction overview of IP matters and recent developments in India
At a high level as per the law In India, a suit for infringement of trademark, copyright or patents can be filed in a court not lower than a district court. The exceptions to this are the High Courts of Delhi, Calcutta, Madras, Bombay, Shimla, and Jammu and Kashmir, which are courts having original side jurisdiction. Appeals from orders of the district court are heard by the corresponding High court having appropriate territorial jurisdiction. Similarly, an appeal against an order passed by a single judge of a high court having original side jurisdiction will therefore lie with a division bench of the same high court comprising two judges. The decisions in such appeals can be challenged up to the Supreme Court of India subject to grant of special leave by the apex court.
High courts also exercise writ jurisdiction, invoked for the violation of fundamental rights and other legal rights of citizens and non-citizens alike. Writs are issued by courts against public bodies and writ jurisdiction can be directly invoked against decisions of various IP registries such as the Patent Office, Trademarks Registry etc., when there is a violation of principles of natural justice or other principles enshrined in the Constitution.
Moreover, to increase the efficiency and speed of trial in IP disputes, the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 categorized IP disputes as commercial disputes and modified procedural law to expedite and manage their timeline. The Act directed the creation of commercial divisions within high courts and currently, the Delhi and Bombay High Courts have set up commercial divisions to manage IP suits.
Creation of Intellectual Property Division (IPD)
In a recent press release dated July 7, 2021, we were all informed that Delhi High Court creates Intellectual Property Division (IPD) to deal with intellectual property rights (IPR) matters. The creation of the Intellectual Property Division (IPD) in the High Court of Delhi is a significant step which is in line with global practices in this regard. Such IP Divisions or IP Courts, which exclusively deal with IPR matters, already exist in UK, Japan, Malaysia, Thailand, China etc., The creation of IPD with comprehensive Rules governing IPR matters is a momentous step taken towards efficient disposal of such matters.
This was triggered by the fact that The Tribunals Reforms (Rationalization and Conditions of Service) Ordinance, 2021 was promulgated by the President of India and was notified on April 04, 2021. The ordinance dissolves certain existing appellate bodies and transfers their functions (such as adjudication of appeals) to other existing judicial bodies.
The Intellectual Property Appellate Board (IPAB) which was dealing with appeals from the IP offices as also matters such as revocation of Trademarks, Patents, etc. under the various Intellectual Property related statutes is now dissolved. The power to deal with all the pending matters before IPAB as also fresh matters under these statutes, have now been vested in the High Court's pursuant to the new Ordinance.
The Chief Justice of the High Court of Delhi, Justice D.N. Patel had constituted a committee of Justice Pratibha M. Singh and Justice Sanjeev Narula, in order to have a streamlined and comprehensive review of the manner in which a large quantum of IPR cases ought to be dealt with. The Committee submitted its report to the Chief Justice both in respect of IPR and non-IPR subject statutes.
Based on the recommendations of the Committee, the Chief Justice has been pleased to direct the creation of the Intellectual Property Division (IPD) in the Court to deal with all matters related to Intellectual Property Rights. The IPD so created, besides dealing with original proceedings, would also deal with the Writ Petitions (Civil), CMM, RFA, FAO relating to Intellectual Property Rights disputes (except those which are required to be dealt with by the Division Bench).
Press release said that IPD Benches shall be notified by the Chief Justice from time to time. Exclusive IPD Benches are also likely to be created for dealing with such matters. Office-Order is also going to be issued specifying nomenclature to be given to such Petitions and about payment of court-fee for such matters.
The Delhi High Court has created an Intellectual Property Division (IPD) to deal with all matters related to intellectual property rights (IPR). As per information in the press release, approx. 3,000 cases are now to be transferred from IPAB to the High Court of Delhi. In addition, the Delhi High Court has already seized various categories of IPR matters, namely suits relating to Infringement of Trade Marks, Copyrights, Patents, Writ Petitions, Revision petitions arising from IPR suits before the Commercial Courts, appeals from orders/judgments the Commercial Courts concerning IPR suits, etc
Specific sections that govern the applicable jurisdiction
Analysis of specific sections under IP Laws that govern the applicable jurisdiction:
• Section 62 of the Copyright Act, 1957,
• Section 134 of the Trademark Act, 1999 and
• Section 20 of Code of Civil Procedure, 1908
Section 62 that deals with Jurisdiction of court over matters arising under Copyright Act says that -
(1) 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.
(2) 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.
Section 134 under Trademark Act states that a suit for infringement, etc., is to be instituted before District Court.-
(1) No suit-
(a) for the infringement of a registered trademark; or
(b) relating to any right in a registered trademark; or
(c) for passing off arising out of the use by the defendant of any trademark which is identical with or deceptively similar to the plaintiff's trademark, whether registered or unregistered, shall be instituted in any court inferior to a District Court having jurisdiction to try the suit.
(2) 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.
For both Copyright and Trademark:
Section 20 under CPC is applicable which says that: 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—
(a) 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
(b) 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 leave of the Court is given, or the defendants who do not reside, or carry on business, or personally work for gain, as aforesaid, acquiesce in such institution; or
(c) 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.
Under the Code of Civil Procedure, an Indian court would have jurisdiction over a matter if the alleged infringement took place or the cause of action arose within its territorial jurisdiction, or if the defendant or any of the defendants actually and voluntarily resides, carries on business, or personally works for gain, within its territorial jurisdiction. The location of the plaintiff is not a consideration. In Sholay Media Entertainment Ltd v. Yogesh Patel, the Division Bench of the Delhi High Court held that even an infinitesimal fraction of a cause of action will confer jurisdiction.
Further it's important to note that both Section 62 and Section 134 are 'inclusive' in nature. They are categorical in nature. The inclusive nature of these sections can be inferred from the word 'include'.
To better understand the intent and effect of section 62 and section 134, it's important to understand what recourse plaintiff would have in absence of these sections and what recourses they have now with these sections.
In absence of Section 62 and Section 134, having resort to section 20, plaintiff may be able to file the suit of infringement against the defendant only at the district court (in case of copyright) or at a court that is not inferior to the district court (in case of trademark) within local limits of which cause of action wholly or in part arises, or where the defendant resides, carries on business or personally works for gain. But when we read Section 62 and Section 134 with Section 20, plaintiff can also file suit for infringement at a place where he resides or carries on business or personally works for gain. Plaintiff is not barred to file suits at courts having jurisdictions where cause of action has arisen wholly or in part or at court having jurisdiction where defendant resides or carries on business or personally works for gain even if plaintiff is not residing or carrying on business or personally working for gain in any of those jurisdictions.
Ordinarily, the doctrines of lex specialis and lex posterior would apply, and the provision under CPC would be restricted. However, considering the language used in the IP Acts, the Supreme Court has held that the jurisdiction under CPC is not ousted; rather the IP Acts merely provide an additional forum where suits may be filed. The purpose behind this additional route is to expose an infringer with inconvenience rather than compelling the sufferer to chase after the former. Therefore, Section 62 and Section 134 are not in derogation of Section 20, instead they just provide an additional forum for the suing to the plaintiff. Such interpretation of Section 62 and Section 134 has been confirmed by the division bench of the Hon'ble Madras High Court in the 2015 matter of M/S. MICRO LABS LIMITED, V/S M/S. ERIS LIFE SCIENCES PVT. LTD.
The Bombay High Court further 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 jurisdiction to entertain the suit. The Court further held that the mere existence of a subsidiary or sub-ordinate place of business, even if no cause of action arises at such place, would amount to the plaintiff "carrying on business" within the jurisdiction of the court, thus allowing him to file a suit for infringement and passing-off 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 has a place of business within the jurisdiction of the district court. This is in line with the objective of Section 134 of the Trademark Act which aims to provide convenience to a plaintiff to file in a place where the plaintiff actually or voluntarily resides or carries on business or personally works for gain. This special provision in the Trademark Act is a deviation from the principle under Section 20 of the CPC which requires that a corporation would be deemed to be "carrying on business" at its principal office in India, or in respect of a sub-ordinate office, if such cause of action takes place at the place of the sub-ordinate office.
Where there are multiple plaintiffs filing a suit for infringement of a Trademark, even if one plaintiff has a place of residence or business, the court would have jurisdiction to adjudicate the matter.
Often, foreign trademark owners grant a trademark license to the Indian subsidiary for use of the trademark in India. In such cases, typically, the licensee is also impleaded as one of the plaintiffs when such trademark is infringed or otherwise violated. In such cases, now this judgment clarifies that the place of business of such licensee, could confer jurisdiction on the court.
Guided by the motive of aiding convenience, the IP Acts provide for an additional forum where a registered right-holder could sue for infringement. However, the motive was never to enable a plaintiff to indulge in forum shopping, and the legislature did not attend to require either party to travel to distant places. Therefore, in Sanjay Dalia, the Supreme Court interpreted Section 62 of the CR Act and Section 134 of the TM Act in a manner that allowed the availment of the additional route to plaintiffs while restricting harassment of defendants through filing of suits at far-flung places. It was noted that generally, a plaintiff under the IP Acts ought to file a suit at the place of ordinary residence or where the principal office is situated. However, if a right-holder is residing or carrying on business at a place where the cause of action has also arisen, the suit must be filed at that place itself – the IP Acts thus do not allow the right-holder to travel to a far-off place where it carries on business for the purposes of instituting proceedings. For example, if a company has its registered office at A and branch offices at B and C, with the cause of action arising at B, the appropriate forum for filing a suit under the IP Acts would be the court exercising jurisdiction over B. This position has been adopted and further clarified in Ultra Home, where specific scenarios contemplating the plaintiff as a corporation were set out.
Section 62 of the CR Act and Section 134 of the TM Act provide a forum additional to those under Section 20 CPC where a plaintiff may institute proceedings. However, the jurisdiction under IP Acts may only be utilized in respect of a registered copyright/trademark; In a case involving infringement of a copyright/trademark, jurisdiction may be invoked either under the IP Acts or under CPC. Both are individually enough for determining the appropriate forum of dispute. In cases of passing off, only the jurisdiction under CPC may be availed.
Jurisdiction may also depend upon the relevant territory of the court, and the pecuniary value and subject matter of the dispute. Each of these determinants are independently considered for a court to assume jurisdiction.
However, in cases where the validity of the registration of an intellectual property right is disputed, Indian courts will have jurisdiction only if the registration is granted in India. It would therefore not be possible to question the validity of a registration of an intellectual property right granted in a foreign jurisdiction before an Indian court.
However, it would be possible for a foreign entity to challenge the validity or registration of an intellectual property right granted in India. Further, even if rectification proceedings instituted by a defendant in a foreign court are pending, these will not preclude an Indian court from granting interlocutory relief in favor of the claimant in trademark matters.
Concept of Internet Jurisdiction
The concept of internet jurisdiction has also evolved to quite an extent in India. It is interesting to note that the Indian Courts have been liberal in their approach to interpret the complexity of internet transactions. The Indian Courts have interpreted the concept of Internet Jurisdiction in nexus with the scope of jurisdiction as provided for in Section 19 and 20 of CPC, 1908 as well as considering judicial pronouncements from all over the world. In the absence of any law on the issue, judicial pronouncements will only set the footing in the issue.
Since content, products and services on a website or mobile application are available throughout territories wherever the reach of the internet extends, there are two pertinent questions that need answering:
• In respect of an entity having an online presence, where exactly can a plaintiff or a defendant be said to "carry on business"?
• In respect of infringing goods/services offered or sold over the internet, where exactly does the "cause of action" arise?
Answers to these can assist us in addressing the conundrum of jurisdiction around internet-based intellectual property disputes and pinpoint the appropriate forum for institution of a suit.
II. The question on where exactly a plaintiff or a defendant can be said to "Carrying on Business" was addressed in Dhodha House v. S.K. Maingi (hereinafter referred as Dhodha House Case)
In the Dodha House case, it was observed that the presence of any man was not necessary for the purpose of "carrying on business", and the Supreme Court set out three fundamental conditions that had to be satisfied for establishing that an entity carries on business within a court's jurisdiction:
• Presence of an agent who carries on business exclusively for and in the name of the principal;
• Agency in the strict sense of the term; and
• An "essential part" of the business must take place in that place.
However, later in World Wrestling Entertainment Inc. v. Reshma Collection matter (hereinafter "WWE"), the Division Bench clarified that in case of web-based business models, the first two conditions set out in Dodha House will not apply, since they specifically relate to agents. What warrants consideration is whether in transactions over the internet, the third condition stipulating performance of the essential part of the business is satisfied, and if yes, where?
It was noted that the display of goods on a website amounts to an invitation to offer against which an offer is made by a customer at the place where he or she is located. If accepted, the money is paid from the customer's location, and the goods are delivered to the same location. Owing to the nature of the internet, the offer and acceptance are instantaneous. Keeping these factors in mind, it was held that the availability of transactions through a website at a particular place is virtually the same as a seller having a shop at that place in the physical world, and therefore, such seller would be regarded as carrying on business at that place.
The principle expounded in WWE has been upheld and applied in subsequent cases. In Millennium & Copthorne matter, it was clarified that service providers would also attract jurisdiction at places where customers can make a mere reservation (even through third-party websites), whether the reservation concludes into a transaction or not. For example, if there is a hotel located at A, and through a tourism website, customers at B and C can book a room at the hotel, the hotel would be carrying on business at B and C, and would attract jurisdiction on this ground at both of those places in addition to A.
On the second question on Cause of Action. The determination of the cause of action, and thereby, jurisdiction under Section 20 CPC in an online context has been examined extensively Banyan Tree Holding (P) Ltd. v. A. Murali Krishna Reddy (hereinafter "Banyan Tree Case"); A case where interestingly, neither the plaintiff nor the defendant was located within the territorial limits of the court. Here, the Division Bench of the Delhi High Court decided that mere accessibility or interactivity of a website in a particular place would not confer jurisdiction to courts in that place. Rather, the plaintiff must establish that the defendant "purposefully availed" itself of the jurisdiction at the place of suing. After noting common law developments in UK and USA, the following elements were held necessary to show that the cause of action partly arose in a place through the use of internet:
1. Specific targeting of customers in that place;
2. Conclusion of commercial transactions with such customers; and
3. Injury to plaintiff's business, goodwill or reputation in that place.
Thus, a rigorous standard to determine cause of action and jurisdiction in cases of online transactions was set up. Over the years, however, adjudication has diluted this standard. In Sholay Media and Entertainment (P) Ltd. v. Yogesh Patel, the Court considering that mere display of a trade mark at an exhibition confers jurisdiction observed that an act of advertising counterfeit products or soliciting customers therefor in a place would constitute a part of the cause of action, and courts in such place would accordingly have jurisdiction.
Similar views have been held in Burger King Corpn. v. Techchand Shewakramani and in Exxon Mobil Corpn. v. Exoncorp (P) Ltd. (hereinafter "Exxon Mobil"). According to these decisions, the cause of action arises in each and every place where infringement/passing off occurs. Since, in addition to actual sales, advertisements and promotions too constitute infringement according to the IP Acts, the cause of action partly arises in all places where such advertisements and promotions are made. The courts exercising jurisdiction in all those places would thus be appropriate fora for institution of proceedings.
So, to conclude in the context of disputes over the internet, the scope of "carrying on business" has been elucidated in WWE while the scope of "cause of action" has been expounded in Banyan Tree. The ratios of these decisions have been applied and clarified in the subsequent decisions of Millennium & Copthorne and Exxon Mobil to hold that jurisdiction is conferred even in places where a website advertises infringing goods and services or facilitates the mere making of bookings or reservations.
These decisions have greatly expanded the ambit of jurisdiction in cases of online intellectual property violations, so far so that they were recently applied in HT Media v. Brainlink International towards the exercise of extra-territorial jurisdiction to injunct the infringing activities of a defendant located in New York.
Clearly, Section 20 CPC has a wider scope than jurisdiction under the IP Acts, and in context of intellectual property violations over the internet, right-holders would be able to invoke jurisdiction on the basis of "cause of action" under CPC with greater ease than on the ground of "carrying on business".
Thus, it is easy to conclude by saying India has given the concept of personal jurisdiction a wide berth and a multi-dimensional interpretation and one can hope to have a "one size fits all" criteria in the foreseeable future, as Courts get better acclaimed with the use of and the advancement of technology in all fields – legal & commercial.
Disclaimer – The views expressed in this article are the personal views of the author and are purely informative in nature.