Trademark

Delhi High Court considers questions of IP Jurisdiction in Banyan Tree case: Omnipresent or still rooted??


Just when Indian IP started to move towards complex questions and policy decisions, the Banyan Tree case heard by the Delhi High Court comes along to address basic questions of jurisdiction. The case revolves around the decision of the appropriate forum for a case to be heard in the cases of jurisdiction where the cause of action lies on the World Wide Web. The case that was brought before Justice Bhat of the Delhi High Court is straightforward, and the facts situation is as follows.

The plaintiff, Banyan Tree Holdings, is a hospitality company registered in Singapore with business ventures across the globe and claim to have used the mark “Banyan Tree” and banyan tree device in its business transactions since 1944, thereby acquiring a secondary meaning, distinctiveness and a great degree of goodwill worldwide. The defendants are township developers residing in Hyderabad (Andhra Pradesh) and have adopted the name ‘Banyan Tree Retreat’ for one of their projects. In the present case, BT Holdings sought an ex parte interim injunction against the alleged passing off and dilution of the “Banyan Tree” mark by the Defendant, Mr. Murali Krishna Reddy on their website www.makprojects.com/banyantree as well as a rendition of accounts.

The preliminary objection in the present case is the jurisdiction of the Delhi High Court. Interestingly, the Plaintiffs here did not rely on Section 134 of the Trademark Act to establish the jurisdiction of the Courts, but instead used Section 20 of the Code of Civil Procedure. The Plaintiffs averred in the plaint that the Court possessed the requisite jurisdiction since the services of the Defendants were being offered to residents of Delhi through brochures. Secondly, that the defendants’ website is interactive and is accessible from anywhere in India, and that “universality, ubiquity, and utility” of the Internet and the World Wide Web, all are indicative that the High Court possessed the jurisdiction to hear the matter. The arguments of the Plaintiff in this ex parte matter showed reliance upon many cases from countries across the world to establish the ingredients for jurisdiction.

Examining the American cases, the Courts of course dealt with one of the first and perhaps the most high profile case- the Zippo Case (1997). Here the Plaintiff sued the California based Defendants in the Pennsylvanian Courts for the infringement of the trademark on the domain name of the Defendant’s website. Using a “sliding scale” the Court stated that personal jurisdiction could be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the Internet. In doing so, the Court observed various cases:

  • Where a defendant that clearly does business over the Internet enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper.

  • Where a defendant only posts information on the Internet accessible to users in foreign jurisdictions, the Court could not exercise personal jurisdiction where the website was merely passive.

  • Where the Defendant uses an interactive Web site to host information and exchange the same with the user, the exercise of jurisdiction is determined by examining the level of interactivity and commercial nature of the exchange of information that occurs on the Web site.

Next, the Court also observed the narrowing down of the Zippo doctrine had been modified and narrowed down in subsequent judgments. In Toys ‘R’ US v. Step Two, 2003 US App. Lexis 1355, when the trademark was used on the New Jersey based Plaintiff’s as well as the Spanish Defendant’s website, though the defendant operated an interactive website through which persons residing in New Jersey, it went on to state that a commercially interactive website by itself was insufficient to establish jurisdiction, and additionally there had to be evidence of direct targeting of consumers in the area. The Court also used the ‘effects test’ according to which courts can exercise jurisdiction in cases where the acts were committed outside its jurisdiction, but were intentionally aimed at the forum state and its effects were also felt in the forum state. Thus, even if the effects are experienced in the forum state, the defendant must have “manifest intention” to target the forum state, with contacts either through the web (in which case the interactivity of the website ought to be a relevant consideration) or through a non Internet based activity.

In Canada, considering the 2006 decision of Desjean v. Intermix Media, [2006] F.C.J. No. 1754, the Court found the bundling of spyware with free software from the Internet, without the express permission of the plaintiff amounted to violation of his rights. While the Defendant’s claimed to be a Delaware Corporation with its principal offices in Los Angeles, California and therefore, the Court stated that where there is a “real and substantial connection with the action providing a reasonable balance between the rights of the parties, … it is simply anachronistic to uphold a “power theory” or a single situs for torts or contracts for the proper exercise of jurisdiction.” The Court formulated an eight point test to decide when the Courts could assume jurisdiction:

1. The connection between the forum and the plaintiff’s claim;

2. The connection between the forum and the defendant;

3. Unfairness to the defendant in assuming jurisdiction;

4. Unfairness to the plaintiff in not assuming jurisdiction;

5. Involvement of other parties to the suit;

6. The court’s willingness to recognize and enforce an extra-provincial judgment rendered on the same jurisdictional basis;

7. Whether the case is interprovincial or international in nature; and

8. Comity and the standards of jurisdiction, recognition and enforcement prevailing elsewhere.

Looking toward the United Kingdom, 1-800 Flowers Inc v. Phonenames [2002] FSR 12 CA, a United States based corporation, claimed as ‘use in UK’ for the purposes of trademark registration, though they had no direct presence in the UK nor did they have an office or a recognizable consumer base. Hearing the matter, the Court of first instance and the Court of appeal both held that access to a website alone could not automatically confer jurisdiction on any Court, especially in cases related to trademarks.

Back home, the judgment first discusses the concept of jurisdiction in Intellectual Property in India in general and refers to the famous Dhodha House case and also a more recent 2008 decision of Dabur Industries pronounced by Supreme Court. Herein requirements essential to be proven were that the respondent was selling its goods/ services within the territorial jurisdiction of the Court, and that mere evidence such as advertisements were insufficient to prove use.

The Court briefly discussed two cases (both pronounced by Single Judge Benches). Casio India Co. Ltd. v. Ashita Tele Systems Pvt. Ltd. that relied on the Australian case Dow Jones and Co. Inc. v. Gutnic, (2002) HCA 56, (which the Plaintiffs also used) to state that the concept of the jurisdiction of the Courts being applicable due to the “universality, ubiquity and utility” of the Internet. Secondly, India TV v. India Broadcast Live, laid down that where a website is interactive (the level of interaction between the user and the website being relevant) and where evidence was produced to indicate that the target audience and large consumer base was India, the Court could exercise jurisdiction to adjudge the matter. Most interestingly, the Court laments the lack of clarity on the part of the Parliament that despite knowledge (evidenced through the provisions of the IT Act), fails to incorporate the dynamism of technology in the updation of laws.

Judgment

Since the Court found the Single Judge Bench decisions of both Casio as well as India TV disparate in its reasoning, the Court ends on a promising note, in the hope to find an answer to this issue by referring the same to the Division Bench on the following issues:


“(1) Whether this court can entertain the present suit, having regard to the averments and documents, in the context of special provisions in to the Trademark and Copyrights Act, which do not provide for exercise of jurisdiction based on internet or web-presence of such alleged infringers, even while making explicit departure from the general law as to territorial jurisdiction;

(2) Whether the court can entertain the present suit, in the absence of a long arm statute, having regard to the existing state of law, particularly Section 20, CPC, and the impact, if, any of the Information Technology Act, 2000 on it;

(3) Applicable standards for entertaining a suit, based on use of a trademark by a defendant, on its web site, or infringement or passing off of the plaintiff’s trademark, in such web site and the relevant criteria to entertain such suits;

(4) Applicable standards and criteria where the plaintiff relies exclusively on “trap orders” or transactions, in relation to passing off, or trademark infringement cases, as constituting “use” or cause of action, as the case may be.”

Analysis


Once again, Justice Bhat has through a thorough understanding of the evolving law, demonstrated what is required of Indian legislation- dynamism and an open mind to incorporate certain changes that may be necessary considering the trend of cases globally. One such change recommended by His Lordship is an amendment to the statute to provide for such cases. In this regard however, I would respectfully differ. I believe that provisions such as Section 20 of the CPC, Section 134 of the Trademark Act and Section 62 of the Copyright Act act as a founfation on which the dynamism of technology and other such developments can be supplemented through case law.

Thus, through an analysis of decisions from various jurisdictions as well as a clear cut understanding of what Indian law lacks today- clarity- Justice Bhat has, in my personal opinion, has made a step in the right direction by referring the matter to a larger bench. Herein, the Court was dealing with the most basic question of jurisdiction of the Court- which when transposed into the world of global connectivity on the world wide web can and indeed has posed several problems. Therefore, referring the matter to a larger bench will hopefully resolve the issue, with any judgment in this regard in the future serving as precedence.

On a tangential note, Harold Wegner has, as usual, pointed out another most interesting decision to us related to perosnal jurisdiction in patent infringement. The case of Medical Solutions v. Change Surgical LLC looked into the question of whether the Court in the present matter satisfied the two essential tests for possessing personal jurisdiction: First, jurisdiction must exist under the forum state’s long-arm statute and secondly, the assertion of personal jurisdiction must be consistent with the limitations of the due process clause. The relevant provision of the Patent Act in the United States in this regard states that the patented invention is said to be infringed when a party “without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor.” Herein, upon an examination of facts as well as relevant law, the Court pronounced that mere demonstration at a trade show (even by way of brochures, display of prototypes and representations would not amount to “use” within the meaning of such provision in the United States and hence the Court did not possess the relevant jurisdiction.


Seems like the Courts across the globe have had hit to the Civil Procedure books and go back to the basics!

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3 comments.

  1. nikyraja

    This case is clear isolated case, Any trade mark or copyrights act are given only to the country under which they are specified. In international copyrights specially in publications the company or the firm should have been registered independantly in each country just like in patent law. Other wise they can not exercise restrictions on this. For making any case in such cases we need all the trade marks as well copyrights published either electrinically or in gazzettee. Then onlw we may be able to specify what and where we went wrong. we are more lethargic in our dealing related with IPR or copyrights or trade marks. Most of the Indians are still sleeping ever these issues.

    Reply
  2. Anonymous

    there are trademark cases involving transborder reputation which imply that one can exercise rights beyond the country of registration. i feel such cases should also be read in conjunction while taking into account the jurisdiction issue

    Reply

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