One of the peculiarities of the Copyright Act, 1957 is Section 62 which provides copyright owners and their licensees an exception to the normal rules of jurisdiction enshrined in Section 20 of the Code of Civil Procedure, 1908. Section 134 of the Trade Marks Act, 1999 is similar to this. According to the CPC, which usually governs civil litigation, the plaintiff can file a civil suit only in the court within whose jurisdiction the defendant resides or the court within whose jurisdiction the cause of action arises. Section 62 of the Copyright Act, however turned this principle on its head and allowed Plaintiffs to sue alleged infringers before a Court within whose jurisdiction the Plaintiff himself resides or carries on business. Therefore if the Plaintiff was residing in Delhi and the alleged infringer was in Hyderabad, the Plaintiff could sue the latter for copyright infringement in Delhi. The reason for this provision was probably because back in 1957 it was presumed by Parliament that independent copyright owners would be disadvantaged if they had to travel around the country to file suits against each and every defendant. Given the very nature of copyrights they can be infringed in multiple jurisdictions at the same time.
Now Section 62 of the Copyright Act has been the subject of several conflicting and contradictory judgments from the Delhi High Court. At least two Division Bench judgments in the Sanjay Dalia case and the Archie’s case tried to negate Section 62 by using the principle of forum non-conveniens. Other Division Benches (Heinz case) have interpreted Section 62 literally.
The issue however that I want to discuss is the manner in which this provision can be used foreign copyright owners or to be more precise foreign software copyright owners such as Microsoft, Adobe, SAP, Autodesk etc. All these companies have been filing copyright infringement suits regularly before the Delhi High Court for the last decade and their enforcement campaigns have met with stunning success partly because they have managed to build up an excellent team of law firms in Delhi to prosecute on their behalf. One hiccup in their campaign was the case of Microsoft v. Dhiren Gopal where Justice Dhingra, now retired, passed a stinging judgment against Microsoft accusing it of forum shopping wherein it would sue defendants from other cities in Delhi despite the fact that Microsoft had offices in those other cities. The decision was widely reported in the media and the blogs. A Division Bench of the Delhi High Court however stayed Justice Dhingra’s judgment because it had gone over-board in its criticism. For reasons best known to Microsoft it never advertised the fact that the Division Bench had passed such an order. Since the Order is unavailable on the website of the Delhi High Court, I cannot give you a link to the same. Microsoft managed to sue defendants from Hyderabad and Bangalore before the Delhi High Court on the basis of Section 62 of the Copyright Act i.e. it was residing and carrying on business within the jurisdiction of the High Court.
The million dollar issue however is whether companies like Microsoft, Adobe and SAP are actually residing and carrying on business within the jurisdiction of the Delhi High Court. I ask this question because all these companies file their law-suits with the foreign corporations as the first plaintiff i.e. Microsoft Corporation, Adobe Systems Incorporated, Autodesk Incorporated, SAP Aktiengesellschaft are named as the first party. The Delhi High Court website does not allow its viewers to read the names of the second plaintiffs but I am guessing that it’s the Indian subsidiaries who are the second plaintiffs otherwise they will not be able to claim Section 62 jurisdiction since most of these foreign corporations do not function directly in India. The reason that foreign corporations are made the first plaintiff is because they most probably are the owners of copyright. For example the Windows Vista and MS Office on my system claim to be owned by Microsoft Corporation which is an American company. Even the MS Office which I bought in Hyderabad claims to be owned only by Microsoft Corporation i.e. the U.S. Company. There is no claim of an exclusive licencing agreement between Microsoft Corporation and its Indian subsidiary – Microsoft Corporation India Pvt. Ltd. The possible reason for no licencing agreement is that subsidiaries are not to be trusted with IP and also tax becomes a major issue if the copyright is licenced to the Indian subsidiary. I’m guessing that the remaining software companies follow the same practice.
The question therefore is whether foreign corporations which are owners of the copyright can claim to be residing or carrying on business within the jurisdiction of the Delhi High Court through their wholly owned Indian subsidiaries and therefore benefit from Section 62 of the Copyright Act, 1957?
I know what the software companies are going to answer but let’s just play devil’s advocate for a moment and look at the two possible arguments.
First argument: If a foreign corporation is the owner of a copyright and it has not licenced the same to its Indian subsidiary then in that case how can the Indian subsidiary be included as plaintiff No. 2 in these law suits? It has absolutely no cause of action for copyright infringement against alleged infringers since it is not an owner of copyright or even an exclusive licensee (the only two classes of person who can file infringement suits under Section 55 of the Copyright Act.) And if the Indian subsidiary, located in Delhi is not included as a Plaintiff then the foreign corporation cannot claim jurisdiction before the Delhi High Court under the guise of Section 62(2) of the Copyright Act, 1957.
Second argument: A foreign corporation can always claim that they are carrying ‘on business’ within the jurisdiction of the Delhi High Court on the basis of the fact that their software is sold in Delhi through authorized agents. However if you were to go by the ‘explanation’ to Section 20 of the CPC, which I reproduce as follows: A corporation shall be deemed to carry on business at its sole or principal office in 3[India] or, in respect of any cause of action arising at any place where it has also a subordinate office, at such place. Foreign Corporations can enter India through a wholly owned subsidiary incorporated under the Company’s Act, 1956 BUT then the wholly owned subsidiary is a separate legal entity and cannot be considered to be a part of the foreign corporation or even a subordinate office. Therefore even if the foreign corporation has a wholly owned Indian subsidiary operating within the jurisdiction of the Delhi High Court it cannot claim the privileges of Section 62 of the Copyright Act, 1957.
Part XI of the Companies Act, 1956 however allows foreign corporations to operate directly in India provided that they fulfil the regulatory requirements contained in Section 591-608 of the Companies Act, 1956. To the best of my knowledge most foreign corporations create Indian subsidiaries as the other option is a regulatory nightmare.
Conclusion: Therefore in my opinion the only way a foreign corporation which owns a copyright can utilize Section 62 of the Copyright Act is if that foreign corporation actually carries out business in India by complying with Part XI of the Companies Act, 1956.
You are absolutely right in your conclusion. There is no doubt about it.
The problem is that in the cases filed by the foreign companies named by you, to my knowledge, the defendants have surrendered and no case has gone on for trial more particularly with respect to the challenge to the jurisdiction. The one order passed by Justice Dhingra was set aside as stated by you.
To my knowledge in almost all the cases, Ex parte injunctions have been granted, Local Commissioners were appointed, the computers of the defendants were seized/sealed or so leaving the defendants in lurch. One thing, the defendants in any case were infringes.
Then one knows that the cases take long before even the applications for interim injunction are heard, whereas as per the provisions of Order 39 Rule 3, when an ex parte interim injunction order is passed, the efforts of the court granting the injunction would be to dispose off the application within the period of 30 days. BUT no such efforts have ever been made by any court. Rather the first date which the court fixes is invariably beyond 30 days of the ex part order. This also functions as deterrent for the defendants to contest the case and they surrender and in this way the jurisdiction remains to be challenged.
You are right Anon. This issue will most probably never come up in the Delhi High Court since software matters are settled quickly. Although it would be interesting to see if anybody takes up this issue in context of Section 134 of the Trade Marks Act, 1999.
Best,
Prashant
Bravo! This time you have outdone yourself! You should be proud of yourself!…hold on..before you start pumping yourself up, tell me, O'”research” associate, do you even read and research before you put out these “opinions”? Is this seriously a responsible opinion, ask yourself this question. Have you spent time reading the Act, and understanding the basics of instituting an action? or are you more interested in the attention alone? Where do your priorities lie? Please read the all relevant provisions under the chapter which speaks of remedies and prevalent judgments on this issue, not just the “popular” decisions. Once you have done this, please ask yourself if you are doing justice to the forum whose visibility demands responsibility from all its members. Honestly, better is expected of you. This is just not done. And you think you are entitled to point out mistakes in reportage by the mainstream media? Get your act together before you think you can point out errors in reporting by those who do not have the benefit of your practice.
Hi Anon,
I can’t understand why you are so upset? These are just my views. If you think they are wrong, please feel free to point it on the blog. I can’t understand what my priorities have got to do with this post?
Considering that you have not been able to point out any errors in my post I’ll conclude that you haven’t been able to find any. You thus seem to be more upset that I was right and not that I was wrong.
Best,
Prashant
Dear Prashant,
Interesting post. However, I think you are slightly mistaken in your interpretation this time.
The terminology used in Sec.62 is “the person instituting the suit” and not “owner of copyright”. Thus it is clear that its not the owner of copyright through whose place of business, jurisdiction is decided. It is the place of business of “person instituting the suit” that is relevant for the purposes of claiming jurisdiction under Sec. 62
Consequently, a foreign copyright owner is squarely entitled to claim the benefit of Sec.62 through its Indian subsidiary.
The issue raised by you has already been decided by the Supreme Court in Exphar SA & Anr. v. Eupharma Lab. Ltd. & Anr. (AIR 2004 SC 1682) as follows:
“The appellant No. 2 (who had a manufacturing contract with appellant No. 1, the owner of copyright) is certainly ‘a person instituting the suit’. The Division Bench went beyond the express words of the statute and negatived the jurisdiction of the Court because it found that the appellant No. 2 had not claimed ownership of the copyright of the trade mark, infringement of which was claimed in the suit. The appellant No. 2 may not be entitled to the relief claimed in the suit but that is no reason for holding that it was not a person who had instituted the suit within the meaning of Section 62(2) of the Act.”
Also, I must differ with your statement that a copyright owner and exclusive licensee are “the only two classes of person who can file infringement suits under Section 55 of the Copyright Act.” Sec. 55 does not speak about institution of suits. It only speaks about remedies available in an infringement suit. Consequently, while only the copyright owner / exclusive licensee / publisher (See Sec. 54 for definition of “owner of copyright”)) may be entitled to the remedies, that doesnt translate into them being the only class of persons who can institute infringement proceedings. Absence of the phrase “owner of copyright” from Sec.62 fairly supports this interpretation.
Looking forward to your comments.
Regards,
Sneha
Hi Prashant, Another Good Post,
Hi Sneha, Nice interpretation of the Act!
What I feel is that;
Arguendo, even if Microsoft corp. USA has given ‘exclusive license’ to the Microsoft India Limited (MSIL) but i.e. in respect of the exclusive license in INDIAN context (as the Sec. 2 (j) CRA, 1957 applies ‘only ’ to the whole of India). So, this means that only within the territory of India, MSIL (exclusive licensee) is authorized to have exclusive economic rights of the software (to the exclusion of other persons, even Microsoft USA itself).
Even generally speaking, the whole purpose of the liberalisation and globalization policies will go in vain if the parent company transfers it’s so called “exclusive” license to a particular company in one country and after that binds itself in using it further anywhere else.
Also, as per section 61 of the CRA, in any case, the Microsoft Corp. USA being the true owners will be the party to the proceedings.
Regards.
Hi Sneha,
1.It’s true that Section 62(2) refers to the ‘person instituting the suit’. However this section deals with more than infringement suits. If you note the section does not use the term ‘infringement suit’. This is because section deals with all suits and proceedings instituted under Chapter XII of the Copyright Act, 1957 including suits filed for ‘groundless threats’ under Section 60. Obviously a ‘groundless threat’ action is filed by a person other than a copyright owner and hence Section 62(2) has to refer to ‘person instituting the suit’.
2. I’m intrigued by your assertion that a person not having a cause of action under the Copyright Act can filed a suit for copyright infringement. One of the fundamental tenets of our legal system is the requirement of ‘locus standi’ i.e. you need to be an aggrieved party to seek a legal remedy. The only extraordinary situation in which this concept is diluted is in ‘public interest litigation’. In the context of the Copyright Act you seem to miss the point that while Section 55 defines the persons having locus standi to sue for copyright infringement i.e the class of persons who can seek remedies for a copyright infringement suit, Section 62 only defines the jurisdiction of courts to hear persons aggrieved under the Copyright Act. Section 62 does not identify the parties have the locus standi to file suits under the Copyright Act, 1957. This is bolstered by a reading of Section 61. Therefore only when a person proves that he is a person aggrieved under Section 55 can he file a suit under Section 62 of the Copyright Act. If we were to go by your logic Section 55 would be rendered obsolete.
3. In regards the Exphar case that you cite please note that the judgment is clearly per-incuram for the purposes of our present discussion because both the Supreme Court and the Delhi High Court did not discuss or even mention Section 55 of the Copyright Act, 1957 which is central to our present debate. The conclusions of the court would have been completely different if Section 55 had been brought to its attention.
Therefore I think you are completely wrong in your understanding of the law on the point.
Best,
Prashant
Hi Anon,
I think’s Sneha’s interpretation is completely off the mark, as explained in my above comment.
If Microsoft Corp. were to enter into an exclusive licencing agreement with its Indian subsidiary then there is obviously no problem in filing suits under Section 62(2). The only issue that I forsee in an exclusive licensing agreement of this nature is major tax issues. I’m not sure of the exact nature of the issue but there will definitely be some taxation issues or the other because the tax treaties with the USA has some cosy clauses for American IP holders. This is however just a guest.
Best,
Prashant
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Dear Prashant,
Thanks so much for a lesson on “locus standi” and the CPC. I thought my comment was pretty clear, guess it needs to be simplified further for your consumption. Also, I was under the impression that modulation of tone and temper is one of the hallmarks of an academic discussion, I guess I was wrong on that count too.
I never even remotely suggested that “the person instituting a suit” under Sec. 62 could be any Tom, Dick or Harry. I think it is hackneyed to state that the person instituting the suit needs to have a cause of action and that the cause of action needs to be under the Copyright Act. After all, when you are instituting a suit under the Act, you have to show grievance under the Act. One doesn’t need to go to the lofty heights of “locus standi” to understand this basic point.
Let’s get down to the brass tacks here and understand each other’s propositions clearly:
Prashant: Foreign entities which do not have a place of business in India cannot institute a suit under Section 62 through their Indian subsidiary’s place of business since both are distinct legal entities. No person other than the copyright owner or the exclusive licensee can institute action under Section 62.
Sneha: Foreign entities are made party to proceedings since the copyright owner is a necessary party (“CPC 101”). That said, the copyright action in effect is to protect the interest of the Indian subsidiary which has an actionable interest in the copyright of the foreign entity. Nowhere does Section 62 exclude a non-exclusive licensee from invoking the provision, nor does Section 62 start off with “Subject to the provisions of Section 55…”
This concept of an actionable interest vesting in a non-exclusive licensee has been clearly recognized by a Division Bench of the Delhi High Court in Phonographic Performance Limited v. Lizard Lounge & Ors., wherein the locus of a non-exclusive licensee who was aggrieved by infringement of the licensor / owner’s rights was recognized as being valid.
In that case, the right of a Copyright Society to institute a suit in its own name, for infringement of copyright of its members, was questioned. The Single Judge seemed to have thought on the same lines as you. He had concluded that the provisions of Sec. 55 of the Copyright Act confers the right for seeking a remedy against infringement only on the owner of copyright, the expression “owner of copyright” having been defined in Section 54 to include an exclusive licensee. Thus, since a Copyright Society is not an exclusive licensee, it was held not to have a right to institute legal proceedings. Reversing this erroneous conclusion, the Division Bench stated –
“if we were to accept the reasoning of the learned single Judge, it would imply that the principles of agency as contained under the Indian Contract Act, 1872 have to be given a go-bye. The Copyright Society is an agent appointed under the agreement by the owner of the Copyright and specific powers have been conferred on the agent to institute legal proceedings. The said Act does not contain any provision prohibiting the institution of legal proceedings in derogation to the general law of agency. The author being the first owner of Copyright under Section 17 of the said Act can certainly appoint an agent to institute legal proceedings.”
I don’t think your post considers this judgment. In that sense, would you at least agree that your post is per incuriam? Or, would you still say I am “completely wrong” and “completely off the mark”? 😉
Cheers,
Sneha
Dear Sneha,
1. Don’t get me started on ‘modulation of tone and temper’. You started off your initial comment with a negative assumption that I was ‘mistaken’. You set the tone for the discussion with your presumptuous attitude. I merely replied in kind. If you’re too sensitive to handle criticism stop handing it out in the first place.
2. You are welcome for the lesson on ‘locus standi’.
3. In regards your assertion that you “never even remotely suggested that the person instituting a suit under Sec. 62 could be any Tom, Dick or Harry”, let me reproduce your initial comment: “while only the copyright owner / exclusive licensee / publisher (See Sec. 54 for definition of “owner of copyright”)) may be entitled to the remedies, that doesnt translate into them being the only class of persons who can institute infringement proceedings.” Your interpretation renders Section 55 nugatory. That basically means any ‘Tom Dick and Harry’ can file the law suit. Moreover your extract from the Exphar judgment contained the same logic.
4. The PPL v. Lizard Lounge judgment is definitely not applicable to the present facts. The PPL case was decided on completely different grounds i.e. the Supreme Court’s interpretation of the functions of the Copyright Society in the ENIL case. As you know the ENIL case had nothing to do with the locus of Copyright Societies to sue on behalf of their members, it was in regards compulsory licensing provisions of the Copyright Act. The entire ‘agency’ argument was lifted right from the Supreme Court’s judgment which as already explained above was decided in a wholly different context.
5. The second aid used by the Division Bench was the Statement of Objects and Reasons which had clarified that copyright societies were meant to enforce the rights of their members.
6. Without the Supreme Court’s judgment or the Statement of Object and Reasons to support PPL, it is unlikely that the Division Bench would have over-ruled the Single Judge. The only reason that the Single Judge did not mention the Supreme Court judgment was because the Supreme Court judgment came up only during the course of the appeal.
7. Since the PPL v. Lizard Lounge case was decided on such specific factors unique only to that particular case, it is unlikely that the same would be applied to any of the software/Microsoft cases since the facts are completely different. Moreover my argument is predicated on an interpretation of Section 62. The Division Bench judgment does not mention the words ‘62’ even once.
8. PPL and its members atleast have some kind of licensing agreement as described in the judgment. Companies like Microsoft do not have any sort of licensing agreement with their Indian subsidiaries, to the best of my knowledge. Once again, because of the tax angle. Do they mention any such licensing agreement in their plaints?
Best,
Prashant
I think Prashant is right in this regard. I have come across a similar case in Delhi High Court and this was one of the grounds that we raised against MSIL. The statute itself clearly points out who can initiate an infringement suit…
What was the outcome of that case Sindhu?
Prashant,
I am defending a matter involving Microsoft in the scenario mentioned in this post. Do you know anyone who can argue the matter on my behalf and determine this legal question of Jurisdiction?
-John
Hi John,
Sure thing – please email me at preddy85[@]gmail.com
Prashant
An Indian Company wants to sue a certain website for copyright infringement. The website is hosted on servers located in Chicago, USA. Will the courts in India have jurisdiction over the matter?