The Supreme Court’s decision in IPRS v. Sanjay Dalia continues to torment IP owners who have been abusing the law to create jurisdiction before the Delhi High Court. The victims this time are Pepsico and the owners of the Rasna trademark.
In two different judgments, Justice R. K. Gauba has rejected lawsuits filed by both these trademark owners under Section 134 which is the special jurisdictional clause of the Trade Marks Act, 1999. This clause, like Section 62 of the Copyright Act allows the Plaintiff to sue at its place of business. These clauses are ‘special’ because under conventional jurisdictional clauses such as Section 20 of the CPC, a lawsuit can be instituted only at the place where the defendant resides or where the cause of action arises.
In this case, Plaintiff No. 1 was Pepsico Inc. a corporation incorporated under the laws of North Carolina, USA and Plaintiff No. 2 was Pepsico (India) Holdings Pvt. Ltd., a subsidiary incorporated under the laws of India with its registered office in Gurgaon. The jurisdiction of the Delhi High Court was invoked on the grounds that the Plaintiff No. 2 had a branch office within the jurisdiction of the Delhi High Court. This is exactly the mischief sought to be remedied by the Supreme Court in the Sanjay Dalia case when it held that a company can be deemed to conduct its business only at the place of its registered office and not at its branch office. The special jurisdictional clauses in Section 62 of the Copyright Act and Section 134 of the Trade Marks Act thus can be invoked only before the courts within whose jurisdiction, the plaintiff has its registered office as that is the only office where it is deemed to be carrying on business.
When this lawsuit was originally filed in 2014, the Delhi High Court had issued an ex-parte interim injunction along with an Anton Piller order. A raid was then conducted under the supervision of court appointed commissioner, on the premises of the Defendant in West Bengal. Thereafter the Single Judge decided to proceed ex-parte against the Defendant.
When the roster changed and the matter came up before Justice Gauba, not only did he decide that his predecessor had wrongly proceeded against the defendant ex-parte but also ruled that the Delhi High Court lacked the jurisdiction to hear the matter. In his judgment, dated December 21, 2016 dismissing the lawsuit, Justice Gauba reasoned that since Plaintiff No. 2 had only a branch office, rather than a registered office, in New Delhi the plaintiffs could not take advantage of Section 134 of the Trade Marks Act. While this is true, the more robust line of reasoning would have pointed to the fact that the trademarks in question were actually owned by Plaintiff No. 1 i.e. Pepsico Inc., an American company with its registered office in North Carolina. This is true for most Indian subsidiaries – they are neither owners nor licensees of the trademarks that belong to their foreign parents. Which means that even if these subsidiaries have a registered office in Delhi they cannot invoke S. 134 to sue before the Delhi High Court. Unfortunately, this fact has been lost on the Delhi High Court for several years now.
The second judgment by Justice Gauba rejecting the lawsuit filed by the owners of the ‘Rasna’ trademark is relatively straightforward. This lawsuit too was filed in 2014 and an interim injunction was granted ex-parte before notice was even issued to the Defendant. In this case, the second Plaintiff has its registered office in Ahmedabad and only a branch office in Delhi. The branch office in Delhi was invoked as the basis of the jurisdiction of the Delhi High Court. However since it is now settled that only the address of the registered office and not the branch office can be the basis of invoking jurisdiction of the Court under S. 134 it was relatively easy for Jusice Gauba to dismiss the suit for lack of jurisdiction. All previous injunctions against the Defendant were also vacated.