Delhi High Court Rules on the Jurisdiction of the ASCI; Holds that It Can Adjudicate upon Claim of Infringement and Passing Off

In a very interesting judgment delivered earlier this month, the Delhi High Court ruled on the jurisdiction of the Advertising Standards Council of India (ASCI) to adjudicate upon complaints relating to copyright infringement in advertisements (for those interested, we have previously blogged about the ASCI’s powers and functions in a post which can be found here).

Holding that the existence of provisions under the Copyright Act, 1957 and the Trademark Act, 1999 exclusively empowering the district court to adjudicate upon claims of infringement does not operate as an embargo to the ASCI adjudicating upon claims of infringement, the court grounded its judgment in the desirability of vesting self-regulatory bodies with greater powers in order to enable them to function as efficacious alternative dispute resolution mechanisms.

Facts and arguments:

The plaintiff, Metro Tyres, is a manufacturer of tyres and tubes for two-wheelers and three-wheelers. It instituted the suit under discussion to restrain defendant no. 2, MRF, from making groundless threats of instituting proceedings against the plaintiff for copyright infringement as regards the content of its media advertisements and thereby imperiling its reputation and goodwill. Further, the plaintiff sought a direction from the court to injunct the ASCI from adjudicating upon any proceedings that may be instituted by the MRF in this respect.

In support of its contentions, the plaintiff advanced 3 main arguments.

First, in light of the fact that Section 62 of the Copyright Act and Section 134 of the Trademark Act exclusively empower district courts to adjudicate upon claims of infringement and passing off, the plaintiff argued, the ASCI is not competent to adjudicate upon such proceedings. This assertion, argued the plaintiff, is further fortified by the fact that the ASCI lacks any powers to punish those who flout its directions; it has to refer such cases to the government for appropriate action.

Second, Rule 7(9) of the Cable Television Network Rules, 1994 proscribes the broadcast of any advertisements that are contrary to the ASCI’s conduct of self-regulation on advertising. Under the Cable Television (Regulation) Act, 1995, authorized officers such as sub-divisional magistrates and district magistrates are tasked with the responsibility of dealing with complaints relating to the contravention of the act and the Cable Television Rules. Since no court inferior to a district court is empowered to adjudicate upon such complaints under the Copyright Act and the Trademark Act, the plaintiff argued, Rule 7(9), which is the legal substratum upon which the powers of the authorized officers adverted to above is founded, is squarely hit by Section 62(1) of the Copyright Act and Section 134 of the Trademark Act.

Finally, arguendo ASCI does have jurisdiction to adjudicate upon this matter, the plaintiff contended that it lacks jurisdiction in this case. This is for the simple reason that the plaintiff is not a member of the ASCI, so ASCI cannot adjudicate upon a dispute between a member and a non-member.

Decision of court:

The Court commenced its analysis by noting that the vires of a rule can only be challenged before a division bench as per the roster of the Delhi High Court, so the single judge adjudicating upon this matter, Justice Endlaw, cannot adjudicate upon this prayer.

Thereafter, it dealt with the plaintiff’s claim founded upon Section 62 and 134. Noting that the aforesaid provisions only delineate the jurisdiction of courts that can adjudicate upon suits of infringement, the court held that proceedings before the ASCI are not in the nature of a suit. To buttress its holding, the court referred to Section 63 of the Copyright Act and Section 103 of the Trademark Act which relate to criminal infringement proceedings. Noting that Sections 62 and 134 do not in any way impact the operation of these provisions, the court held that this makes it amply clear that sections 62 and 134 cannot operate as an embargo to the ASCI adjudicating upon claims which operate in a completely different sphere.

Recognizing that self-regulatory bodies can play a central role in curbing needless litigation, the court cited several judgments in support of the proposition that conditions conducive to the growth of self-regulatory bodies have to be created. Ergo, it held that the plaintiff cannot be allowed to scuttle the proceedings instituted by the MRF before the ASCI.

Insofar as the plaintiff’s argument that the ASCI cannot adjudicate upon a proceeding involving a non-member is concerned, the court held that the fact that the plaintiff conducts an activity governed by the ASCI’s code viz. advertising, coupled with the fact that the advertising agency and television channels through which its advertisements are broadcast are ASCI members, would be sufficient for making it amenable to the ASCI’s jurisdiction.

Analysis:

While I don’t dispute the court’s finding that the Copyright Act and the Trademark Act do envisage the grant of other remedies over and above those that are provided in Section 62 and Section 134, this, I would respectfully submit, cannot be the sole basis for the court to arrive at the conclusion that the ASCI is competent to adjudicate upon MRF’s complaint. More specifically, I would submit that the court’s judgment suffers from 3 grave flaws.

First, interestingly, in para 10 of the judgment, Justice Endlaw takes note of his own judgment in Procter and Gamble versus Hindustan Uniliver, in which it was held that the ASCI is not on the same footing as a court, inasmuch as it cannot grant the reliefs that can be granted by a civil court and can only complement, not usurp, the authority of other courts and tribunals. He also takes note of a Bombay High Court judgment in Century Plywoods versus ASCI in which it was held that the ASCI cannot arrogate to itself the powers of a court or issue directions to non-members. However, he does not explain how his holding in this case can be squared with his holding in the Procter and Gamble case and merely says that he disagrees with the view of the Bombay High Court because of the line of reasoning articulated by him in his judgment.

This brings me to my second point about the line of reasoning underpinning the Court’s conclusion. Justice Endlaw, instead of putting forth cogent reasons in support of the proposition that the legislative command statutorily engrafted in Section 62 of the Copyright Act and Section 134 of the Trademark Act is not flouted or undermined by his judgment in this case, focuses on the normative desirability of arming self-regulatory bodies with greater powers. The tenuous reasoning adopted by him is best epitomized by the fact that he refers to the Supreme Court’s judgment in Subramanian Swamy versus Union of India,, to the extent that it expounds upon the importance of fraternity, which is not even remotely relevant in the case at hand. While the other judgments that he cites do deal with self-regulatory bodies and mechanisms, those judgments do not lay down any principles that directly support his conclusion, and some of them were delivered in completely different contexts, such as the need for a self-regulating mechanism in the legal profession.

Finally, Justice Endlaw completely misconstrued the plaintiff’s argument relating to the power of the ASCI to pass a verdict against a non-member. The plaintiff’s argument, as I understand it, was that the ASCI, being a company set up under Section 25 of the 1956 Act, cannot pass orders against third parties over whom it exercises no control. Further, if one party is its member and one is not in a disputed matter, legitimate concerns may also be raised about its objectivity and impartiality.

Instead of addressing these apprehensions, Justice Endlaw focuses on the manner in which the ASCI’s orders can be fully carried into effect even against non-members.

For the foregoing reasons, I would submit that the judgment rests on a shaky legal foundation and ought to be reconsidered by a division bench.