The Delhi High Court unequivocally elucidated the matter of jurisdiction concerning the infringement of trademarks stemming from acts perpetrated on the Internet in the eminent case of Impresario Entertainment & Hospitality Pvt Ltd v S & D Hospitality. With utmost conviction, the Court reaffirmed its prior ruling in Banyan Tree Holding (P) Limited v A Murali Krishna Reddy & Anr, 2009, thereby efficaciously settling the discordant outcomes surrounding the aforementioned subject matter.
Introduction:
The Delhi High Court has emerged as the focal point for intellectual property (IP) litigation cases, a testament to its expertise in this field.
This impetus has led litigants to initiate legal actions specifically pertaining to IP laws in the esteemed Delhi High Court, consequently giving rise to inquiries concerning the court’s jurisdiction, particularly in matters involving online transactions, throughout the course of several decades. The jurisdictional quandary in question has been thoroughly examined and addressed by the esteemed Justice Mukta Gupta in the present case.
Fact of case:
The plaintiff, an esteemed company engaged in the provision of gastronomic services, maintains its registered office in Mumbai and conducts its operations in Hauz Khas Village, New Delhi. It operates a renowned restaurant, trademarked as ‘SOCIAL,’ along with various coffee shops. In 2017, the plaintiff became aware of the defendant’s two restaurants in Hyderabad operating under the name ‘SOCIAL MONKEY.’ Additionally, the defendant offers a widely recognized beverage named ‘A GAME OF SLING,’ which closely resembles and/or imitates the plaintiff’s beverage, titled ‘HYDERABAD SLING.’
Consequently, the plaintiff filed a petition seeking a perpetual injunction against the defendant, restraining them from manufacturing, selling, marketing, advertising, or offering services under the trademarks ‘SOCIAL‘ and ‘STONE WATER,’ or any other similar marks that could potentially lead to the infringement of the plaintiff’s trademark within the defendant’s establishments.
Both the plaintiff’s and defendant’s establishments have entered into contractual agreements with prominent online platforms such as Zomato and Dine Out, thereby making their menus, contact information, and other relevant details accessible through these platforms.
Jurisdictional Issue:
Before delving into the merits of the case, the court must first ascertain whether it possesses the jurisdiction to entertain the matter. Thus, the key issue before the court is whether it has the requisite jurisdiction to adjudicate on the present case.
Arguments:
The defendant primarily contends that the court lacks jurisdiction to hear the suit, given that neither the defendant’s listed office nor its business operations are situated in Delhi. Furthermore, the plaintiff’s registered office in Mumbai is also beyond the territorial jurisdiction of the Delhi High Court. Another contention raised by the defendant is the plaintiff’s failure to establish the location of its principal office in Delhi.
In response, the plaintiff vehemently opposes these contentions, asserting that it does not maintain any office or branch in Hyderabad. It further clarifies that its principal office responsible for funding and licensing all its brands is exclusively situated in Delhi.
The plaintiff also argues that due to the defendant’s presence on popular platforms like Zomato and Dine Out, it has the capability to divert the plaintiff’s customers to its outlet in Hyderabad. The defendant refutes this notion, deeming it ill-conceived, as the mere act of booking or placing an order online does not suffice to establish the occurrence of a transaction.
Furthermore, the plaintiff contends that the defendant has plans to expand its operations pan India, supported by its filing of trademark applications. Conversely, the defendant contests this assertion, contending that the plaintiff’s actions lack the essential elements to demonstrate any imminent threat.
The plaintiff further claims that at least one customer from Delhi has reserved a table at the defendant’s outlet in Hyderabad, thus establishing the cause of action in Delhi.
Judgment:
Justice Gupta dismissed the case on grounds of jurisdictional inadequacy.
In reaching this decision, the court heavily relied on the jurisdictional principles established by the Delhi High Court, as exemplified in the case of Banyan Tree Pvt. Ltd. v. A. Murali Krishna Reddy. In the Banyan Tree case, the court held that “the mere accessibility of the defendant’s website in Delhi does not confer jurisdiction upon this court.
A passive website, lacking the intention to specifically target audiences beyond the state where the website host is located, cannot vest the forum court with jurisdiction.”
The court drew a necessary distinction between the “purposeful availment” and “purposeful avoidance” tests. It opined that for the plaintiff to establish a case, it must demonstrate that the defendant intentionally sought to target customers within the jurisdiction of the forum state. Once established, it falls upon the defendant to demonstrate that they intended to avoid the jurisdiction of the forum state. Regarding the websites in question, the court concluded that the mere interactivity of the websites within the forum state does not confer jurisdiction.
Considering the burden of proof on the plaintiff to establish that the defendant purposefully availed the jurisdiction of the forum state, the court determined that the defendant must engage in some commercial transaction with customers within the forum state, intending to pass off their goods as those of the plaintiff. The onus lies on the plaintiff to present evidence supporting this claim rather than mere conjecture.
The court further held that even if the defendant succeeded in attracting customers from other jurisdictions through platforms like Zomato and Dine Out, these customers would still need to physically visit the defendant’s outlet in Hyderabad to avail themselves of the services. The court emphasized that the most that customers from other jurisdictions could do was reserve a table at the defendant’s restaurant, which ultimately resulted in the completion of the transaction in Hyderabad, where the cause of action would primarily lie.
Although the judgment is well-reasoned, it associates the cause of action with the finalization of the transaction, leaving some uncertainty regarding situations involving the transportation of goods to the forum state or the involvement of intermediaries. Additionally, when defendants are absent, as in the previous case of Impresario Entertainment & Hospitality Pvt. Ltd. v. Urban Masala, where an ex parte injunction was granted without proper consideration of jurisdictional claims, the issue becomes less clear.
Related Cases:
- Indian Performing Rights Society Ltd. v. Sanjay Dalia & Anr. – The Supreme Court of India interpreted section 62 of the Copyright Act, 1957, and section 134(2) of the Trade Marks Act, 1999, concerning the appropriate venue for the plaintiff to file a lawsuit. It emphasized that “The very intention behind the insertion of provisions in the Copyright Act and Trade Marks Act is to facilitate the convenience of the plaintiff. The convenience of the parties has also been given statutory expression in section 20 of the CPC. The interpretation of these provisions should prevent causing inconvenience to the parties.”
- Banyan Tree Holding (P) Limited vs. A. Murali Krishna Reddy & Anr. on 23 November 2009 – The division bench of the Delhi High Court held that “Under clauses (a) to (c) of section 20 CPC, a plaintiff has a choice of forum and cannot be compelled to go to a place of business or residence of the defendant and can file a suit where the cause of action arises.”
- Icon Health And Fitness, Inc vs. Sheriff Usman And Anr. – The Delhi High Court established jurisdiction under Clauses (a) and (b), ruling that the defendants were “carrying on business” in Delhi. The Court’s reasoning was succinct, stating that “Though the defendants do not physically exist in Delhi, they are promoting their fitness apps and brands through App Store, Google Play Store, and e-commerce platforms like www.amazon, which can be accessed and used from all over the country, including Delhi. Thus, the defendants are conducting business or working for gain in Delhi, and this Court has territorial jurisdiction to try and entertain the present suit under section 20 of the CPC, 1908.”
Conclusion
This case has addressed the issue of the court’s ability to exercise jurisdiction over cases involving online transactions. Mere accessibility of the defendant’s website in the forum state can no longer serve as sufficient grounds for the court to assert jurisdiction.
Furthermore, the court has reaffirmed the legal principles established in the Banyan Tree case and provided further elucidation. The judgment in this case establishes a more stringent and consistent standard for determining the court’s authority to entertain cases involving online transactions.
