commercial courts act
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This article is written by Nisha Modak, pursuing a Diploma in Intellectual Property, Media and Entertainment Laws from LawSikho.com. Here she discusses “Impact of the Commercial Courts Act and the Amendment to it upon claims of Trademark Infringement and Passing Off”.

Introduction

Our nation today is becoming a powerhouse of trade and commerce. There has been an exponential growth in our economy over the last decade, as more and more businesses and other avenues for economic development are coming up. Since a larger number of commercial activities were being undertaken, the number of legal disputes relating to such issues also began to increase. 

The legal system soon began to be overburdened with the plethora of commercial disputes that were brought to its doorstep. Another problem was that the legislature often fell short of having adequate rules and regulations in place to address commercial disputes, and found itself unequipped to tackle the rapid wave of disputes that kept flowing in. Thus, it sought to enact specific legislation which would streamline the adjudication of commercial and business related disputes and claims, and ensure speedy settlement of these disputes.

Commercial Courts Act, 2015

The Commercial Courts Act, 2015 (the ‘Act’) is regarded as landmark legislation towards making Indian judiciary more competent to deal with disputes of a commercial nature or those arising from contractual or monetary aspects of  commercial activity.

The provisions of the Act led to the establishment of a Commercial Court at the District level and a Commercial Division in the High Court, which has original civil jurisdiction to try commercial disputes as defined under the said Act. The Act also provides for the establishment of Commercial Appellate Divisions, at the level of the High Courts, which are empowered to adjudicate upon appeals from orders passed by the Commercial Court or Commercial Division. In an attempt to widen its jurisdiction, the Act has given a liberal interpretation to the term ‘commercial disputes’. It has an inclusive definition, under Section 2 of the said Act. Disputes relating to intellectual property rights, insurance, mercantile documents as well as those relating to transactions between bankers, financiers etc. are brought under the scope of the term ‘commercial dispute’. 

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One of the most significant impacts of the passing of this Act is that is has allowed for certain deviations to be made in the way the Code of Civil Procedure (the ‘Code’) is applied to suits relating to commercial disputes of a specified value. As per the provisions of Section 16 of the Act, it brings certain changes to the said Code to the extent it is applicable to commercial disputes within the scope of the new law. The reason behind such amendments is to help speed up litigation before the new dedicated Commercial Courts. Some of the variations that have been brought about in the applicability of the Code to commercial disputes are:

  1. As per Order XI of the Act, parties are required to file a list of all documents in their power, possession, control and custody pertaining to the suit, and not just those documents relied upon in the plaint or the written statement. Such documents have to be submitted, irrespective of whether they are beneficial or detrimental to the case of the party submitting them.
  2. As per Order XIII A of the Act, any party can apply for summary judgment, in respect to a claim (or part thereof) which can be decided by the Court without recording oral evidence. Summary judgment may be given when the Court is satisfied that the Plaintiff/ Defendant (as the case may be) has no prospect of succeeding in the claim, or when there is an absence of any reason to withhold deciding upon the claim.
  3. Order XV A of the Act introduces the concept of Case Management Hearing, according to which the Court shall conduct the first hearing within four weeks from the date of filing of affidavits of admission or denial of documents by the parties. 
  4. Order XV A also provides for the recording of evidence, including the conducting of cross examination, on a day to day basis. 
  5. The Schedule of the Act provides for the imposition of costs for frivolous suits.
  6. The Act, under Order XX, makes it mandatory for the Courts to pronounce judgments within a period of 3 months upon the completion of arguments. 

Trademark Infringement and Passing Off under the Commercial Courts Act

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  • The Commercial Courts Act, 2015 provides for the establishment of specialized courts which exclusively deal with commercial disputes. The exhaustive definition of the term ‘commercial disputes’, as interpreted by the Act, includes matters related to Intellectual Property Rights. Thus, after the passing of the Act, any dispute relating to matters of ownership, registration, licensing, assignment, infringement etc. of intellectual property is tried before the Commercial Courts. This is to ensure speedy adjudication without resolving to the traditional and cumbersome court procedure and also to set up a judicial body which would have more expertise in dealing with disputes of a commercial nature. 

  • In a landmark judgment, in the case of Guiness World Records v Sababbi Mangal, the Delhi High Court further expanded the scope of the Act to decide cases related to Intellectual Property. It deviated from the provisions of jurisdiction given under Sections 6 and 7 of the Act and ruled that matters relating to Intellectual Property Rights, filed under statutes such as the Patents Act, Copyright Act, Trademark Act etc. shall be adjudicated by Commercial Courts, irrespective of whether the suit value is above the minimum limit of 1 Crore rupees or not. Thus it allowed a greater number of aggrieved individuals to avail the benefits of a trial before the Commercial Courts. 

  • Prior to the passing of the Act, cases related to Trademark Infringement and Passing Off were tried as per the traditional court system, and were decided strictly upon the provisions of the Code. Since the Act has prescribed certain changes in the way the Code is to be applied, it has revolutionized the manner in which trademark cases are conducted. The main advantage that the Act lends is speedy disposal of the case, which is crucial in cases of trademark infringement or passing off since the continued use of the trademark in dispute would be detrimental to the aggrieved party who seeks the remedy of the Court.

  • In SanDisk LLC v. Memory World, the Delhi High Court passed a summary judgment under Order XIII of the Commercial Courts Act and granted a permanent injunction upon the use of the Plaintiff’s registered trademark. The Court applied the provision of the Act, which empowers a court to pass a summary judgment, without recording evidence, if it appears that the Defendant has no real prospect of defending the claim and there is no other reason to refrain from deciding upon the claim. In this particular case, the Defendant had not filed a written statement despite, entering an appearance, thus showing that he had no intention to defend the claim. The Court recognized the intention of the Defendant to profit from the goodwill of the Plaintiff and make sales by misrepresenting his products as manufactured by the reputed company of the Plaintiff. The Court held that it was a clear case of trademark infringement, which could be summarily decided. 

  • In Ahuja Radios v. A Karim, the Delhi High Court once again exercised the power given under the Commercial Courts Act to grant summary judgment in a commercial dispute relating to passing off of a trademark. This case satisfied the requirement established under the Act, that the Defendant had no prospect of challenging the claims of the Plaintiff, nor did he have any chance of succeeding in his defense. Hence the Court passed a summary decree granting a permanent injunction against the Defendant. 

Amendment to the Act

Since the time it was implemented, the Commercial Courts Act has satisfied the main purpose for which it was enacted, which was to regulate, streamline and enhance the efficiency of the adjudication process for commercial disputes. However, there were still certain obstacles faced by the Courts, which could not be effectively addressed by the existing provisions in the Act. Thus the need was felt to bring about certain changes in the Act, which would eliminate the residual glitches in the adjudication process and truly achieve the goal envisaged by the legislation. 

In May 2018, the Government promulgated an Ordinance to amend the Commercial Courts Act, 2015. The prominent changes made by the Ordinance are:

  1. As per the new amendment, the Commercial Courts are now empowered to try all commercial disputes which are above the value of 3 lakh rupees. Thus, it has widened the pecuniary jurisdiction conferred by the Act, by lowering the previously decided value of 1 crore rupees. A greater number of commercial and business disputes can now be effectively adjudicated in the appropriate Court. 
  2. The Ordinance has sought to curb the number of cases that are brought to Courts and promote settlement of disputes by methods of Alternative Dispute Resolution. Thus it is mandatory for the parties to undergo mediation for a period of 3 months before they are eligible to file a suit before a Commercial Court. This provision does not apply to those disputes in which urgent interim relief is required to be given.
  3. The amendment has lent greater autonomy to the State Governments, with respect to the appointment of judges to the Commercial Courts. The Government can unilaterally make the appointment, even without the concurrence of the Chief Justice of the High Courts. 

Effects of the Amendment

  • The most significant impact of the Amendment has been the lowering of the minimum value for the dispute. The previous provision relating to pecuniary jurisdiction did not allow a lot of disputes to be presented before the Commercial Courts since they were lower in value than the decided limit. This defeated the very purpose for which the Act was implemented since these disputes were left to seek remedy with the traditional court system. 
  • Secondly, the compulsory pre institution mediation has resulted in a lot of parties being able to mutually agree and decide upon an amicable settlement of their dispute. An example of this is the 2019 case of trademark infringement of GrabOn v. GrabOnRent. These startup companies were able to avoid the cumbersome process of litigation and were able to resolve their dispute by mediation. 

Conclusion

  • Thus, the Commercial Courts Act, 2015, as well as the Amendment to it has changed the face of the way Intellectual Property disputes are handled. Due to the efficient Court process, the judges of the Commercial Courts who have specialized knowledge about business and commercial matters, and the speedy remedies are given, people have now regained their faith in our judiciary. 

Endnotes

  1. http://legislative.gov.in/sites/default/files/A2016-4_1.pdf Definition as per the Act
  2. CS (OS) No. 1180/2011
  3. 2018 SCC OnLine Del 11243
  4. CS(OS)  447/2013

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