In this article, Anisha Jain, pursuing Certificate Course in Trademark Law at LawSikho, discusses the jurisdiction issues under Trademark law for online transactions.
“If your business is not on the internet, then your business will be out of business” – Bill Gates
E-Commerce has made the world a global village today. Some years ago when a business used to open, it had to largely rely on its local customers for its sustenance. However, with the inception of the internet everything changed, a business now has its audience all around the world. The conduct of business has been revolutionized by the internet wherein it has enabled the businesses to connect with their customers more rapidly and effectively and speed up their services as well.
Judicial Approach to Trademark Jurisdiction in Online Transactions
With the increasing number of businesses moving online where everything can now be purchased on the World Wide Web, there is an all-time increase in the number of legal disputes in the e-commerce sector. These disputes have a novel character to them unlike their counterparts where business places in case of traditional business were permanent within a defined geographical location, whereas the e-commerce business has a virtual existence, thus raising an important question of jurisdiction in the plethora of cases related to cybercrime, infringement of trademarks and domain name that come up everyday.
The determination of the jurisdiction of the Court in cases of Trademark Infringement poses a great difficulty. Jurisdiction is the first step involved in deciding any dispute and in order to effectively decide a dispute, it is very important to determine whether a court is competent to decide on a particular matter or not. In civil cases the questions related to jurisdiction are governed by Section 20, Code of Civil Procedure 1908, the test is the place where the defendant resides or cause of action arises.
Recently Delhi High Court can be seen as the pivot for all disputes related to IP Laws. It has passed various judgments interpreting the provisions related to the determination of jurisdiction where either one or both the parties have an online presence.
Banyan Tree Holding (P) Limited vs A. Murali Krishna Reddy & Anr
The Delhi High Court, in this case, decided the question of jurisdiction of the Court under Section 20(c) of Code of Civil Procedure, 1908. The Division Bench, in a well thought out judgment, laid down that in cases of passing off or infringement, where the plaintiff is not carrying on his business within the jurisdiction of the court and there is no long-arm statute, the question whether this court has the jurisdiction to entertain the suit would be decided if the plaintiff shows that the defendant has ‘Purposefully Availed’ the jurisdiction of the forum court to himself. Further, in order to prove this, the plaintiff will have to show real commercial transactions entered into by the Defendant with an internet user residing within the jurisdiction of the forum court. In addition to Section 20(c) CPC, the plaintiff also has an option of approaching the Court under Sections 62(2) and 134(2) of Copyright Act, 1957 and the Trademark Act, 2002 respectively.
World Wrestling Entertainment v. Reshma Collection
The Delhi High Court in an appeal of its Division Bench Judgment, in this case, has defined the rules which shall apply to eCommerce and online retailers in order to determine the issues of Jurisdiction. These rules are however only limited to Trademark and Copyright infringement cases. In the present case, the plaintiff filed for a permanent injunction on the defendant alleging infringement his copyright, trademark, passing off, dilution etc. The plaintiff was an incorporated company in United States of America and defendants were residents of Mumbai. The plaintiff, appellant, in this case, approached the Delhi High Court under Sections 62(2) and 134(2) of Copyright Act, 1957 and the Trademark Act, 2002 respectively. A specific plea regarding jurisdiction was also filed by him. Plaintiff is WWE which is a well-known trademark and holds over 200 licenses in 86 countries including India. They offer a variety of memorabilia including apparel, posters, calendars etc. The same is being Counterfeited and sold by the defendant, thus infringing the Plaintiff’s registered trademark. The court held that in the present case the website consisting of the various products of the plaintiff cannot be considered an offer by itself, but is an invitation to an offer which has been compared to a menu in a restaurant.
The Delhi Court referred to the decision of the Supreme Court in Bhagwandas Goverdhandas Kedia vs M/S. Girdharilal Parshottamdas and in M/S. Dhodha House vs S.K. Maingi in deciding the question of jurisdiction in this case. When a customer in Delhi accepts it, it becomes an offer made by the customer in Delhi. Further, when through the software and browser the transaction is confirmed by making the payment to the plaintiff, the plaintiff accepts the offer of the customer at Delhi. Therefore the plaintiff can be considered to be carrying his business in Delhi to some extent because the plaintiff instantaneously communicates his acceptance to the customer through the internet at Delhi. Thereby facilitating an entity to have a virtual presence in one place which is at a distance from the place of its physical presence. This presence of websites at a particular place is like having shops in the physical world. Therefore it was held that the High Court of Delhi will have jurisdiction to entertain the suit in the same capacity as if the plaintiff is considered to be carrying on business in Delhi for the purposes of suits under Trademark and Copyright Laws.
Impresario Entertainment & Hospitality Ltd vs. S & D Hospitality
In this case, the defendant challenged the jurisdiction of Delhi High Court in the present case as neither he had his registered office at Delhi nor did he carry out any business at Delhi, even the plaintiff’s registered office is in Mumbai. In the present case, the plaintiff is a company engaged in providing restaurant services having its registered office at Mumbai. The plaintiff is carrying on a business in Delhi under the Trademark ‘SOCIAL’, in 2017 it became aware of the defendant having two restaurants in Hyderabad under the name ‘SOCIAL MONKEY’ and also about serving an identical/similar beverage to that of the plaintiff’s beverage. Therefore the plaintiff filed for a permanent injunction against the defendant before the Delhi High Court contending that his principal office for franchising and financing is located in Delhi and it carries on its business in Delhi through its office in Hauz Khas. Moreover, the defendant has entered into a contract with Zomato in order to promote his business, the office of which is in Delhi and hence this court will enjoy the jurisdiction in the present matter. The Learned Division Bench of the High Court relied on the decision of the Court in Banyan Tree Holding (P) Ltd. and held that the plaint failed to pass the test laid down in this case because merely registering on Zomato would not conclude a commercial transaction between the defendant and the customers, they would have to avail the services of the defendant at Hyderabad (his principal place of business), even Purposeful Availment could not be proved on the part of defendant. Therefore the Court did not exercise the jurisdiction in this case.
Millennium & Copthorne International Limited vs. Aryans Plaza Services Private Limited & Ors.
In this case, the Delhi High Court relied on the Impresario case but it also highlighted the faults in the test laid down in the judgment. While dealing with the question regarding reservation and booking from a website, it is a part of carrying on the business even if it does not subsequently materialize.
Online transactions are a rather new concept for our Country right now and consequently, there is a lot of discussion and confusion surrounding it. The Judicial Precedents till now have been time and again criticized the ground that selling products/services online gives an option to the plaintiff of Forum Shopping i.e. the choice of Forum based on his convenience without paying any regard to the difficulty which the defendant might have to face. What is needed is a uniform approach to be followed in all cases of jurisdiction with respect to Online Transactions with respect to Trademarks. Therefore there is a need for a Long Arm Statute or a Specific Law which deals with the question of Jurisdiction so as to enable a fair and speedy trial.