Delhi High Court Returns 17 IP Suits For Lack Of Jurisdiction, Says Its Dominance May Be Stunting IP Litigation In Other States

The Delhi High Court has held that a plaintiff cannot establish territorial jurisdiction merely by ordering an allegedly infringing product online and having it delivered to an address of its choice.

Such transactions, arranged to bring a suit within the court's jurisdiction, cannot be used to create a cause of action in Delhi, the Court held while returning 17 commercial intellectual property suits.

“If this exercise is allowed, in law, the plaintiffs will be capable of filing a suit in any nook and corner of the country through engaging an investigator who gets the product delivered at that place. Such a recourse cannot be countenanced in law,” the court ruled.

Justice Purushaindra Kumar Kaurav delivered the 246-page judgment on November 3, examining the territorial jurisdiction claimed in 17 suits involving allegations of trademark infringement and passing off. The court returned all 17 plaints, leaving the plaintiffs free to present them before the courts having the requisite territorial jurisdiction.

In several of the cases, neither the plaintiff nor the defendant was based in Delhi. The Court found that plaintiffs were relying on factors such as the accessibility of websites, online product listings, and individual test purchases to establish a connection with the national capital.

The Court cautioned that it should not entertain a suit merely because a plaintiff could point to some connection, however remote, with Delhi.

“Delhi High Court must not command a reputation that no matter how minuscule a connection the lis has with Delhi, the plaintiff or the defendant, it would entertain a suit,” it observed.

The judgment also acknowledged the role played by the Delhi High Court in developing intellectual property law, while stressing that other High Courts must have the opportunity to build their own expertise.

“India's IP landscape to a large extent has grown under the Banyan Tree, which is the Delhi High Court. While the Banyan provides shelter and comfort, it also stunts the growth of other trees below it. There is no reason to believe that other High Courts will not rise to the occasion, create a specialised machinery like this Court, and make IP litigation conducive either before them, or the district courts,” the Court noted.

The court explained that the widespread availability of websites and online services cannot, by itself, mean that every court across the country has jurisdiction over a dispute. A defendant must have purposefully targeted customers in the territory concerned. In cases based on online transactions, there must also be commercially concluded transactions within that territory.

It also clarified that a plaintiff's own website being accessible in Delhi would not establish that it carries on business there.

The judgment dealt with the issue in the context of a batch of suits involving both online and offline allegations of infringement and passing off. It held that the principles governing territorial jurisdiction cannot be bypassed simply because the alleged infringement involves goods available through the internet.

Test purchases cannot be used to create jurisdiction.

One of the cases examined was a suit filed by ABD Maestro Private Limited against Great Galleon Ventures Limited over the alleged infringement of its “YELLO” trade mark and bottle design by Great Galleon's “V21” vodka.

ABD Maestro, which is based in Mumbai, claimed that the Delhi High Court had jurisdiction because the defendants' website and social media pages were accessible in Delhi. It also relied on a GST registration showing Delhi as Great Galleon's principal place of business and a test purchase of the alleged infringing product.

Great Galleon is based in Indore. The product image relied upon by ABD Maestro carried the words “FOR SALE IN MADHYA PRADESH ONLY”. The Court found no material showing that V21 vodka was being sold in Delhi.

It also rejected the reliance on the GST registration. The expression “principal place of business” under GST law could not, by itself, establish that a party was carrying on business in Delhi for the purposes of territorial jurisdiction under the Code of Civil Procedure.

The Court further noted that ABD Maestro had not pleaded that Great Galleon held a Delhi excise licence, which would be required for the sale of liquor in the city.

On the test purchase, the Court found that the transaction had been arranged by a person set up by the plaintiff. It noted that the order had been placed by the advocate who filed the suit, and the delivery address was the same as the address mentioned in the advocate's vakalatnama.

The Court held that a single sale or delivery in Delhi, particularly one arranged by the plaintiff, could not be enough to make the city a forum for the dispute.

It observed that using an investigator or another person appointed by the plaintiff to find a connection with a particular court would, as a rule, amount to “concocting jurisdiction”. The judgment, however, recognised limited exceptions where an investigation may be necessary to establish a cause of action that could not otherwise be pleaded, or where independent material already shows that the defendant supplies goods to retailers, distributors or stockists in the territory.

Court stresses restraint in exercising jurisdiction

The Court also examined the doctrine of forum non conveniens, under which a court may decline to entertain a suit even if some part of the cause of action appears to have arisen within its jurisdiction.

It held that the court must consider whether the connection with the territory is material to the dispute or merely incidental. A “fraction” or “slender part” of the cause of action in Delhi would not necessarily justify the High Court entertaining the suit when the material and essential part of the dispute lay elsewhere.

The Court acknowledged that it had, in some earlier cases, exercised jurisdiction in circumstances similar to those relied upon by the plaintiffs. However, it said that the issue required closer consideration.

“After enjoying, effectively, a pan-India jurisdiction, it becomes difficult for a court today to draw a Lakshman Rekha and restrain itself from stepping outside its bounds,” the judgment observed.

It added that where jurisdiction naturally exists, the Court must entertain the suit. But where a dispute properly belongs before another court, bringing it to Delhi and having it entertained would deprive the natural forum of the opportunity to decide the matter.

“The question is not one of losing territory but of institutional discipline,” the Court held.

Finding that territorial jurisdiction had not been established in the 17 cases, the Court directed that the plaints be returned under Order VII Rule 10 of the Code of Civil Procedure, allowing the plaintiffs to approach the appropriate courts.