SUMMARY JUDGMENT IN INTELLECTUAL PROPERTY DISPUTES UNDER ORDER XIII-A OF CIVIL PROCEDURE CODE

  1. Applicability of order XIII-A of CPC to Intellectual Property Dispute

With the objective of streamlining and expediting the disposal of disputes in litigation, the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (hereinafter referred to as the “Act”) came into effect on October 23, 2015.  The Act provides for the setting up of specially designated Commercial Courts at District level and Commercial Division of High Courts with ordinary original civil jurisdiction to adjudicate on commercial disputes of a certain specified value. “Commercial dispute” includes disputes arising out of intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semi-conductor integrated circuits.[1] “Specified Value” has been defined[2] to mean the value of the subject-matter of the suit, determined in accordance to Section 12 of the Act, which shall not be less than one crore rupees or such higher value to be notified by the Central Government. The value of subject matter in an intellectual property right dispute would be determined by the market value of the said IP right, as estimated by the plaintiff[3].

  1. Amendment of the Code of Civil Procedure

The said Act has amended the Code of Civil Procedure, 1908 (hereinafter to be referred to as “CPC”) to incorporate stricter timelines and procedures. These amended provisions of the CPC are applicable[4] only in respect of commercial disputes of specified value (one crore rupees). One such salient feature of the Act is the inclusion of Order XIII-A in CPC which provides for the mechanism of Summary Judgment in respect of a claim without recording oral evidence. In light of two recent decisions of the Delhi High Court, this article aims to  analyse the said mechanism in respect of intellectual property disputes.

  1. Context of the mechanism under Order XIII-A

Order XIII-A delineates the procedure by which the Court shall, on application of a party, decide a claim without the recording of oral evidence. Previously, suits which had more or less a clear outcome based on merits would still have to go through the entire procedure enumerated under the CPC before the case could be disposed.

The technicalities led to inordinate delays for the parties concerned and the entire docket system was overburdened. To counter this event, the amendment envisages a process for a summary judgment which is on similar lines to summary suits provided in the CPC with the primary difference that application for summary judgment can be in respect of any relief in a commercial dispute while summary suits relate to such relief relating to liquidated demand or fixed sum of debt.

Application to be in respect of a claim or part thereof

Under order XIII-A, the “claim” in an application for summary judgment shall include (a) part of a claim, (b) a particular question on which the whole or part of the claim depends, and (c) counter-claim.[5] For example, in Trade Mark infringement suit, the question of prior user/first use may be a question on which the claim for damages depends either in whole or in part, and such question may be determined in an application for summary judgment.

When and on what considerations:

Under mechanism as provided under Order XIII-A, the application for summary judgment can be made by either party after the service of summons to the defendant and before the framing of issues.[6] Upon consideration and satisfaction of the Court, a summary judgment may be given that (a) the plaintiff/defendant has no real prospect of succeeding on the claim/defence, as the case may be; and (b) there is no other compelling reason as to why the claim should not be disposed of before the recording of oral evidence.[7]

The rationale being that the Court, after hearing both parties to an application for summary judgment, is of the view that there are no material propositions of fact or law on which further evidence needs to be led since the respective rights of the parties are well-established as per the merits of the dispute.

  1. Bright v. MJ Bizcraft

In the case of Bright Enterprises Private Ltd. v. MJ Bizcraft LLP[8], decided by a Division Bench of the Delhi High Court in appeal, a suit was originally instituted before a Single Judge to claim a permanent injunction, restraining trademark infringement and dilution of goodwill by the defendant. The Plaintiffs used ‘PRIVE’ in the hotel business while the Defendants used ‘PRIVEE’ in relation to a nightclub in the hotel Shangri-La Eros. The Single Judge, without issuing summons to the defendant, dismissed the said suit by suomoto invoking Order XIII-A and stating that a plaintiff’s suit with “no real chance of success” ought to be dismissed at whichever stage the Court finds it so. Subsequently, this was appealed by the plaintiffs.

  • No dismissal without issue of summons

On an appeal by the Plaintiffs on the dismissal of their case, the Division Bench held that the principle of audi alteram partem is embedded in the CPC and hence issue of summons is not optional at the instance of the Court when a particular suit has been duly instituted. It was further held that at the stage of admission of the suit, it is only to be seen whether the suit has been duly instituted. It observed that the case of a plaintiff may be weak but that is not a ground for dismissing a suit without granting the plaintiff an opportunity of proving and establishing his case.

  • Window for application and no suomoto invocation

The Division Bench further held that Order XIII-A cannot be suomoto invoked by the Single Judge on inquisition and that summary judgment may only be delivered upon appropriate application being made by either of the parties.[9] Moreover, it was stressed upon by the Court that the window for preferring an application for summary judgment is only after issuance of summons to the defendant and before the framing of issues, and since such proceedings are of an exceptional nature it was the prerogative of Courts to be scrupulous while observing the requirements of Order XIII-A.

  1. Ahuja Radios

In Ahuja Radios v. A. Karim[10], an application for summary judgment was made on the basis of admissions on part of the defendant. The plaintiff was a leading manufacturer and seller of audio equipment under the registered AHUJA mark since 1940. A suit was filed against the defendant for selling counterfeit products under its mark.

The court restrained the defendant from selling audio equipment using the mark AHUJA or other deceptively similar mark and ordered a local commissioner to inspect his premises. The inspection resulted in seizure of a number of products bearing the AHUJA mark, which the defendant admitted were not original. Subsequently in pleadings, the defendant made claims contrary to his initial admitted statements and claimed that such counterfeit products were placed in his premises by the plaintiff immediately before the inspection.

The Court noted that the defendant had no real prospect of resisting the decree of permanent injunction and that the defendant also had little prospect of succeeding in its defence that he was not dealing in the counterfeit products, thereby indicating that there was no compelling reason for the Court to not dispose of the claim for permanent injunction before the recording of oral evidence.

The court passed a decree for permanent injunction in summary disposal of the suit under Order XIII-A on the basis of the admissions of fact by the defendant. Therefore, it is pertinent to note that admission on fact is a relevant criterion for admitting an application for summary judgment.

Conclusion

It is pertinent to note that sometimes disputes in relation to intellectual property rights are pertaining to infringers who do not enter appearance in the proceedings to the suit. Instead of requiring the plaintiff to lead evidence ex-parte, summary judgment under Order XIII-A of the CPC is an efficacious mechanism of disposal of disputes in such cases. The Courts are already passing punitive damages in trademark infringement cases where the offence of infringement is gross and clearly made out and hence, it is submitted that Order XIII-A would find an appropriate application in such disputes.

About the Author: Pratik Das, Legal intern at Khurana and Khurana, Advocates and Attorneys and can be reached at abhijeet@khuranaandkhurana.com

References :

[1] Section 2(1)(c)(xvii) of the Act.

[2] Section 2(1)(i).

[3] Section 12(1)(d).

[4] Section 16(1) and 16(2).

[5] Order XIIIA, R. 1(2).

[6]Ibid, R. 2.

[7]Ibid, R. 3.

[8]2017(69)PTC596(Del).

[9] Order XIII-A Rule 4.

[10] IA No. 5202/2017 in CS(COMM) 35/2017 delivered on May 1, 2017.

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