No Physical Footprint, Real Legal Implications: Indian Trademark Law For Foreign Defendants

INTRODUCTION

The Internet today has massively facilitated trade and business for people and companies across the globe by providing them a platform to ease the communication between the buyer and the seller.

However, this facilitation of trade and business raises pertinent questions as to the laws which would govern the disputes arising in this internet space as the litigants may or may not be physically present within the forum state.

Before a court of law can adjudicate upon a matter, it must decide a pertinent question as to jurisdiction for entertaining the lawsuit.

Section 20 of the Civil Procedure Code and Section 134 of the Trade Marks Act, 1999 provide the parameters for establishing a court’s territorial jurisdiction. However, there is an explicit departure from the standard principle of territorial jurisdiction when the case involves exercising jurisdiction on the basis of the internet or web presence of the alleged Infringers.

For an efficacious adjudication of the matter at hand it is important to walk through and rely on the various principles evolved as part of common law and statutory provision to establish personal jurisdiction and applicable standards for the entertainment of suit of the forum court where the alleged breach is based on the internet activity.

FOREIGN LITIGANT WITH NO PHYSICAL PRESENCE IN INDIA

If no business is being run by the plaintiff within the court’s territorial jurisdiction and there is no long-arm statute, it is necessary to be shown by the plaintiff that there has been “purposeful availment” by the defendant of the forum court’s jurisdiction in order to persuade the forum court that it has jurisdiction to consider the case for passing off action to take place.

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Trademark Law

In order to do this, it must be proven beyond a reasonable doubt that the defendant intentionally targeted the forum state in order to cause harm to the plaintiff there and that the defendant used the website having the intention to use it for commercial advantage. Theories of Constitute Use and Injury Test may be used to analyse the same.

In the case of Tata Sons the court while relying on the India Tv case held that in order for Indian courts to exercise jurisdiction over overseas defendants in internet trademark infringement actions, “intent to target” is a mandatory prerequisite. Since the Defendants were not within jurisdiction of the court, the sought-after directions were not issued by the court to them.

CPC AND ONLINE IP INFRINGEMENT

According to Civil Procedure Code, 1908, Section 20 (hereafter referred to as “CPC”), a lawsuit may be filed in the court that has jurisdiction over:

If the defendant works for profit, has a place of residence, or engages in business or

Where the action’s primary causes, whether whole or in part, can be identified (Cause of Action). Section 134 of the Trade Marks Act, 1999 addresses the issue of territorial jurisdiction.

These provisions are only applicable in infringement cases; passing off cases are not addressed by them. Given that a website or mobile application’s content, goods, and services are accessible in all regions where the internet is accessible, the following two important questions must be addressed:

Where exactly can a plaintiff or defendant be said to “carry on business” in relation to an organisation or entity that has an online presence?

When it pertains to infringing goods and services provided or sold online, where specifically does the “cause of action” arise?

CARRYING ON BUSINESS  

It was stated in Dhodha House v. S.K. Maingi that a man’s presence was not required for “carrying on business.” Aryans Plaza Services (P) Ltd. v. Millennium & Copthorne International Ltd. case established that service providers would be liable for any place where customers might make a basic reservation, including through websites run by other companies. This would hold true regardless of whether the reservation is carried out in a transaction.

Additionally, in the case of World Wrestling Entertainment Inc. v. Reshma Collection, more emphasis was placed on online transactions, specifically those that were an “essential part” of the business. It was noticed that the act of displaying products on a website is the same as inviting a consumer to make an offer.

It was concluded that the seller would be deemed to be conducting business at that place if they could conduct business at that location through a website, being equivalent to the seller having a shop there in person.

CAUSE OF ACTION

When considering the cause of action in the case of Banyan Tree Holding (P) Ltd. v. A. Murali Krishna Reddy, where neither the plaintiff nor the defendant resided within the jurisdictional boundaries of the court, the jurisdiction under Section 20 CPC in an online context was thoroughly examined.  In this case, the court determined that simply being able to access or interact with a website in a particular location does not give local courts jurisdiction over that area.

It is mandatory for the plaintiff to show that there has been “Purposeful Availment” on the part of the defendant of the jurisdiction in the area where the lawsuit was filed. This included things like: Specific targeting of users there; Completion of business transactions with them; Injury to plaintiff’s operations, reputation, or goodwill there.

However, adjudication has diluted this standard over time. In the cases of Exxon Mobil Corp. v. Exoncorp (P) Ltd. as well as Sholay Media and Entertainment (P) Ltd. v. Yogesh Patel, the court determined that the mere use of a trade mark at an exhibition establishes jurisdiction. This is because the cause of action partially arises in all locations where such commercials and advertising are made since, in addition to actual sales, advertisements, and promotions also constitute infringement under the Intellectual Property Acts.

It was stated in the case of Burger King Corporation v. Techchand Shewakramani & Ors., that the place where the use of trademark occurs is the place of litigation under Section 20(c) of the Civil Procedure Code. A trademark may be used “upon” or “in relation to” goods in this manner. The Court clarified that the trademark need not always be attached to the goods or that there must be an actual sale for it to be used in commerce by citing Sections 29(4) to(7) and 56(1) and(2) of the Trademarks Act, 1999. The acts of marketing and promoting the mark, requesting franchisee inquiries from a territory, obtaining goods from a territory, producing or assembling goods , printing or packaging, and exporting goods from a territory are all considered uses of the mark within that territory.

CONCLUSION

In today’s age of globalization and fast-moving businesses, especially in the cyber space, it is important to keep up with the pace of internet and holistically decide the territorial limits of the forum court on a trade or business which is majorly present and functioning in the cyberspace. The gap between the fast-moving trade and business and the common law principles has to be filled by the reasonableness by which Courts adjudicate upon such matter.

It is evident from the above discussion that Indian courts can indeed entertain the present suit, regardless of the fact that such exercise of jurisdiction is to be based on internet or web-presence of such plaintiff and alleged infringers; making the given case an explicit departure from the general law as to territorial jurisdiction.

The present court therefore believes that the aforementioned applicable criteria for considering passing off lawsuits are all pertinent to the current case. This is based on the defendant using a plaintiff’s trademark on the defendant’s website or on trademark infringement or passing off where more than one litigant is a foreign entity with no physical presence.

Author: Kunal Vinayak, in case of any queries please contact/write back to us via email chhavi@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney.

REFERENCES

Jain, I.B., 2023. The Significance of Intellectual Property Rights in Cyber Law. European Economic Letters (EEL), 13(1), pp.161-167.

Ranjan, R., 2022. Trademark Infringement Issue in Cyberspace. Issue 6 Indian JL & Legal Rsch., 4, p.1.

Hörnle, J., 2021. Internet jurisdiction law and practice. Oxford University Press.

Chaudhary, G., 2021. IPR in Cyberspace. Law Essentials J., 2, p.331.

Holbrook, T.R., 2020. Is There a New Extraterritoriality in Intellectual Property?. Colum. JL & Arts, 44, p.457.

Senftleben, M., 2020. Intermediary Liability and Trademark Infringement: Proliferation of Filter Obligations in Civil Law Jurisdictions?.

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