The Delhi High Court, a preferred forum for Intellectual Property (IP) disputes, has now questioned the practice of litigants filing IP suits before it based on the most insignificant connection with the national capital [ABD Maestro Private Limited v Great Galleon Ventures Ltd + Connected matters]. 

In a 246-page judgment delivered on November 3, Justice Purushaindra Kumar Kaurav also took a dim view of the High Court entertaining such IP suits despite having little connection to the national capital.

The Court acknowledged that India’s IP landscape has largely grown under the “Banyan Tree” of the Delhi High Court. But the judge cautioned that this Banyan Tree must not stunt the growth of other trees below it. 

“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 said. 

It added that the Delhi High Court must not command a reputation that it will entertain an IP suit no matter how minuscule a connection the dispute has with Delhi.

Justice Kaurav also cautioned that after enjoying 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 question is not one of losing territory but of institutional discipline. If jurisdiction is naturally made out, the Court must entertain the suit without hesitation. But if a dispute ought to be agitated before another court and is brought to Delhi, almost forcibly, and such a suit is entertained, the other rightful and natural forum which should have exercised jurisdiction over the matter gets deprived of the opportunity to adjudicate upon that cause of action,” the High Court said. 

It added that institutional discipline and respect require this Court to refrain from entertaining such a suit. 

“The statutory and constitutional scheme evinces a carefully structured division of courts‘ jurisdiction. Constitutional morality demands that this Court respect that scheme and abides by it,” the Court underscored. 

Justice Kaurav made these observations while refusing to entertain 17 commercial suits, largely involving IP rights disputes. The parties had sought to invoke the Delhi High Court's jurisdiction despite having little or no substantial connection with Delhi.

The Court noted that in more than half of the cases, neither the plaintiffs nor the defendants were based in Delhi. It observed that the courts within whose territorial jurisdiction the parties were located were competent to adjudicate the disputes.

It further held that the mere accessibility of a website in Delhi, or the fact that goods could be ordered online and delivered to an address in the capital, would not automatically confer territorial jurisdiction.

It cautioned that allowing plaintiffs to create jurisdiction through strategically placing online orders or engaging investigators to purchase allegedly infringing products in Delhi would undermine the concept of territorial limits of courts.

Notably, the High Court also laid down several key conclusions on territorial jurisdiction in trademark and copyright infringement and passing off cases. They are summarised below: 

Infringement and passing off are separate causes of action

Territorial jurisdiction must be independently established for infringement and passing off claims. 

“If a composite suit is filed seeking reliefs for both infringement and passing off, it must be established that jurisdiction is made out for each relief. If it is found that a court does not have jurisdiction to proceed with any of the reliefs, the suit cannot proceed.”

Meaning of ‘carries on business’

A company is generally deemed to carry on business at its registered office. It can be sued at a subordinate office only if the cause of action also arises there.

Quia timet actions

A preventive suit requires an imminent threat of infringement that could cause substantial, potentially irreparable, prejudice. For regulated products, the defendant must also have the necessary licences or permissions.

Passing off

Mere availability of goods in a territory does not confer jurisdiction. The plaintiff must establish commercial-scale sales by the defendant or its distributors, wholesalers or retailers within that territory.

Offline infringement

Jurisdiction arises where the defendant uses an identical or deceptively similar trademark in the course of trade within the court's territorial limits. Registration of the mark there is insufficient.

Online infringement

The plaintiff must show that the defendant deliberately targeted people in the forum and concluded commercial transactions with them through its website.

Dynamic effect

The effects of an alleged infringement being felt in a particular territory cannot, by itself, confer jurisdiction under the CPC.

Use of investigators

Investigators ordinarily cannot be hired to manufacture territorial jurisdiction. 

“As a rule, the use of an investigator or any other person set up by the plaintiff to find jurisdiction before a forum court amounts to concocting jurisdiction,” the Court said. 

It clarified that exceptions exists where investigators merely document sales already taking place within the territory.

Forum non conveniens

Even where jurisdiction technically exists, courts can decline to entertain a suit if another forum is more appropriate, particularly where the Delhi connection is merely incidental or insignificant. 

Doctrine of demurrer

Courts can look beyond clever drafting and disregard bald assertions unsupported by documents when deciding territorial jurisdiction.

[Read Judgment]