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SC Says No To IP Forum Shopping!

Published on Sat, Aug 29,2015 | 13:45, Updated at Mon, Aug 31 at 17:01Source : CNBC-TV18 |   Watch Video :

Forum shopping is a common occurrence in litigation. Lawyers will tell you that Delhi high court is the preferred court for intellectual property cases. Often even if the IP dispute arises in Mumbai or Bangalore, the case is filed with the Delhi court. The Supreme Court seems to have put an end to this menace. But, has this judgment really solved the problem or has it made things worse for IP owners and their lawyers? Aayush Ailawadi finds out…

In 2007, Sanjay Dalia, a manager of Mumbai based Cineline cinemas was accused of copyright infringement by the Indian Performing Rights Society. IPRS is headquartered in Mumbai and the alleged infringement had taken place in Maharashtra, yet the case was filed in Delhi where IPRS had a branch office.

Under the Section 20 of Code of Civil Procedure, a suit must be filed where the cause of action arises or where the defendant resides or conducts business through a head office or branch office. But, both the Copyright Act and the Trade Marks Act override this CPC provision. They both provide an IP owner with an additional forum, a District Court in the city where the owner conducts business.

Anoop Narayanan
Founder, ANA Law Group
Mumbai-based IP litigator
“Section 134 of the Trade Marks Act and Section 62 of the Copryright Act gave certain special powers to the plaintiff as against Sec 20 in the CPC where the plaintiff could go ahead and file a litigation in a place where it resides or carried on business so CPC provided that you have to file a case in a city where the defendant is located or where the cause of action in full or partly arose. So, this deviation was done by the legislature to help the plaintiff and alleviate the problem of chasing infringers in different parts of the country.”

But, in both the IPRS case and in another similar matter the defendants or alleged infringers of IP argued that these sections were being misused by IP owners and the court must apply Heydon’s mischief rule to such cases. Heydon’s rule requires the courts to interpret contentious legal provisions in a way that the mischief is suppressed, the remedy is advanced and the defendants are not harassed! So, the Supreme Court held that the two sections must be interpreted according to this rule, in a purposive manner.

Saikrishna Rajagopal
Managing Partner, Saikrishna & Associates
Delhi-based IP litigator
“You know it’s really a pity that it was this fact situation which played out before the Supreme Court. The reason why I say that is because the facts of this particular case were very peculiar and were in fact asking for the Mischief Rule to be applied against it. Because, the plaintiff and the defendant in this case were both located in Bombay and the cause of action arose in Bombay and yet the suit was filed before the Delhi HC which in the opinion of the Supreme Court had nothing to do with either of the parties or the cause of action. It is for this reason that the SC invoked the Heydon’s principle. Now, the Heydon’s principle basically is a rule of interpretation laid down by an English court in the 1580s or so. The way this rule is applied is this. The court while interpreting the provision will look at the object or the mischief which the provisions sought to overcome and this case the object of the section was to ensure or facilitate a plaintiff in the sense that the plaintiff would not be constrained to go all the way to where the defendant is located or where the cause of action or the actual infringement has occurred and instead would be in a position to sue the infringer in his own backyard, so to say. But in this case, in view of the peculiar facts of this case where both the plaintiffs and the defendant were located in Mumbai and the cause of action has arisen in Mumbai, the Supreme Court felt that filing of a case before the Delhi HC really was an abuse of the objective for which this section was enacted.”

So, the Supreme Court has held that if the cause of action arises at the place where a company ordinarily resides or has a principal place of business, then it has to file a suit at the very same place, which means that if the infringement takes place in Mumbai, where the company is based or where it has its main office, then it has to file a suit in Mumbai and not in some other city…

Anoop Narayanan
Founder, ANA Law Group
Mumbai-based IP litigator
“So, now the Supreme Court in this particular case has gone into some detailed analysis of what has been happening in this country and several cases where the plaintiff have gone forum shopping and laid down some principles forever saying that if a plaintiff carries on business in one city and cause of action also arose in that city, then the plaintiff shall necessarily initiate the legal action in that city instead of dragging the defendant to another city, of the plaintiff’s choice or convenience.”

Saikrishna Rajagopal
Managing Partner, Saikrishna & Associates
Delhi-based IP litigator
“Section 62 of Copyright Act and Section 134 of Trade Marks Act, have clearly been watered down or diluted. So, there is a perception that these are provisions that were long arm provisions, which were capable of abuse or were abused in the past, I think that perception now will gradually die down.”

In IP cases, companies prefer to sue for infringement in the Delhi High Court, Bombay High Court, Madras High Court or Calcutta High Court, so as to bypass district courts.

For instance, in 2010, Microsoft sued a defendant in Delhi for an infringement which occurred in Bangalore, although the company had a large business presence in Bangalore. Had it sued in Bangalore, it would have to first approach the Bangalore City Civil Court. In Delhi, it could file a suit directly before the Delhi High Court. This can expedite the hearing and also means the case is heard by more experienced judges.

Interestingly of the 4 courts – Delhi is the most popular IP litigation destination. More than 70% of all IPR infringement cases in India are heard by the Delhi HC.

In the present case of IPRS v Sanjay Dalia, although the court hasn’t explicitly addressed the rampant problem of forum shopping in IP cases, it has said that the complainant’s argument about there being superior IPR expertise in Delhi is irrelevant when it comes to deciding territorial jurisdiction.

Saikrishna Rajagopal
Managing Partner, Saikrishna & Associates
Delhi-based IP litigator
“Well, to answer your question as to why the Delhi High Court has often seemed to be the capital of IP litigation, so to say is I think largely attributable to the late 1960s when I think most of IP litigators, Delhi had the highest concentration of IP litigators even then and I think it was the contribution of those men and women that made the Delhi High Court a court which was very familiar with IP principles. The Delhi High Court had the opportunity to rule on a number of IP topics particularly at a time when there were several legislative sort of gaps and the Delhi High Court demonstrated tremendous pro-activeness and openness in being willing to apply principles enunciated in foreign precedents and incorporating them under Indian law. Also, there’s been this perception that the Delhi High Court has been more liberal in the grant of ad interim ex parte relief. I think that has been the case for sometime. Other jurisdictions have been more convoluted in the grant of ex parte relief especially when you are dealing with the problem of counterfeiting and piracy. In a civil context, I think it’s very important that ex parte ad interim injunctions are passed, court commissioners are appointed to catch the infringer with a smoking gun. So the passing of orders without prior notice, ad interim orders, is critical and because the Delhi HC granted these orders and think it became a favoured jurisdiction for plaintiffs and I think that perception is changing and it’s changing rapidly.”

The Supreme Court decision may put a dent in the Delhi High Court’s popularity. But the scope of the Supreme Court judgment may be limited. Lawyers argue that complainants could still pick preferred forums from among the Chartered High Courts of Bombay, Madras and Calcutta, which function under special rules.

Saikrishna Rajagopal
Managing Partner, Saikrishna & Associates
Delhi-based IP litigator
“Let me start by saying that this judgment may not strictly apply in terms of chartered high courts arguably so. As you know chartered courts are three in the country- Bombay, Madras, Calcutta. These were high courts set up as Supreme Courts during the British rule and now they are Chartered High Courts which have a Letters Patent jurisdiction, so for example in the context of the Madras High Court, could say in an a case of copyright in the context of the film industry, it is perhaps arguably possible for a judge of the Madras High Court to assert jurisdiction over a proceeding whose cause of action has arisen in Kanyakumari. So, this question of law that the Madras High Court may rule on would then apply across the state. So, it is possible under the relevant clauses of the Letters Patent to seek leave of the High Court and therefore assert jurisdiction of the Madras High Court. So, within the territory of these High Courts, it may arguably be possible to kind of assert that IPRS vs Sanjay Dalia decision would not apply.”

Anoop Narayanan
Founder, ANA Law Group
Mumbai-based IP litigator
“The Supreme Court’s approach is pretty clear that the court wants the plaintiff to follow certain discipline in initiating the legal action and considering that the court did not clarify as to how the filing of Letters Patent shall proceed hereafter, I think it’s ultimately for the Chartered high courts to take a view on this, but my understanding is that this will apply to all the courts in terms of IP litigation.”

This judgment has certainly clarified the scope of the special rights of copyright & trademark owners in India and while it may not be music to the ears of Delhi’s intellectual property lawyers, it will surely lead to the distribution of intellectual property litigation from Delhi, to other parts of the country.

In Mumbai, Aayush Ailawadi

 
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