Issue IV : Jurisdiction of world wide web: Ubiquitous Or Rooted?

Introduction:

The absence of uniformity in the regulations or legal principles followed to settle disputes of similar nature arising in the cyberspace in different places of the world has caused a great deal of confusion.1 As the nebulous World Wide Web (“www”) involves within its sphere persons, institutions, and nations engaged in personal and commercial communication, the jurisdictional issues arise more often than anticipated. The only way to avoid this is to get more means available to “access” extra-territoriality. Indian laws have so far dealt with two sets of reasoning- cause of action and consequences.

Last month, a Division Bench of the Delhi High Court (“DHC”) made some key observations on jurisdictional issues in a matter2 where the cause of action was in www. The judgment comes pursuant to a referral made by a single judge of the DHC last year in the Banyan Tree Case. The DHC held that merely accessing a website in Delhi would not satisfy the exercise of jurisdiction by the DHC. The present bulletin discusses the case and the questions that have been answered by the DHC to decide the appropriate forum for a case to be heard where the cause of action lies on the www.

1.0 The Factual Matrix

Banyan Tree Holdings (“BTH”), a hospitality company in Singapore with business ventures across globe, was using the mark “Banyan Tree” and banyan tree device in its business transactions since 1944. On the account of the extensive and continuous use by the BTH of the said mark and device in relation to its business, this mark had gradually acquired secondary meaning, had become highly distinctive, gained a great degree of goodwill worldwide and have come to be associated with BTH and its sister concerns. BTH holds no registration for the said mark and device in India, the application for which is still pending.

In 2007, a township developer residing in Hyderabad (“Developers”) had initiated work on a project under the name “Banyan Tree Retreat” in its website which was objected by BTH. BTH has averred that the word mark and the device adopted by the Developers were deceptively similar to that of BTH. BTH further alleged that the use of the said mark and device by the Developers was a dishonest attempt to encash on the reputation and goodwill of BTH and was calculated to cause confusion and deception among the public by passing off the services of the Developers as that of BTH. Accordingly, the present suit was filed by BTH for an injunction to restrain the Developers from using of the said mark and device. BTH sought an interim injunction against the alleged passing off in the DHC and, therefore, the issue of jurisdiction arose.

2.0 The Observation and ruling of the DHC

BTH claimed that the DHC has the territorial jurisdiction under section 20 of the Code of Civil Procedure, 1908 (“CPC”) to entertain the suit as Developers solicit business through use of the impugned mark “Banyan Tree Retreat” and the Banyan device in Delhi. Developers have presence in Delhi through their website which is accessible in Delhi and not only provides contact information but also seeks feedback and inputs from its customers through an interactive web-page. Further, the services of Developers are being offered to the customers in Delhi also because of the ubiquity, universality, and utility of the features of the internet and the www and hence the cause of action has arisen within the jurisdiction of DHC.

In the referral order, the learned single judge examined the above claim of territorial jurisdiction of the DHC and after noticing the developments in the law in India, Canada, USA, and England, formulated questions for consideration by the Division Bench which were re-framed by the BTH’s counsel and answered by the DHC as:

  • For the purposes of a passing off action, or an infringement action where the Plaintiff is not carrying on business within the jurisdiction of a court, in what circumstances can it be said that the hosting of a universally accessible website by the Defendants lends jurisdiction to such Court where such suit is filed (“the forum court”)?

Answer: For the purposes of a passing off action, or an infringement action where the Plaintiff is not carrying on business within the jurisdiction of a court, and in the absence of a long-arm statute, in order to satisfy the forum court that it has jurisdiction to entertain the suit, the Plaintiff would have to show that the Defendant “purposefully availed” itself of the jurisdiction of the forum court. For this it would have to be prima facie shown that the nature of the activity indulged in by the Defendant by the use of the website were with an intention to conclude a commercial transaction with the website user and that the specific targeting of the forum state by the Defendant resulted in an injury or harm to the Plaintiff.

  • In a passing off or infringement action, where the defendant is sought to be sued on the basis that its website is accessible in the forum state, what is the extent of the burden on the Plaintiff to prima facie establish that the forum court has jurisdiction to entertain the suit?

Answer: For the purposes of section 20 (c)3 CPC, in order to show that some part of the cause of action has arisen in the forum state by the use of the internet by the Defendant the Plaintiff will have to show prima facie that the said website, whether euphemistically termed as “passive plus” or “interactive”, was specifically targeted at viewers in the forum state for commercial transactions. The Plaintiff would have to plead this and produce material to prima facie show that some commercial transaction using the website was

3 “The cause of action, wholly or in part, arises.”

entered into by the Defendant with a user of its website within the forum state resulting in an injury or harm to the Plaintiff within the forum state.

  • Is it permissible for the Plaintiff to establish such prima facie case through “trap orders” or “trap transactions”?

Answer: The commercial transaction entered into by the Defendant with an internet user located within the jurisdiction of the forum court cannot possibly be a solitary trap transaction since that would not be an instance of “purposeful” availment by the Defendant. It would have to be a real commercial transaction that the Defendant has with someone not set up by the Plaintiff itself. If the only evidence is in the form of a series of trap transactions, they have to be shown as having been obtained using fair means. The Plaintiff seeking to establish jurisdiction on the basis of such trap transactions would have to aver unambiguously in the plaint, and also place along with it supporting material, to prima facie show that the trap transactions relied upon was to satisfy the above test.

DHC held that jurisdiction of the forum court does not get attracted merely on the basis of interactivity of the website which is accessible in the forum state. The degree of the interactivity apart, the nature of the activity permissible and whether it results in a commercial transaction has to be examined. For the “effects” test4 to apply, BTH must necessarily plead and show prima facie that the specific targeting of the forum state by the developers resulted in an injury or harm to BTH within the forum state. For the purposes of a passing off or an infringement action (where BTH is not located within the jurisdiction of the court), the injurious effect on BTH’s business, goodwill or reputation within the forum state as a result of the Developer’s website being accessed in the forum state would have to be shown. Naturally therefore, this would require the presence of BTH in the forum state and not merely the possibility of such presence in the future. Secondly, to show that an injurious effect has been felt by BTH it would have to be shown that viewers in the forum state were specifically targeted. Therefore, the “effects” test would have to be applied in conjunction with the “sliding scale” test5 to determine if the forum court has jurisdiction to try a suit concerning internet based disputes. Finally, the DHC held that for determining if on the facts of the present suit, BTH has been able to show prima facie that the DHC has the jurisdiction to entertain the suit, it is placed again before the learned single judge who will first determine that question in light of the law laid down in this judgment.

In terms of section 134 (2)6 of the Trademarks Act 1999 (“TMA”) the DHC would have jurisdiction to entertain the suit although Developers do not reside or carry on business within its jurisdiction. Section 134 (2) of the TMA (like and section 62 (2) of the Copyright

Act 1957) is a “long arm” provision in a limited sense, confined to infringement actions by BTH carrying on business within the jurisdiction of the forum court. The present suit is an action for passing off in which neither BTH nor the Developers voluntarily reside or carry on business within the local limits of Delhi. Consequently, neither section 20(a) nor section 20(b) CPC applies. BTH seeks to find the territorial jurisdiction of DHC in terms of section 20(c) CPC. In other words, according to BTH the cause of action, wholly or in part, arises within the jurisdiction of DHC on account of the accessibility of Developer’s website in Delhi, and that (a) the nature of the website, (b) the intention of the website’s host to market its products in Delhi and (c) the effect of such action by Developers in Delhi, accounts for in determining whether DHC has territorial jurisdiction.

Indian courts have discussed the issue of jurisdiction in various cases before but the opinions have widely differed. DHC in Casio India Co. Limited v. Ashita Tele Systems Pvt. Limited7, held after referring to the decisions in Rediff Communication Ltd. v. Cyber Booth8 that “once access to the impugned domain name website could be had from anywhere else not necessarily the residence of the Defendant.” Accordingly, in case of a mere likelihood of deception, whereby an average person is likely to be deceived or confused was sufficient to entertain an action for passing off, it was not at all required to be proved that any actual deception took place at Delhi. However, in (India TV) Independent News Service Pvt. Limited v. India Broadcast Live Llc And Ors9., DHC held that “the proposition that the mere fact that a website is accessible in a particular place may not itself be sufficient for the courts of that place to exercise personal jurisdiction over the owners of the website. However, where the website is not merely ‘passive’ but is interactive permitting the browsers to not only access the contents thereof but also subscribe to the services provided by the owners/operators, the position would be different.” It was acknowledged that a mere accessibility of website may not be sufficient to attract jurisdiction of the forum court.

DHC could not examine the finer aspects of the question of jurisdiction based on the nature of the website, the intention of the host of the website to specifically target viewers outside its jurisdiction, and the effect of hosting such website on audiences outside such state. For the purposes of a passing off action or an action for infringement where BTH is not carrying on business within the jurisdiction of the forum court, and where there is no long-arm statute, BTH would have to show that Developers purposefully availed itself of the jurisdiction of the forum court. It would have to be shown that the nature of the activity indulged in by Developers by the use of the website was with an intention to conclude a commercial transaction with the website user in the forum state.

Conclusion

The provisions under the TMA and CPC together with the principles laid down by various courts so far settle the issue of jurisdiction. Jurisdiction must exist under the forum state’s long-arm statute and the assertion of personal jurisdiction must be consistent with the limitations of CPC. Even demonstration in an interactive website by way of brochures, display of prototypes and representations should amount to a conclusive commercial transaction and hence the respective courts should possess the relevant jurisdictions. This judgement is a beginning to settle more disputes and initiate the evolution of the jurisdiction for www.

Authored by: Neeraj Dubey

1For details refer to PSA Newsletter August 2008 at http://www.psalegal.com/pdf/E%20Newsline%20August%202008.pdf.

2 November 23, 2009 decision by DHC in the matter Banyan Tree Holding Private Limited v. A. Murali Krishna Reddy and Others, CS (OS) No.894/2008.

3.0      Implications

4 Ibid at 1.

5 The “sliding scale doctrine” or a “continuum,” was laid down by the court in the Zippo case for measuring websites, which provided these three categories: (i) where it clearly does business over the www, i.e., integral to the defendant’s business, (ii) a passive website, (iii) situations where the exercise of jurisdiction depends upon the level of interactivity and the commercial nature of the exchange of information or interactive websites.

6 Suit for passing off, infringement, relating to any right of a registered trade mark, to be instituted before District Court.

7 2003 (27) PTC 265 (Del).

8 AIR 2000 Bombay 27.

9 2007 (35) PTC 177 (Del.).

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