Protection of IP dwindles at the border

By Manisha Singh and Dheeraj Kapoor, LexOrbis
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The essential question of jurisdiction is often difficult, especially in disputes involving the internet activities of a foreign resident. It formed the basis of the dispute before the Delhi High Court in the case of Tata Sons Private Limited v Hakunamatata Tata Founders & Ors. The plaintiffs alleged that the defendants had infringed their trademarks by dealing in cryptocurrencies under the name TATA coin/$TATA. Under their well-known mark, TATA, the plaintiffs provided a platform for cryptocurrency trading, but did not trade in cryptocurrencies under any brand name or trademark. The defendants were situated in the UK and the USA, respectively, had no outlets in India and were not said to have carried out manufacturing or marketing activities in the country. Since the defendants were based outside India, the issue was whether the court had jurisdiction to grant injunctions in favour of the plaintiff.

Manisha-Singh,-Partner,-LexOrbis
Manisha Singh
Partner
LexOrbis

The plaintiffs argued that as the defendants’ cryptocurrency could be purchased on their website by anyone in India, persons from India had posted enquiries on the defendants’ Twitter page and there was heavy internet traffic to the site from India, there was “purposeful availment” of the jurisdiction of the court. The plaintiffs also argued that the “effect” of such infringement was felt within the court’s jurisdiction. According to the plaintiffs, online purchases within the jurisdiction, of the cryptocurrency using the infringing marks, adversely affected the plaintiffs’ business and devalued their goodwill. The plaintiffs maintained that there existed three grounds for the exercise of the court’s jurisdiction, namely the purposeful use by the defendants of the court’s jurisdiction; the cause of action arising from the defendants’ activities within the court’s jurisdiction, and a substantial connection between the acts of the defendants and their consequences, and the jurisdiction of the court.

The plaintiffs alleged that the defendants clearly intended to target India as a customer base and any injunction could be enforced by the court since the domain name registrars were also before it.

Dheeraj Kapoor, Managing associate, LexOrbis
Dheeraj Kapoor
Managing associate
LexOrbis

The court distinguished the case of (India TV) Independent News Service Pvt. Limited v India Broadcast Live LLC and Ors. upon which the plaintiffs relied. Although the court in India TV granted ex parte injunctions, the court in TATA noted that the website indiatvlive.com in that case was not passive and included India as a country from which people could subscribe. The defendants evinced an intention to target nationals within and outside India. There was much material establishing that the defendants in that case had sufficient connections with India and intended to target India as a consumer base. The court in TATA held that the accessibility of the defendants’ website to persons within its jurisdiction did not, of itself, confer jurisdiction. A substantial indication of activities directed towards those within the court’s jurisdiction was necessary. Indian courts do not possess extra-territorial jurisdiction over non-resident defendants, and have jurisdiction only if the defendants’ activities have a sufficient connection with India, the cause of action arises out of such activities, and the exercise of jurisdiction is reasonable. That the defendants’ website was interactive and accessible to persons located within the court’s jurisdiction, although relevant, was by itself insufficient. The level of interactivity is important.

The court emphasised that the predominant considerations in deciding the issue were whether the defendants’ website was interactive and whether it disclosed an overt intention to target the Indian market. Without an intention to target the court could not exercise jurisdiction.

In the present case, the court found these factors to be missing and the defendants’ intention consciously to target India as a potential market could not, prima facie, be established. The mere accessibility of the website in India was insufficient, and the court thus refused to grant an interim injunction to the plaintiffs.

However, brand owners should note that if the evidence establishes sufficient connections between the defendants’ activities and India, and an intention to target India as a market the courts may well decide cases differently.

Manisha Singh is a partner and Dheeraj Kapoor is a managing associate at LexOrbis

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