Court decides jurisdictional issues in internet cases

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In a recent, elaborate and comprehensive decision in Banyan Tree Holding v A Murali Krishna Reddy & Anr, the division bench of Delhi High Court has settled recurring questions concerning accessibility of websites and justification of a court’s territorial jurisdiction in proceedings against the owners of websites.

The plaintiff, BT Holdings, a hospitality company registered in Singapore, claimed to be a part of a group of companies involved in the hospitality business. Since 1994 it adopted and used the word mark “Banyan Tree” and the banyan tree device. It had also maintained the websites www.banyantree.com and www.banayantreespa.com since 1996, both of which were accessible in India.

Internet_conceptIn October 2007 the plaintiff learned that the defendants, being township developers based in Hyderabad, had initiated work on a project under the name “Banyan Tree Retreat”. Accordingly, the present suit was filed by BT Holdings seeking an ex parte interim injunction against the alleged passing off and dilution of the “banyan tree” mark by the defendant on their website, www.makprojects.com/banyantree, as well as a rendition of accounts.

The preliminary objection before a single judge of Delhi High Court was the territorial jurisdiction of the court to examine the suit. BT Holdings held that the court possessed the jurisdiction since the services of the defendants were being offered to residents of Delhi through brochures, and the defendant’s website is interactive and is accessible from anywhere in India.

The judge found that the suit was an action for passing off of trademark in which neither BT Holdings nor any of the defendants were voluntarily residing or carrying on business within the local limits of Delhi. The judge referred questions concerning the jurisdiction of the court to entertain the suit to the division bench of Delhi High Court, which paraphrased them as follows:

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”)?

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 establish that the forum court has jurisdiction to entertain the suit?

Is it permissible for the plaintiff to establish such a case through “trap orders” or “trap transactions”?

After examining the law of “long arm” statutes in the US and other common law jurisdictions such as Canada, the UK, Australia and India, the division bench found that 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. That is, it would have to be shown that the defendant’s use of the website was done with intent 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 to the plaintiff within the forum state. In this finding, the court relied upon the judgment in India TV Independent News Service v India Broadcast Live and Ors of 2007, which overruled the finding in a 2003 judgment, Casio India v Ashita Tele Systems.

The division bench also found that the plaintiff would have to show that some commercial transaction using the website was actually entered into by the defendant with a user of the website, resulting in an harm to the plaintiff within the forum state.

The division bench further found that any commercial transaction used to prove harm to the plaintiff would have to be a real transaction entered into by the defendant with an internet user located within the jurisdiction of the forum court. It could not be a “solitary trap” transaction (set up by the plaintiff), since that would not be an instance of purposeful availment by the defendant. If the only evidence is in the form of a series of “trap” transactions, they must be shown to have been obtained by fair means.

The suit was placed again before the single judge with direction to first determine the question of territorial jurisdiction in light of the law laid down in the judgment of the division bench.

The judgment is significant, as the court held that merely accessing a website in Delhi would not satisfy the exercise of jurisdiction by Delhi High Court. Rather, it has to be shown that the defendant purposefully availed itself of such jurisdiction, by demonstrating that the use of the website was with intent to conclude a commercial transaction with the site user, and such use resulted in injury or harm to the plaintiff.

The legislative and regulatory update is compiled by Nishith Desai Associates, a Mumbai-based law firm. The authors can be contacted at [email protected] Readers should not act on the basis of this information without seeking professional legal advice.