Establishing jurisdiction for suits against website owners

By Vivek Vashi, Bharucha & Partners
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In Lilly Icos LLC v Richie Laboratories Ltd Delhi High Court recently considered the question of how to justify a court’s jurisdiction in proceedings against the owners of a website.

Lilly Icos, an Indiana-based collaboration between Eli Lilly and Company and ICOS Corporation, was established in 1998 to develop, manufacture, promote and sell pharmaceutical preparations to treat erectile dysfunction. The active ingredient in the preparations was Tadalafil, patented in numerous countries by Lilly and its affiliates.

Vivek Vashi Bharucha & Partners
Vivek Vashi
Bharucha & Partners

Lilly filed an application in the US in 1999 to register Cialis as its trademark for the preparations. The mark, with its distinctive suffix “-alis”, was clearly recognizable to the trade and the public. The tablets sold under the Cialis mark were an unusual almond shape, a unique light yellow colour, and were stamped with Lilly’s trademark C-20 in a distinctive script. This combination of elements was known as Cialis Tablet Trade Dress (CTTD). The drug was sold globally under the trademark Cialis and CTTD.

Lilly secured exclusive marketing rights for Tadalafil under patent laws in India, and also applied for registration of the trademark Cialis in India. The application was advertised in the Trade Marks Journal in 2003, and Lilly’s registration of the trademarks Cialis and C-20 was approved while the lawsuit was pending.

Lilly learned that Richie Laboratories was advertising a Tadalafil tablet under the brand name Tadarich on its website, www.richielabs.com. Richie’s product used a pill shape identical to CTTD, only replacing Lilly’s trademark C-20 with the number 20 stamped in a stylized form.

Lilly alleged that: (i) Richie also used the brand name Richcalis to indicate that its product was a richer form of Cialis; (ii) Richie used the name to exploit the goodwill and reputation of Lilly and to pass off its goods as Lilly’s, thereby causing irreparable harm to Lilly; (iii) Richie’s use of the suffix “-alis” had significantly injured Lilly’s interest by causing public confusion as to the source, sponsorship or affiliation of Lilly’s product; (iv) Richie damaged Lilly’s goodwill in the Cialis mark and CTTD; (v) Richie injured Lilly’s right to use the Cialis mark and CTTD as the exclusive indications of Lilly’s product; and (vi) Richie had diminished the distinctive quality of Lilly’s Cialis mark and CTTD.

Lilly instituted proceedings in Delhi High Court for a permanent injunction and for rendition of accounts for the profits made by Richie. Richie refused to accept the summons and notice issued by the court and the matter proceeded ex parte.

The court raised doubts on its jurisdiction to hear the suit. Lilly contended that since Richie advertised the trademarks through its website, which could be accessed in Delhi, and sold its product globally including in Delhi, the court had jurisdiction to entertain the suit.

However, the court observed that Lilly’s evidence about the nature and features of Richie’s product was not taken from Richie’s website, but from a different website, www.express-pharmapulse.com. Further, Richie’s website was not accessible in Delhi.

The court acknowledged that under section 20 of the Civil Procedure Code, 1908, a plaintiff may file a suit at the place where the cause of action arises wholly or in part. However, the court observed that the mere establishment of a website would not give jurisdiction to a court. A plaintiff must show a substantial cause or action that invokes the jurisdiction of a particular court.

The court relied on its previous decision in India TV Independent News Service Pvt Ltd v India Broadcast Live LLC, in which it was held that the mere fact that a website is accessible in a particular place may not be sufficient for the courts of that place to exercise jurisdiction over the owners of the website. The situation would be different if the website was interactive rather than passive: for example, if users could not only access content but also subscribe to services provided by the website owners. The level of interactivity would be relevant; limited interactivity might also be insufficient for a court to exercise jurisdiction.

The court also referred to Cybersell Inc v Cybersell Inc and Ors, in which the US Court of Appeals applied a tripartite test to determine exercise of personal jurisdiction over a non-resident defendant. The test required (i) the non-resident defendant to perform an act or transaction via the website; (ii) the claim to arise out of the defendant’s website-related activities; and (iii) a reasonable exercise of jurisdiction.

The court further referred to Kusum Ingots and Alloys Limited v Union of India, in which the Supreme Court held that where a small part of the cause of action arose within the territorial jurisdiction of the high court, this would not in itself be a sufficient reason for the court to exercise jurisdiction. The court held that since (i) the website www.expresspharmapulse.com was not an interactive website but a passive one, (ii) Richie had discontinued production of Tadarich and (iii) Lilly had not established that Richie marketed Tadarich in Delhi, the court did not have the jurisdiction to entertain the suit.

This judgment is significant as it clarifies that mere accessibility of a website in a certain location is insufficient to establish a court’s jurisdiction. A plaintiff must establish a sufficient nexus between the website and the court, and the website’s level of interactivity would be a relevant indicator of such a nexus.

Vivek Vashi is the mainstay of the litigation department at Bharucha & Partners.

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