Your place or mine? Case changes jurisdictional rules

By Julien George, Saikrishna & Associates
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As a result of legislative policy, intellectual property rights holders can file a suit where they reside or carry on business or personally work for gain, instead of where defendants reside or the cause of action arises, which is the general rule under section 20 of the Civil Procedure Code, 1908.

Julie George
Julie George

IP rights (IPR) come into existence on creation, use or on registration of the IP (depending on the type of IP), and violations of IPR may occur anywhere in India, as opposed to other civil suits, where the cause of action arises when and where a party refuses to perform a mandated duty or obligation. Consequently, the legislature provided for an additional forum for IP owners to seek redressal against IPR infringement.

The IPR jurisdictional sections – section 62(2) of the Copyright Act, 1957, and section 134(2) of the Trade Marks Act, 1999 – allow IPR owners to file suits where they ordinarily reside or carry on business, which until now was thought to be independent of where the cause of action arose. However, the Supreme Court of India has recently sought to curtail this interpretation of these sections in order to curb what the court saw as “undue harassment” to litigating parties.

The court clarified the scope of the IPR jurisdictional sections in the case of Indian Performing Rights Society Ltd v Sanjay Dalia & Anr. In this case, the plaintiff (IPRS) had its registered or head office in Mumbai. The defendant, a cinema multiplex chain, also was situated in Mumbai and the cause of action had accrued in Mumbai. The plaintiff had, however, instituted an infringement suit in Delhi on the basis of its Delhi branch office under section 62(2) of the Copyright Act.

The court held that if the cause of action accrues at the place where the plaintiff also happens to have its principal office, then the suit can only be instituted at that place. The court’s intention it seems was to restrict a possible tool for harassment while ensuring that the plaintiff’s benefit under the IPR jurisdictional sections remained intact.

The court stated that the IPR jurisdictional sections “never intended to operate in the field where the plaintiff is having its principal place of business at a particular place and the cause of action has also arisen at that place so as to enable it to file a suit at a distant place where its subordinate office is situated though at such place no cause of action has arisen. Such interpretation would cause great harm and would be juxtaposed to the very legislative intendment of the provisions so enacted.”

The above decision was premised on the “mischief rule”, which says the while granting a remedy to a party under the provisions in question, it is equally necessary to avoid any counter mischief to the opposite party.

This decision has created a stir within the IPR community, with the common concern being whether it would result in IP owners being forced to institute suits wherever the defendant resides or carries on business (as the defendant could now show that the plaintiff has a presence within the same jurisdiction, either through its principal office or its branch office). This would on the face of it negate the “special rule” granted to IP owners.

This concern was fortified by Delhi High Court’s recent decision in Ultra Home Construction v Purushottam Kumar Chaubey & Ors. Relying on the IPRS case, the high court held that if cause of action is found at a place where the plaintiff carries on business, either through its principal office or a branch, it would have to institute its suit at that place.

The interpretation in Ultra Home seems contrary to the Supreme Court’s observations in the IPRS case. That court arguably only linked cause of action with the plaintiff’s principal place of business, resulting in ousting a jurisdiction claim in relation to a branch office where the cause of action did not arise. This ratio is in line with the legislative intent of providing a plaintiff corporation with jurisdiction at its principal place of business. Additionally, if an entity does not have a principal place of business, and instead carries on business at various places, then the entity would be required to file suit in its place of business where the cause of action also coincides, if it does. Unfortunately the IPRS judgment is silent on what would happen if the cause of action accrues at both the principal place of business and the place where a branch office is located.

In Ultra Home, however, the IPRS decision has been construed as ousting the jurisdiction of the principal place of business in favour of a branch office, which seems to contradict the basic intent of the IPR jurisdictional sections. It is a well-established principle of law that a decision is an authority for what it decides and not what can logically be deduced from it. Applying the ratio of the IPRS judgment to a different set of facts would result in a complete dilution of the jurisdictional benefits guaranteed under the IP laws. For now, all one can do is wait and watch for this jurisdictional saga to play out.

Julien George is a senior associate at Saikrishna & Associates. The views expressed in this article are personal.

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