IP Rights Litigation in India: What You Need to Know About Jurisdiction & Cause of Action

An infringement suit is usually instituted in accordance with Section 20 of the Code of Civil Procedure, 1908. Clauses (a) and (b) of Section 20 provides that ‘a suit can be instituted where the defendants actually and voluntarily resides, or carries on business, or personally works for gain.’  This is the general principle with respect to jurisdiction and cause of action. Further, clause (c) of this provision provides that a suit can also be instituted in the jurisdiction of a court where the cause of action has wholly or in part arisen.

Fundamentally, a cause of action is the legal right on which a claimant sues. A cause of action is a substantive legal right, to the extent that there are recognized categories of causes of action, such as – breach of contract, negligence, trademark/copyright/design infringement, passing-off, misrepresentation, etc. In simple words – when a factual situation satisfies the elements of the substantive law or basis for interim relief – its “essential ingredients”, you have a legal right to sue for a remedy. Therefore, cause of action is the legal basis for liability (substantive law) + facts pleaded in a case.

In Kusum Ingots & Alloys Ltd. v. Union of India,[1] the Supreme Court interpreted the term ‘cause of action’ to mean “every fact which would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the Court”.

The Limitation Act 1963 sets out the statute of limitations for filing infringement actions. The usual time limit for bringing an action is three years from the date the cause of action arises.

However, in Timken Company v Timken Services Private Ltd.,[2] the Delhi High Court held that every time a deceitful act is committed, a fresh cause of action arises. 

Jurisdiction

First and foremost, the relevant provisions pertaining to jurisdiction under various Intellectual Property regimes in India are as under:

Questions of Jurisdiction under the Trademarks Act, 1999 and the Copyrights Act, 1957

Section 62 (2) of the Copyright Act, 1957 and Section 134 (2) of the Trademarks Act, 1999 confers a right on the plaintiff to institute a suit in the jurisdiction of a court where they actually reside, carry on business or personally works for gain. In the judgment of India Performing Rights Society Ltd. v. Sanjay Dalia,[3] the Supreme Court held that “if the cause of action incidentally arises at a place where the principal office of a plaintiff is located, the plaintiff cannot rely upon Sections 62 of the Copyright Act and 134 of the Trademarks Act, to institute a suit at a place where its branch office is located.” In effect, where a corporation is having an ordinary residence or principal place of business or personally works for gain, and the cause of action has also arisen at that place, it must institute a suit at the said place and not in any other jurisdictions. All other jurisdiction where the cause of action has not arisen is ousted even though at such a place the plaintiff by virtue of having a subordinate office might be carrying on business or personally working for gain.

Cause of Action and Jurisdiction in cases of Infringement/Passing-off

Trademarks

The determination of jurisdiction and the accrual of cause of action in cases of trademark infringement and passing-off was discussed extensively in Burger King v. Techchand Shewakramani.[4] The relevant paragraphs from the judgment are as follows:

19. In a case involving trademark infringement, infringement happens when a person “uses in the course of trade” any mark without the owner’s consent. Thus, use of a mark is the cause of action in an infringement as also in a passing off action. If use takes place in a territory where the suit is filed, that Court has the jurisdiction to entertain the suit. When there is use of a mark, there is a cause of action to sue where the use takes place.

If use takes place in a territory where the suit is filed, that Court has the jurisdiction to entertain the suit. It is relevant to examine what constitutes “use” of a trademark as per Section 2 (2) (c) of the Trademarks Act:

“(2) In this Act, unless the context otherwise requires, any reference –

(c) to the use of a mark-

(i) in relation to goods, shall be construed as a reference to the use of the mark upon, or in any physical or in any other relation whatsoever, to such goods;

(ii) in relation to services, shall be construed as a reference to the use of the mark as or as part of any statement about the availability, provision, or performance of such services;”

21. Thus, jurisdiction of a Court in a trademark action could be invoked where there is use upon or in relation to goods. The phrase ‘in relation to’ has been interpreted to include advertising, promotion, publicity, etc. Thus, in addition to actual sale of goods and providing services, if a person advertises his or her business under the mark in a territory, promotes his or her business under the mark in a territory or for example invites franchisee queries from a particular territory, sources goods from a particular territory, manufactures goods in a particular territory, assembles goods in a particular territory, undertakes printing of packaging in a particular territory, exports goods from a particular territory, it would constitute ‘use of a mark’.
22. Thus, when Section 20 of the CPC provides that a suit could be filed in any place where the cause of action arises, in a suit involving rights in a trademark, cause of action arises in each and every place where there is any form of use of the said mark. Principles which apply to infringement, actions to determine ‘use’ would equally apply to passing off actions.”

Patents

A patentee or its exclusive licensee can file a lawsuit for patent infringement. If the cause of action is a patent infringement lawsuit, the limitation period begins when the patentee or its agent first gains knowledge of the infringement. A fresh cause of action arises each time a patent is infringed; therefore, patent infringement lawsuits are usually premised on a continuing cause of action. The limitation period is three years from the date of the cause of action.

Designs

In S.D. Containers Indore v. Mold Tek Packaging,[5] a division bench of the apex court clarified that ‘High Court’ under Section 22(4) of the Designs Act means a High Court that does not have ordinary civil jurisdiction. The court held that in case of infringement suits under Section 22 (4), the cause of action arises in the state where the suit had been initially filed by the plaintiff and not the state where the designs are registered.

Moreover, the court in Greenlight Planet India Pvt. Ltd. v. Gee Lighting Technology[6] opined that cause of action for an infringement suit under the Designs Act is different/separate/distinct from the cause of action for a passing off suit of a trademark, trade name and domain name. It held that, ‘where an infringement suit has already been filed under the Designs Act, there is no need to obtain the leave of the court to introduce a separate proceeding in the case of passing-off of trademark.’ Lastly, in Carlsberg Breweries v. Som Distilleries and Breweries Ltd.,[7] a five-judge bench of Delhi HC held that “two causes of action (one of passing-off of trademark and the other of design infringement under the Designs Act, 2000 can be joined and tried in a composite suit.”

Copyrights

Section 62(2) of the Copyright Act,1957 has already been interpreted by the Supreme Court of India in the case of Exphar S.A. vs. Eupharma Laboratories,[8] in 2004 when the Court held that:

“It is, therefore, clear that the object and reason for the introduction of sub-section (2) of Section 62 was not to restrict the owners of the copyright to exercise their rights but to remove any impediment from their doing so. Section 62 (2) cannot be read as limiting the jurisdiction of the District Court only to cases where the person instituting the suit or other proceeding, or where there are more than one such persons, any of them actually and voluntarily resides or carries on business or presently works for gain. It prescribes an additional ground for attracting the jurisdiction of a Court over and above the ‘normal’ grounds as laid down in Section 20 of the Code.”

In the IPRS case,[9] it was held that “the intendment of Section 62 of the Copyright Act and 134 of the Trademarks Act, 1999 is to provide a forum to the plaintiff where he is residing, carrying on business or personal works for gain. The object is to ensure that the plaintiff is not deterred from instituting infringement proceedings ‘because the court in which proceedings are to be instituted is at a considerable distance from the place of their ordinary residence.’ Where an organization is having ordinary residence/principal place of business and cause of action has also arisen at that place, it shall institute a suit at the said place and not at other places.”

Conclusion

From the above, it is abundantly clear that accrual of cause of action is a sine qua non for a suit to be filed.  Cause of action is a bundle of facts which is required to be proved to grant relief to the plaintiff. Cause of action not only refers to the infringement but also the material facts on which right is founded. Section 20 of the CPC recognizes the territorial jurisdiction of the courts inter alia where the cause of action wholly or in part arises. It shall be decided in each case whether cause of action wholly or in part arises at a particular place. Lastly, a plaintiff can also file a suit where the cause of action wholly or in part arises.

References : 

[1] (2004) 6 SCC 254

[2] (CS (OS) 3/2010 and IA 21/2010)

[3] (2015) 10 SCC 161

[4] CS (COMM) 919/2016 & CC (COMM) 122/ 2017

[5] Civil Appeal No. .3695 OF 2020 (SLP (C) NO. 11488 OF 2020)

[6] CS (Comm) 290/2018

[7] 2019 (77) PTC 1 (Del)

[8] (2004) 3 SCC 688

[9] (2015) 10 SCC 161