[Case Brief] Banyan Tree Holding (P) Ltd. v/s A. Murali Krishna Reddy & Others – Delhi High Court

Case Name Banyan Tree Holding (P) Ltd. v/s A. Murali Krishna Reddy & Others
Case Number CS (OS) No 894 of 2008
Court Delhi High Court
Bench Chief Justice AP Shah, Justice Dr S. Muralidhar
Author of the Judgment Justice Dr S. Muralidhar
Decided On 23 November 2009
Relevant Act/Sections Copyright Act, 1957 – Sections 62(2)

Trademarks Act, 1999 – Sections 9, 20(c), 134(2)

Author of the case brief Praher Vaidya

Facts:

The Plaintiff is a company having its registered office in Singapore and it is a part of a group of companies involved in the hospitality business. Since 1994, it adopted and used the wordmark Banyan Tree and also the banyan tree device. They also maintain the websites, www.banyantree.com and www.banayantreespa.com since 1996, which are accessible in India. Plaintiff does not hold a registration for the said mark and device in India but on the account of the extensive and continuous use by the Plaintiff of the said mark and device in relation to its business, they have acquired secondary meaning; have become highly distinctive and have come to be associated with the Plaintiff and its sister concerns. In October 2007, the Plaintiff learned that the Defendants, which are at Hyderabad had initiated work on a project under the name “Banyan Tree Retreat”. The wordmark and the device adopted by the Defendants in relation to their retreat is deceptively similar to that of the Plaintiff. A suit was filed by the Plaintiff for an injunction to restrain the Defendants from the use of the said mark and device. The learned single judge has noticed that the plaintiff has claimed in the plaint that the Court has the territorial jurisdiction under Section 20 of the Code of Civil Procedure, 1908 (CPC) to entertain the suit. According to the Plaintiff the Defendants solicit business through the use of the impugned mark “BANYAN TREE RETREAT” and the Banyan device in Delhi. Also, that the Defendants have a presence in Delhi through their website which is accessible in Delhi and because of the ubiquity, universality, and utility of the features of the Internet and the World Wide Web, the cause of action has arisen within the jurisdiction of the Court. The Single Judge made a referral order to the Division Bench of the Delhi High Court for deciding the issues below.

Issues:

  1. 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”)?
  2. 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 prima facie establish that the forum court has jurisdiction to entertain the suit?
  3. Is it permissible for the Plaintiff to establish such prima facie case through “trap orders” or “trap transactions”?

Held:    

The present suit is an action for passing off and not of infringement in which neither the Plaintiff nor any of the Defendants voluntarily resides or carries on business within the local limits of Delhi. Consequently, neither Section 20 (a) nor Section 20(b) of the Civil Procedure Code applies.

Issue 1:                Various tests as evolved in other jurisdictions:

  1. Purposeful availment– The defendant must have purposefully directed its activities towards the forum state or otherwise “purposefully availed” of the privilege of conducting activities in the forum state.
  2. Zippo sliding scale test – The “sliding scale” test for determining the level of interactivity of the website, for the purposes of ascertaining jurisdiction of the forum state i.e. (i) passive, (ii) interactive and (iii) integral to the defendants business.
  3. Effects test- The forum court will exercise jurisdiction if it is shown that the effects of the Defendant’s website are felt in the forum state.
  4. Targeting- The activity must be intended to have effects within the territory of the state asserting jurisdiction. It is something more than effects, but less than a physical presence.
  • The essential principles developed as part of the common law can be adopted by our courts in determining whether the forum court has jurisdiction where the alleged breach is related to an activity on the internet.
  • For the purposes of a passing off action or an action for infringement where the Plaintiff is not carrying on business within the jurisdiction of the forum court, and where there is no long-arm statute, the Plaintiff would have to show that the Defendant purposefully availed itself of the jurisdiction of the forum court. It is not enough, merely to show that the website hosted by the Defendant is an interactive one. It would have to be shown that the nature of the activity indulged in by the Defendant by the use of the website was with an intention to conclude a commercial transaction with the website user.
  • While the Defendant may in his defense show how he avoided the forum state, the initial burden is on the Plaintiff to show that the Defendant “purposefully availed” itself of the jurisdiction of the forum court. The issue of incorporating filters to block access to the website by viewers located outside the forum state will have to be considered while deciding if the Defendant had “purposefully avoided” the forum state. However, that question will arise only if the Plaintiff has been able to show that the website of the Defendant is interactive and permits commercial transactions to be concluded by the Defendant with a user of the website.
  • Jurisdiction of the forum court does not get attracted merely on the basis of interactivity of the website which is accessible in the forum state. The degree of the interactivity apart, the nature of the activity permissible and whether it results in a commercial transaction has to be examined. For the effects test to apply, the Plaintiff must necessarily plead and show prima facie that the specific targeting of the forum state by the Defendant resulted in an injury or harm to the Plaintiff within the forum state. For the purposes of a passing off or an infringement action (where the plaintiff is not located within the jurisdiction of the court), the injurious effect on the Plaintiffs business, goodwill or reputation within the forum state as a result of the Defendants website being accessed in the forum state would have to be shown. Naturally, therefore, this would require the presence of the Plaintiff in the forum state and not merely the possibility of such a presence in the future. Secondly, to show that an injurious effect has been felt by the Plaintiff it would have to be shown that viewers in the forum state were specifically targeted. Therefore the effects test would have to be applied in conjunction with the “sliding scale” test to determine if the forum court has jurisdiction to try a suit concerning internet based disputes. [The judgment of the Delhi High Court in Casio India Co. Limited vs Ashita Tele Systems Pvt. Limited is to this effect overruled.]

Issue 2:                For the purposes of Section 20 (c) CPC, in order to show that some part of the cause of action has arisen in the forum state by the use of the internet by the Defendant, the Plaintiff will have to show prima facie that the said website was specifically targeted at viewers in the forum state for commercial transactions and produce material to prima facie show that some commercial transaction using the website was entered into by the Defendant with a user of its website within the forum state and that the specific targeting of the forum state by the Defendant resulted in an injury or harm to the Plaintiff within the forum state.

Issue 3:                The facts of each case will determine whether the trap transaction is a fair one and has resulted in a purchase on the internet of goods or services. Alone trap transaction will not be sufficient evidence of infringement or passing off. For the purposes of establishing that a part of the cause of action arose within the jurisdiction of the court, the Plaintiff would have to show that the Defendant has purposefully availed of the jurisdiction of the forum court by entering into a commercial transaction with an internet user located within the jurisdiction of the forum court. This cannot possibly be a solitary trap transaction since that would not be an instance of “purposeful availment” by the Defendant. It would have to be a real commercial transaction that the Defendant has with someone not set up by the Plaintiff itself. If the only evidence is in the form of a series of trap transactions, they have to be shown to be obtained using fair means. The Plaintiff seeking to establish jurisdiction on the basis of such trap transactions would have to aver unambiguously in the plaint, and also place along with it supporting material, to prima facie show that the trap transactions relied upon satisfying the above test.

 

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