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Alert 349 - India - No 'forum shopping' on basis of web presence alone
The internet has challenged traditional methods of selling and buying. One challenge faced by parties to an online transaction is which forum should be used to adjudicate conflicts. This is particularly an issue in India when a buyer seeks redress on the basis that the seller's goods or services are made available to consumers in all parts of India through the Defendant's web presence.
In a recent judgment, the division bench of the Delhi High Court set out guidelines for determining jurisdiction in trade mark infringement or passing off cases involving websites. The court opined that the Plaintiff must not just prove that the Defendant's website was 'specifically targeted' at viewers in the forum state but must also show that the website was used with the intention of concluding a commercial transaction with customers in the forum.
Facts
The question arose in a conflict concerning misuse of the name 'Banyan Tree'. Neither the Defendant, Mr Murali Krishna Reddy (Reddy), nor the Plaintiff, Banyan Tree Holding Pvt Ltd (BTH), owners of the well-known Banyan Tree hotels and resorts, was based in Delhi. BTH claimed that use of the name 'Banyan Tree Retreat' by Reddy was an attempt to pass off his business and services as those of BTH. BTH submitted that the Defendant had a website, advertising his services, (www.makprojects.com/banyantree.htm) that was accessible in Delhi, and that the Defendant was offering services to consumers in Delhi through that website.
The division bench considered when the court had jurisdiction based on accessibility of a website and the extent of the burden that the person invoking the court's jurisdiction has to discharge. Interestingly, the division bench also examined the extent to which 'trap orders' or 'trap transactions' made through a defendant's online presence can form the basis of an action.
Decision
The division bench examined two earlier cases on the subject in India, - the Casio India case and India TV case - that essentially took different views:
a) In Casio India's case the court held that mere web presence is sufficient to invoke jurisdiction of a particular court. The Defendant was based in Mumbai and the case was filed in Delhi, where the Defendant's website was accessible.
b) In India TV's case the Delhi Court categorically stated that the Defendant's website must be interactive, permitting browsers not only to access but also to subscribe to the services provided in the court's jurisdiction.
The court in Banyan Tree has laid down the following guidelines:
1) The Plaintiff must show that the Defendant has engaged in commercial activity by targeting its website specifically at customers within the forum court's jurisdiction. Simply posting an advertisement showing the Defendant's mark on a passive website that does let consumers enter into commercial transactions with the Defendant is not enough to trigger the court's jurisdiction.
2) The court approved evidence procured through 'trap orders' and 'trap transactions'. However, the following factors will be relevant:
i) Fairness of the transaction.
ii) The nature of goods or services offered for purchase and whether they are of a nature which requires customers to physically verify their quality before purchase. In such cases trap transactions may not be sufficient.
iii) A lone trap transaction will not be sufficient.
iv) Evidence of trap transactions with supporting materials must be produced for scrutiny of the Court.
Over the last ten years the Delhi High Court with its IP-savvy image has attracted IP owners and practitioners and emerged as a preferred forum for litigation. In some cases the boundaries were stretched and 'availability of goods online' or 'accessibility of website' was often cited to bring actions before the Delhi High Court. The clear guidelines now provided by the court will help IP holders decide when Delhi is an appropriate forum, and help generally with the development of other forums for IP litigation.
