India: Delhi High Court on forum shopping in IPR cases

In a recent case titled Indovax Pvt. Ltd. vs. Merck Animal Health & Ors. bearing no. CS (OS) 2047/2013, vide its order dated July 27, 2017, the High Court of Delhi observed that simply because goods have been procured from another state and are being sold in Delhi, the same cannot be construed as Merck Animal Health & Ors. (hereinafter referred to as the ‘Defendants’) selling their goods in Delhi, and as a result thereof, allowed the Defendant’s application and returned the Suit plaint to the Indovax (hereinafter referred to as the ‘Plaintiffs’) for lack of territorial jurisdiction.

BRIEF FACTS:

The Plaintiff filed the above mentioned suit against the Defendants for infringement of its trade mark and passing off action. Subsequently, the Plaintiff amended the Plaint deleting its relief for infringement of its trade mark. The above mentioned suit was now only in respect of passing off action. However, the Defendant claimed the Hon’ble Court did not possess the requisite territorial jurisdiction to entertain the present matter, and subsequently filed an application under Order VII Rule 11 for rejection of the suit plaint.

CONTENTIONS RAISED BY THE DEFENDANTS:

•  That the Court has no territorial jurisdiction on the ground that for a suit for passing off, the territorial jurisdiction of the Hon’ble Court has to be determined under Section 20 of the Civil Procedure Code, 1908 (hereinafter referred to as the ‘CPC’). Further, since the present suit is only in respect of passing off action, the Plaintiff cannot avail the benefit provided under Section 134 of the Trade Marks Act, 1999.
• That the Defendants are neither carrying on business nor residing in Delhi as alleged by the Plaintiff, and that the Plaintiff had initially filed a suit on the basis of a single invoice issued in Jind, Haryana in support of its contention that the cause of action had arisen within the jurisdiction of this Court and no other document was filed along with the original plaint to prima facie show that the cause of action had arisen within the jurisdiction of this Hon’ble Court. Subsequently, however, the Plaintiff filed on record three invoices of one “Baxi Medical Stores” in Delhi on November 16, 2013, along with the amended plaint. The Defendants contend there is no sale of its product by them, either by itself or through their authorized representative or any of their agents or dealers within the jurisdiction of this Court and the Plaintiff has not produced any document on record to prima facie show the sale of Defendant’s product within the jurisdiction of this Court by the Defendants or their agents/dealers or authorized representatives. 
• That the Local Commissioner appointed by this Hon’ble Court vide order dated November 18, 2013 had submitted his report dated November 26, 2013. In the said report, the Local Commissioner had reported that “Baxi Medical Stores” had sourced the stock from Karnal, Haryana and that the proprietor of the said store had also admitted that he is not a distributor of the Defendants and had merely procured the three vials of product INNOVAX from outside Delhi. The Defendants contended that supply of their product by an unauthorized person to any third person cannot be said to be a commercial sale made by the Defendants either by itself or through their agent or distributors.
• That these three invoices had been filed by the Plaintiff to set up the territorial jurisdiction in Delhi and thus the Plaintiff is engaging in forum shopping. Further, these three invoices which were neither issued by Defendants nor by any of their authorized representative/ dealer are not sufficient to give territorial jurisdiction to the Delhi Courts.

CONTENTIONS RAISED BY THE PLAINTFF:

• That this Court has the territorial jurisdiction since the Defendant’s vaccines under the impugned trademark is available for sale in Delhi and also that the Defendants through their agents are peddling their vaccines in Delhi.
• That the Court was satisfied that it had territorial jurisdiction and that is why the Court allowed the amendment and issued the notice to the Defendants.
•  That the question of jurisdiction is a mixed question of law and fact. The report of the Local Commissioner clearly establishes the fact that the Defendant’s medicines are available for sale in Delhi, and therefore, sale through consignee or the distributor is sufficient for this Court to have territorial jurisdiction.
• That Defendants have filed an application for registration of trademark INNOVAX in Delhi and this would give rise to a threat perception in the mind of public that the goods of Defendants are to be sold in Delhi and that would be sufficient to give the jurisdiction to this Court. 
• Actual sale of the product within the jurisdiction of a Court is not essential for an act of passing off where there is an intention to sell and since the Plaintiff makes out a prima facie case of such intention, this Court has the territorial jurisdiction. 
• That the Plaintiff’s goods have adopted a distinctiveness in the market and any goods carrying a trade name which is deceptively similar to that of Plaintiffs, is likely to cause confusion in the mind of public and the public would think that they were buying the goods belonging to the Plaintiff. It is argued that the Defendant’s trademark “INNOVAX” is deceptively similar to that of Plaintiff’s trademark “INDOVAX” and the public buying the vaccine would be buying it under the confusion that it is buying the product of the Plaintiff while, in reality, they were buying the products of Defendants. On account of this submission, the cause of action of passing off has arisen in favor of the Plaintiff.

OBSERVATIONS OF THE COURT:

•      “It is a settled proposition of law that while determining an application under Order 7 Rule 11 CPC, the Court has to be guided by the averments made in the application accepting it as a gospel truth and cannot rely on extraneous facts mentioned in the written statement…”
•     “…even if the plaintiff relies on a trap transaction it is required to show that the Defendants are indulging into commercial sale of its product…”
•   “There is no averment in the plaint to even prima facie show that through its website the Defendants are indulging into any commercial activity within jurisdiction of this Court. To give jurisdiction to this Court, it is imperative upon the Plaintiff to prima facie show by way of its averment in the plaint duly supported by the documents that the Defendants are indulging either by itself or through their agents or distributors in the commercial activity within the jurisdiction of this Court which amounts to passing off of the goods of the Plaintiff……There is no averment that the Defendants are selling their products in Delhi through their authorized agent, distributors etc. On the other hand, the events of the case clearly show that the Plaintiff is indulging into forum hunting.”
•     “…In his statement, Mr. Shashi Baxi (owner of Baxi Medical Store) has categorically stated that the said vaccine is procured from Dev Enterprises as the Company was not supplying the same in Delhi. He has also clearly stated that Baxi Medical Store is not the distributor of the said vaccine. From the statement of Mr. Shashi Baxi, it is apparent that Baxi Medical Stores was neither acting as a distributor or agent of the Defendants nor was supplying these medicines on behalf of the Defendants. The report of the Local Commissioner clearly shows that the Baxi Medical Stores obtained its medicine from Dev Enterprises, Karnal, Haryana, on specific demands. The Plaintiff had, at no stage, challenged the report of the Local Commissioner nor is it their case that Baxi Medical Store is working as a dealer, agent or distributor of Defendant’s company…”
•        “…the Plaintiff pleads that the vaccine of the Defendant “is available for purchase in New Delhi.” It does not say that the Defendants are selling their products within the jurisdiction of this Court. The Local Commissioner report clearly shows that the Defendant’s vaccine is not “available” for sale in Delhi but it is “procured” from the authorized dealer at Karnal, Haryana i.e. M/s Dev Enterprises for supply. These facts clearly show that the invoices have been procured by the Plaintiff to give jurisdiction to this Court and on the basis of these invoices, it cannot be held that the Defendants are doing commercial activities within Delhi…”
•        “In cases where the goods of the Defendants are not available for sale within the jurisdiction of this Court, it cannot be said that the ordinary person is likely to buy the goods of the Defendants believing that they are buying the goods of the Plaintiff. In such cases, it cannot be said that the cause of action has arisen within the jurisdiction of this Court…”

 
HELD:

Honorable Justice Deepa Sharma stated that, “I am satisfied that no cause of action has arisen within the jurisdiction of this Court. The plaint along with pending applications is hereby returned to the Plaintiff for filing in the Court of appropriate jurisdiction.”

It is evident from this judgment that unless it is proven beyond any doubt that the infringing parties are selling the goods either themselves, or through authorized representatives/dealers/distributors within the jurisdiction of the Court, it cannot be said that the parties are selling their goods within such jurisdiction. Furthermore, if a Plaintiff is to acquire receipts of sale made by unauthorized third parties who have in turn procured such infringing goods from another state, the same cannot confer jurisdiction on any Court and can be recognized as forum shopping/hunting.