Introduction

An online transaction may be explained as a way of conducting business by utilizing

computer and telecommunication technology to exchange data or conduct business. One of
the many primary question that needs to be addressed when it comes to dealing with online
transactions is when a transaction takes place online, where is the contract said to be
concluded? The traditional approach to jurisdiction invites a court to ask whether it has the
territorial, pecuniary, or subject matter jurisdiction to entertain the case brought before it.
With the internet, the question of ‘territorial’ jurisdiction gets complicated largely on account
of the fact that the internet is borderless.

In this particular paper, we analyse the jurisdictional issues arising in the domain of IPR.we
do so by first stating the clash of laws involved in case of jurisdiction under IPR. then we go
on to discuss in brief some early cases which talked about the jurisdictional issue. Then, we
discuss more extensively the 2 landmark cases of Banyan Tree and Reshma to highlight the
differences. Finally, we briefly discuss a supreme Court case which proposes an innovative
way out of the quagmire that IPR finds itself in.
 The clash between laws
For civil matters, the Code of Civil Procedure, 1908 governs the jurisdiction aspect. Section
19 of the Act states that where a suit is instituted for compensation on account of wrong done,
if such a wrong was committed within the local limits of the jurisdiction on one court and the
defendant resides in or carries on business, within the local limits of the jurisdiction of
another court, the suit may be instituted at the option of the plaintiff in either of the courts.
Section 20 of the CPC further provides that the suit shall be instituted within the local limits
of whose jurisdiction the defendant resides or the cause of action arises.

The Indian statutory rules regarding the domain of IPR when it comes to jurisdiction of
courts in suits for infringement or passing off of a trade mark comprise in the following
provisions of law, namely section 134 of the Trade Marks Act, 1999 and section 62 of the
Copyright Act, 1957.

Section 134 of the of the Trade Marks Act, 1999 prescribes that a suit for infringement or
passing off of a trade mark shall be instituted in a district court within the local limits of
whose jurisdiction the plaintiff actually and voluntarily ‘resides’ or ‘carries on business’ or
‘personally works for gain’ at the time of the institution of the suit or other proceeding.

Section 62 of the Copyright Act, 1957 prescribes that a suit for infringement of copyright in
any work shall be instituted in a district court within the local limits of whose jurisdiction the
plaintiff actually and voluntarily ‘resides’ or ‘carries on business’ or ‘personally works for
gain’ at the time of the institution of the suit or other proceeding.
 The early cases
The vesting of jurisdiction in a case where there is online transactions are involved lies in the
meaning and interpretation of the expressions ‘carries on business’ and ‘personally works for
gain’.

In the case of ​M/S. Dhodha House vs S.K. Maingi1 where the SC laid down a 3-pronged test
to determine whether the plaintiff could be said to “carry on business”:

(i) The agent must be a special agent who attends exclusively to the business of the principal
and carries it on in the name of the principal and not as a general agent who does business for
any one that pays him;

(ii) the person acting as agent, must be an agent in the strict sense of the term and a manager
of a Joint Hindu Family cannot be regarded as an ―agent within the meaning of this
condition; and

(iii) To constitute ―carrying on business at a certain place, the essential part of the business
must be performed at that place.
2
In the case of ​Casio India Co. Ltd. vs Ashita Tele Systems Pvt. Ltd. There was a passing-off
action where the Defendant was carrying on business from Bombay. The Defendant had
managed to get a registration of domain name www.casioindia.com and Defendant no. 2 was
the Registrar with whom the domain name had been registered. The Plaintiff, on the other
hand, claimed to be a 100% subsidiary of Casio Computer Ltd., Japan (Casio Japan) which
was the registered owner of the trademark Casio in India used for a large number of
electronic and other products. He had also obtained the registration of large number of
domain names in India like CasioIndia Company.com, CasioIndia.org, CasioIndia.net as well
as Casio India.info, CasioIndia.Biz. Defendant no. 1 had managed to get the registration of
these domain names during the time when it held a distributorship agreement with the
Plaintiff. The Honourable Delhi High Court has observed that once access to the Defendants
website could be had from anywhere else, jurisdiction could not be confined to the territorial

1
​(2006) 9 SCC 41
2
2003 (3) RAJ 506
limits of the place where the Defendant resided and the fact that the Defendants website could
be accessed from Delhi was sufficient to invoke the territorial jurisdiction of a court in Delhi.
3
Another leading judgement is of ​Independent News vs India Broadcast Live​. Here the Delhi
High Court differed with its earlier judgment in Casio India. The Court holds that 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 but yet held that if the Defendants website is
interactive, permitting browsers not only to access the contents thereof but also to subscribe
to the services provided by the owners/operators, then court’s jurisdiction at the place where
the website is accessed from is permissible. The High Court of Delhi ruled that it did not have
jurisdiction over the domain name www.indiatvlive.com, because the defendant was based in
Arizona.

The court relied on the US circuit case ​CompuServe Inc. v. Patterson​,4 which referred to a
three-part test for deciding jurisdiction:

i. The defendant must purposefully avail itself of acting in the forum state or causing a
consequence in the forum state.
ii. The cause of action must arise from the defendant’s activities there.
iii. The acts of the defendant or consequences caused by the defendant must have a
substantial enough connection with the forum to make exercise of jurisdiction over
the defendant reasonable.

3
2007 (35) PTC 177 Del
4
​89 F.3d 1257
 Banyan tree's 'purposeful availment'

The ​Banyan Tree case5 heard first by the single bench of the Delhi High Court comes along
to address basic questions of jurisdiction. The case revolves around the decision of the
appropriate forum for a case to be heard in the cases of jurisdiction where the cause of action
lies on the World Wide Web. The plaintiff, Banyan Tree Holdings, is a hospitality company
registered in Singapore with business ventures across the globe and claim to have used the
mark “Banyan Tree” and banyan tree device in its business transactions since 1944, thereby
acquiring a secondary meaning, distinctiveness and a great degree of goodwill worldwide.
The defendants are township developers residing in Hyderabad (Andhra Pradesh) and have
adopted the name ‘Banyan Tree Retreat’ for one of their projects. In the present case, BT
Holdings sought an ex parte interim injunction against the alleged passing off and dilution of
the “Banyan Tree” mark by the Defendant, Mr. Murali Krishna Reddy on their website
www.makprojects.com/banyantree
Interestingly, the Plaintiffs here did not rely on Section 134 of the Trademark Act to establish
the jurisdiction of the Courts, but instead used Section 20 of the Code of Civil Procedure. The
Plaintiffs averred in the plaint that the Court possessed the requisite jurisdiction since the
services of the Defendants were being offered to residents of Delhi through brochures.
Secondly, that the defendants’ website is interactive and is accessible from anywhere in
India, and that “universality, ubiquity, and utility” of the Internet and the World Wide Web,
all are indicative that the High Court possessed the jurisdiction to hear the matter. The
arguments of the Plaintiff in this ​ex parte matter showed reliance upon many cases from
countries across the world to establish the ingredients for jurisdiction.

The court in the course of the judgement cited the popular American case, ​the case of ​Zippo
Manufacturing Co. v. Zippo Dot Com, Inc​. 6Here the Plaintiff sued the California based
Defendants in the Pennsylvanian Courts for the infringement of the trademark on the domain

5
​CS (OS) No. 894/2008
6
​952 F. Supp. 1119
name of the Defendant’s website. Using a “sliding scale” the Court stated that personal
jurisdiction could be constitutionally exercised is directly proportionate to the nature and
quality of commercial activity that an entity conducts over the Internet. In doing so, the Court
observed various cases:

● Where a defendant that clearly does business over the Internet enters into contracts
with residents of a foreign jurisdiction that involve the knowing and repeated
transmission of computer files over the Internet, personal jurisdiction is proper.
● Where a defendant only posts information on the Internet accessible to users in
foreign jurisdictions, the Court could not exercise personal jurisdiction where the
website was merely passive.
● Where the Defendant uses an interactive Web site to host information and exchange
the same with the user, the exercise of jurisdiction is determined by examining the
level of interactivity and commercial nature of the exchange of information that
occurs on the Web site.

The court then went on to cite the case of ​Toys ‘R’ US v. Step Two7, when the trademark was
used on the New Jersey based Plaintiff’s as well as the Spanish Defendant’s website, though
the defendant operated an interactive website through which persons residing in New Jersey,
it went on to state that a commercially interactive website by itself was insufficient to
establish jurisdiction, and additionally there had to be evidence of direct targeting of
consumers in the area. The Court also used the ‘effects test’ according to which courts can
exercise jurisdiction in cases where the acts were committed outside its jurisdiction, but were
intentionally aimed at the forum state and its effects were also felt in the forum state. Thus,
even if the effects are experienced in the forum state, the defendant must have “manifest
intention” to target the forum state, with contacts either through the web (in which case the
interactivity of the website ought to be a relevant consideration) or through a non Internet
based activity.

7
​2003 US App. Lexis 1355
Coming back to jurisprudence in Indian law, the ​Court briefly discussed two cases (both
pronounced by Single Judge Benches). ​Casio India Co. Ltd. v. Ashita Tele Systems Pvt. Ltd8.,
to state that the concept of the jurisdiction of the Courts being applicable due to the
“universality, ubiquity and utility” of the Internet. Secondly, ​India TV v. India Broadcast Live
9
, laid down that where a website is interactive (the level of interaction between the user and
the website being relevant) and where evidence was produced to indicate that the target
audience and large consumer base was India, the Court could exercise jurisdiction to adjudge
the matter.

The single judge bench would after making these observations refer this case to a division
bench of the HC with regard to jurisdictional issues. The division bench would go on to rule
that ​merely accessing a website in Delhi would not satisfy the exercise of jurisdiction by the
Delhi court. Rather, it has to be shown that the defendant “purposefully availed” itself of such
jurisdiction, by demonstrating that the use of the website was with intent to conclude a
commercial transaction with the site user, and such use resulted in injury or harm to the
plaintiff.

A passive website, with no intention to specifically target audiences outside the State where
the host of the website is located, cannot vest the forum court with jurisdiction. To such
extent, the court has overruled the proposition in Casio India Co. Limited v. Ashita Tele
Systems Pvt. Limited

8
Supra.note no.1
9
Supra note. 2
 The Reshma case

Wherein the aforementioned banyan tree case talked about jurisdictional issues when it
comes to IPR under section 20 of the CPC, ​World Wrestling Entertainment, Inc. v. M/S
Reshma Collection10 ​specifically interpreted the meaning of the phrase ​“carries on business”
as set out in Section 134(2) of the Trademarks Act,1999 and Section 62(2) of the Copyright
Act, 1957. The facts of the case are as follows:

WWE Inc. had filed an appeal against the ​order ​of the Single Judge of the HC wherein the
Court had returned the plaint filed by the plaintiff-appellant to be presented before a Court of
competent jurisdiction. WWE Inc. had filed the plaint seeking permanent injunction on the
ground of copyright infringement, trademark infringement, passing off etc. WWE was a
company incorporated under the laws of the State of Delaware, USA and the defendant
(Reshma Collections) is a company incorporated in Mumbai. The appellant had invoked the
jurisdiction of the Delhi HC on account of the provisions of Section 134(2) of the
Trademarks Act and Section 62(2) of the Copyright Act.

It was submitted by the plaintiff that it carries on business within the territorial limits of the
Delhi HC; this was supported by the fact that the plaintiff’s programmes are broadcast in
Delhi, the plaintiff sells books and merchandise in Delhi and most importantly, the plaintiff’s
goods and services are sold to customers in Delhi through the plaintiff’s websites which can
be accessed all over India, including Delhi. ​The plaintiff was engaged in the business of
licensing and sale of branded consumer products featuring its well- known World Wrestling
Entertainment (WWE) brand and had registered its trademarks worldwide including in India.
The plaintiff alleged that the defendants were selling counterfeit merchandise (like books,
apparels etc.) using the plaintiff’s logo.

The case was tried by a single bench of the Delhi HC, and they rejected the plaint of the
plaintiff. The case then went into appeal to a division bench of the HC while delving into an
analysis of the sections referred 2 cases; the aforementioned Dhodha case and the case of

10
​FAO (OS) 506/2013
Bhagwan Goverdhandas Kedia v. Girdharilal Parshottamdas & Co11. By citing the 3
pronged test given in the former and the rule laid out in the latter regarding conclusion with
regard to telephonic conversations, the court held that the plaintiff could be said to carry on
his business (to some extent) in Delhi and therefore, fulfilled the condition “carrying on
business” as laid down in Dhodha case, and thus an appeal was allowed in the case.

At a very fundamental level, Banyan Tree and WWE operate in separate spaces. Banyan
Tree’s inquiry is into the Defendant purposefully availing of a jurisdiction by targeting
consumers in that jurisdiction. This speaks to “cause of action” under Section 20(c) of the
CPC. WWE’s inquiry, on the other hand, is into the Plaintiff concluding online transactions
with consumers in a manner consistent with the essential part of business being executed in
that jurisdiction. This speaks to “carries on business” under Sections 62(2)/134(2).

   

11
​AIR 1966 SC 543
 The way forward
In the recent case of ​IPRS v. Sanjay Dalia12, ​the Supreme Court tries to solve the
jurisdictional controversy that has been created, by trying to strike a balance between the use
of section 20 and 62(2)/134(2). it does so by stating that in cases where Plaintiffs assert
jurisdiction solely on the strength of Sections 62(2)/134(2), courts could require them to
justify that:

(a) there is a practical inconvenience to suing their Defendants under Section 20 or

(b) the inconvenience to the Plaintiff in suing under Section 20 prima facie outweighs the
inconvenience to the Defendants in submitting to the jurisdiction of the forum before which
this question arises.

The requirement of fulfilment of these 2 conditions puts a check on the rampant misuse of
Sections 62(2)/134(2), and the primacy of the Plaintiff’s convenience that underlies Sections
62(2)/134(2) is also retained.

12
​2015 10 SCC 161