Virtual Presence and the Question of Jurisdiction in Response to World Wrestling Entertainment Trademark and Copyright Infringement Case

By Nandan Pendsey & Ramya R.S.

Posted: 22nd December 2014 11:19

The division bench (“DB”) of the Delhi High Court (“HC”), in the case of World Wrestling Entertainment, Inc., v. Reshma Collection(1), by order dated 15 August 2014, has interpreted the term “carrying on business” in the context of jurisdiction in trademark and copyright infringement suits to include a place where an entity has a “virtual presence”. 
 
World Wrestling Entertainment, Inc., the appellant / plaintiff, a foreign international integrated media and entertainment company, principally engaged in the development, production and marketing of television programming, pay-per-view programming, live events and the licensing and sale of branded consumer products and other content under the brands “World Wide Wrestling Entertainment”, “WWE”, “WWE scratch logo”, “World Wrestling Entertainment”, “WWE Wrestlers”, “Wrestlemania”, WWE talent names and talent slogans such as “John Cena”, “Batista”, etc., had instituted a suit against Reshma Collection, which is located in Mumbai, inter alia seeking a permanent injunction restraining the respondent / defendant from infringing the trademarks and copyright, passing off and dilution of the appellant/plaintiff’s trademarks such as WWE, WORLD WRESTLING ENTERTAINMENT and WWE WRESTLERS; rendition of accounts, damages and delivery up. 
 
The plaintiff alleged that the defendant, Reshma Collection, was engaged in the business of manufacture and sale of various forms of garments and apparel such as t-shirts, wrist bands, caps and other counterfeit goods and garments bearing the reproductions and images of the plaintiff’s talents and representations of the well-known ‘WWE’ characters; thereby infringing upon the plaintiff’s registered trademarks.
 
In terms of Section 20 of the Civil Procedure Code, 1908, a suit can be instituted where the defendant resides or where the cause of action arises.  However, in the context of trademark and/or copyright infringement, a plaintiff additionally also has the option of instituting a suit where the plaintiff resides or carries on business.(2)
 
In the present case, the appellant/plaintiff had instituted the suit before the Delhi HC claiming that the appellant/plaintiff carried on business within the territorial jurisdiction of the Delhi HC in terms of Section 134 (2)(3) of the Trade Marks Act, 1999 (“TM Act”) and Section 62(2)(4) of the Copyright Act, 1957 (“Copyright Act”) for the following reasons:
 
(i) the plaintiff’s programs consisting of its various characters were broadcast at Delhi;
(ii) the plaintiff’s products (merchandising goods and books) were available at Delhi; and
(iii) the plaintiff’s goods and services were sold to consumers in Delhi through its websites, which can be accessed in Delhi.
 
The fundamental question that arose was whether the Delhi HC had jurisdiction to try the instant suit (i.e.) did the plaintiff “carry on business” within the jurisdiction of the Delhi HC. 
 
In this context, the Single Judge of the Delhi HC relying on the decisions of the Supreme Court of India (“SC”) in Dodha House v. S.K. Maingi(5) (“Dodha House Case”) and Bhagwandas Goverdhandas Kedia v. Girdharilal Parshottamdas and Co. and Ors.(6) (“Bhagwan Case”) by order (7) dated 4 October 2013,inter alia held that merely because the appellant / plaintiff’s website was accessible in Delhi would not be sufficient to grant jurisdiction to the Delhi HC. 
 
The Single Judge held that the Delhi HC did not have jurisdiction to entertain the law suit inter alia on the reasoning that: no essential part of the plaintiff’s business was carried on at Delhi; the plaintiff did not have any branch office or exclusive agent in Delhi; and mere sale of the products / making available of the goods / services of the plaintiff through its website in Delhi would not amount to the plaintiff “carrying on business” in the jurisdiction of the Delhi HC, as envisaged under Section 134(2) of the TM Act and Section 62(2) of the Copyright Act.  Further, the Single Judge of the Delhi HC also observed that the very fact that the Parliament of India had not carried out any amendments to the TM Act and the Copyright Act vis-à-vis “new media” (i.e.) the Internet, shows that the principles of contract including time and place of conclusion of a contract, as applicable to “old media” (i.e.) telephone and fax, would also apply to “new media”; thereby negating the plaintiff’s argument that accessibility of the plaintiff’s website and making available of the plaintiff’s goods through its website amounts to “carrying on business”, conferring jurisdiction on the Delhi HC. 
 
Against this order of the Single Judge of the Delhi HC returning the plaint on the grounds of lack of jurisdiction, to be presented before a Court of competent jurisdiction, the plaintiff filed an appeal before the DB of the Delhi HC.
 
The DB of the Delhi HC interpreted the decision of the SC in the Dodha House Case differently than the Single Judge of the Delhi HC. 
 
The DB examined each of the principles / conditions laid down by the SC in the Dodha House Case and held that the first two conditions as set out in the Dodha House case would not be relevant to the present case as the same pertained to agents.  With reference to the third condition, taking into account the decision of the SC in the Bhagwan Case vis-à-vis conclusion of contracts by way of instantaneous modes of communication such as telephone, the DB of the Delhi HC held that in order to ascertain where the essential part of the business took place, it was important to understand where a contract was concluded while transacting over the Internet.  As a contract, through the Internet, would be concluded instantaneously upon communication of acceptance by the purchaser / buyer, the DB of the Delhi HC held that transactions in the present case were being concluded in Delhi and the same would amount to carrying on business in Delhi; and therefore the Delhi HC had jurisdiction to try the present case.  The DB further observed that as a result of advancements in technology and new models of conducting business over the Internet, it is possible for an entity to have a virtual presence in a place which is located at a distance from the place where it has physical presence.  The availability of transactions through a website at a particular place is virtually the same thing as a seller having shops in that place in the physical world. 
 
In view of the above, the DB of the Delhi HC set aside the order of the Single Judge of the Delhi HC and ordered that the suit be restored. 
 
The aforesaid order of the DB of the Delhi HC has in effect diluted the requirements for proving what constitutes “carrying on business”.  It is important to note that the DB of the Delhi HC did not go into the issue of whether there was any intention on the part of the plaintiff to conclude a commercial transaction with a user of the plaintiff’s website, based in Delhi, as was the test laid down in Banyan Tree holding (P) Limited v. A. Murali Krishna Reddy and Anr(8).  Further, the DB of the Delhi HC did not examine the volume of contracts concluded by the plaintiff, through its website, with users based in Delhi. 
 
Therefore, the implication of this decision of the DB of the Delhi HC is that ‘plaintiff’s jurisdiction’ could be availed of at any place, territory or jurisdiction where a plaintiff’s website is accessible, and contracts could be concluded through the plaintiff’s website.  This could potentially result in forum shopping, as was also observed by the Single Judge in his order dated 4 October 2013. 

(1)MANU/DE/2597/2014 – FAO (OS) 506/2013, CM Nos. 17627 and 18606 / 2013 decided on August 15, 2014.
(2)Section 134 of the Trade Marks Act, 1999 and Section 62 of the Copyright Act, 1957.
(3)(Section 134 of the Trade Marks Act, 1999 - Suit for infringement, etc., to be instituted before District Court: (2) For the purpose of clauses (a) and (b) of sub-section (1), a "District Court having jurisdiction" shall, notwithstanding anything contained in the Code of Civil Procedure, 1908 (5 of 1908) or any other law for the time being in force, include a District Court within the local limits of whose jurisdiction, at the time of the institution of the suit or other proceeding, the person instituting the suit or proceeding, or, where there are more than one such persons any of them, actually and voluntarily resides or carries on business or personally works for gain.
(4)Section 62 of the Copyright Act, 1957 - Jurisdiction of court over matters arising under this Chapter: (2) For the purpose of sub-section (1), a "district court having jurisdiction" shall, notwithstanding anything contained in the Code of Civil Procedure, 1908 (5 of 1908), or any other law for the time being in force, include a district court within the local limits of whose jurisdiction, at the time of the institution of the suit or other proceeding, 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 personally works for gain.
(5)AIR 2006 SC 730. The SC inter alia held that the expression “carrying on business” at a certain place, would mean having an interest in a business at that place, a voice in what is done, a share in the gain or loss and some control there over and should satisfy three conditions viz.,: (i) the agent must be a special agent who attends exclusively to the business the principal and carries it on in the name of the principal; (ii) the person acting as agent must be an agent in the strict sense of the term; and (iii) to constitute “carrying on business” at a certain place, the essential part of the business must take place in that place.
(6)AIR 1966 SC 543. The SC inter alia held that the principles regarding determination of time and place of contract concluded through traditional modes of communication would also apply to contracts concluded through telephone.
(7)2014 (58) PTC 52 (Del) – CS (OS) 1801/2013 and I.A. Nos. 14958-59/2013 dated October 4, 2013.
(8)2010 (42) PTC 361 (Del)

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