Trademark/ Copyright Infringement: No Jurisdiction Based On Location Of Branch Office Where No Part Of Cause Of Action Has Arisen- Madras High Court

In an application filed by the defendant challenging the territorial jurisdiction of the Commercial Division of the Court to adjudicate on an alleged trademark and copyright infringement, Justice Anand Venkatesh has observed that the discretion of plaintiff to file a suit where the plaintiff carries on business is not unconditional.

Unlike Section 20 of CPC which requires the plaintiff to file a suit in a court where the defendant resides or carries on business/ where the cause of action wholly or in-part arises or the civil jurisdiction of High Court under Clause XII of Letters Patent Act, specific provisions incorporated in these Acts offers the plaintiff favourable avenues. Even though the plaintiff has no impediments to invoke a court's jurisdiction in such infringement suits, quite contrary to the placement of plaintiff in normal civil suits, the said liberty comes with a caveat:

"If suit is filed only based on the situs of the branch office, such a suit can be maintained only if the plaintiff is able to show that at least a part of the cause of action had arisen within the place where the branch office is situated. If suits are allowed to be filed only based on the branch office and nothing more, it will lead to mischievous consequences.", the court recorded in the order.

Facts Of The Case

The plaint alleges that in December 2019, the respondent found out that the applicant is manufacturing and distributing product with the respondent's registered trademark and the copyright in the artistic work of their label, mainly in Karnataka. The principal place of business of the defendant is at Sivakasi. The place of business of the applicant is Gudiyatham. The respondent filed the suit before High Court contending that the presence of a branch office at Chennai will confer the court with the required jurisdiction to try the case under Section 134(2) of the Trade Marks Act and Section 62(2) of the Copyright Act.

Arguments Raised

The applicant counsel (defendant in the commercial suit) heavily relied on the apex court judgment in Indian Performance Rights Society v. Sanjay Dalia (2015) whereby it was held that:

"The provisions of Section 62 of the Copyright Act and Section 134 of the Trade Marks Act never intended to operate in the field where the plaintiff is having its principal place of business at a particular place and the cause of action has also arisen at that place so as to enable it to file a suit at a distant place where its subordinate office is situated though at such place no cause of action has arisen."

The respondent counsel (plaintiff in the commercial suit) drew the court's attention to Madras High Court judgment in Hindustan Unilever Ltd. v. Andhra detergents (2017) and it was his submission that even a branch office of the plaintiff would give a cause of action to maintain a suit before the court according to this judgment.

The respondent counsel added that the Supreme Court judgment in Sanjay Dalia was considered in the Hindustan Unilever case,and it was after such consideration that the court held even a branch office of the plaintiff would give a cause of action to maintain a suit before this Court. The counsel attempted to convince the court that Madras High Court has already settled the issue via Hindustan Unilever and it's no longer res integra.

Court's Findings

Situs Of Branch Office & Territorial Jurisdiction

In Wipro Ltd. & Anr. v Oushadha Chandrika Ayurvedic India (P) Ltd. & Ors. (2008), wherein it was unanimously ruled that the term "carries on business" in both Acts is not confined only to the principal place of business, but also any other place where business activities are carried out including branches.

Fast forward, in 2015, when the apex court pronounced the judgment in Sanjay Dalia, it referred to the interpretation given to "branch office" in the amended Section 17(2)(b) of Consumer Protection Act, in the case-law of Sonic Surgical v. National Insurance Co. Ltd. In the said case, the court had underscored that the term "branch office" as used in the amended Section 17(2)(b) has to be interpreted to mean only that branch office where the cause of action has arisen.

Madras High Court also took into account the primary consideration of the apex court in Dalia, which was even upheld in the latest judgment of Madras High Court in Hindustan Unilever Limited Ponds House v. S. Shanthi (2021):

"The Hon'ble Supreme Court was extremely concerned that Section Section 134(2) of the Trade Marks Act and Section 62(2) of the Copyright Act may be misused by big corporations having branch offices at every nook and corner of the country and if they are allowed to institute a suit only based on the location of a branch office, it is always possible for them to drive small-time players to a far-flung place", Justice Anand Venkatesh added in the court's order.

The natural meaning of the two provisions would have led to undesirable consequences and hence the court adopted purposive interpretation to give a permissible construction of Section 62(2) and Section 134(2), the court concluded its analysis.

Referring to Hindustan Unilever, the court observed that the Single Judge Bench erred in construing that Section 134 of the Act and Section 62 of the Copyright Act were interpreted in the light of Section 20 of CPC and Forum Conveniens by the Supreme Court in Sanjay Dalia.

"At the risk of repetition, Section 20, CPC was referred only to find out a solution under what circumstances a suit can be laid for trademark and copyright infringement if the situs to determine jurisdiction is only a branch office", Justice Anand Venkatesh stated in the order while adding that Forum Conveniens was not even an issue in Sanjay Dalia.

"Even though I have differed with the findings of the learned single judge in Hindustan Unilever case, there is no need for referring the issue to a division bench since, the judgement of the Hon'ble Supreme Court in Sanjay Dalia case was taken note of by the later division bench in Shanthi case and the law was reiterated and made clear that situs of the branch office per se will not confer territorial jurisdiction", the court concluded its observations on jurisdiction based on the situs of a branch office.

Forum Conveniens

On the issue of Forum Conveniens, the court added that it usually applies when the Court considers grant of leave or revocation of leave under Clause 12 of the Letters Patent. When the suitability of a forum is considered, the court will ultimately look if the cause of action has even remotely arisen within its territorial jurisdiction. If the answer is in negative, such suits won't be entertained. Here, there is no imminent requirement to ponder over Forum Conveniens since the plaintiff has not approached the court contending that a part of cause of action has arisen within its jurisdiction, but on the premises that the location of branch office within its jurisdiction automatically affirms its territorial jurisdiction to try the infringement suit as well.

Accordingly, the Madras High Court allowed the application and held that its Commercial Division does not have territorial jurisdiction to proceed further with the suit. Rs 50,000/- costs was also imposed upon the respondent plaintiff, to be paid to the applicant defendant.

Case Title: P. Sundaram v. Asia Match Company Private Limited Represented By Its Director

Case No: A. No. 3675/ 2021 in C.S.No.14/2021