TaxTMI 
TaxTMI 
2009 (11) TMI 983
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....lity business. Since 1994 it adopted and used the word mark "Banyan Tree and also the banyan tree device. It is claimed that on the account of the extensive and continuous use by the plaintiff of the said mark and device in relation to its business, they have acquired secondary meaning, have become highly distinctive and have come to be associated with the plaintiff and its sister concerns. The plaintiff maintains the websites www.banyantree.com and www.banayantreespa.com since 1996. The said websites are accessible in India. 4. It is not in dispute that the plaintiff does not hold a registration for the said mark and device in India. Its application for registration is stated to be pending. Since the year 2002, the plaintiff has, in collaboration with the Oberoi Group, been operating 15 spas across India. In October 2007, the plaintiff learnt that the Defendants had initiated work on a project under the name "Banyan Tree Retreat. The plaintiff has averred that the word mark and the device adopted by the Defendants in relation to their retreat is deceptively similar to that of the plaintiff. The plaintiff states that the Defendants have advertised their project on their website ....
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....based on internet or web-presence of such alleged infringers, even while making explicit departure from the general law as to territorial jurisdiction; 2. Whether the court can entertain the present suit, in the absence of a long arm statute, having regard to the existing state of law, particularly Section 20, CPC, and the impact, if, any of the Information Technology Act, 2009 on it; 3. Applicable standards for entertaining a suit, based on use of a trademark by a Defendant, on its website, or infringement or passing off of the plaintiffs trademark, in such website and the relevant criteria to entertain such suits; 4. Applicable standards and criteria where the plaintiff relies exclusively on "trap orders" or transactions, in relation to passing off, or trademark infringement cases, as Constituting "use" or cause of action, as the case may be. The questions as reframed 7. Having considered the submissions of Mr. Praveen Anand, learned Counsel for the plaintiff, we consider it appropriate to reframe the questions referred to us for our opinion as under: (i) For the purposes of a passing off action, or an infringement action where the plaint....
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....e websites host to market its products in Delhi and (c) the effect of such action by the Defendants in Delhi, are the three factors that have to be accounted for in determining whether this Court has territorial jurisdiction. As regards the nature of the website, counsel for the plaintiff submits that it could be passive, interactive or active. The case of the plaintiff is that a mere advertisement on the website, without any move by the Defendants to block access to Delhi viewers through a device of "purposeful avoidance" would be a case of "passive plus." It is contended that all the viewers outside Andhra Pradesh where the Defendants are located are, in the absence of such blocking of access, targeted by the Defendants. According to the plaintiff where the website is passive, in the absence of any intention to market, which absence of intention is express, the forum court would have no jurisdiction. If the intention to market its product is not discernible on account of non-application of mind by the website owner, the forum court might still have jurisdiction where there is an effect on the market in the forum state. 10. As regards an interactive website, it is submitted tha....
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.... monthly payments. The plaintiff terminated the franchise agreement and ordered the defendant to vacate the premises. When the defendant refused, the plaintiff sued him in Miami. Florida had a long arm statute that extended jurisdiction to any person, whether or not a resident of that state, who committed a breach of a contract in the state by failing to perform acts that the contract required to be performed there. The District Court held that the defendant franchisee was subject to the personal jurisdiction of the court in Miami. The Court of appeals reversed and the plaintiff appealed to the Supreme Court. Reversing the Court of Appeals and restoring the judgment of the District Court, the Supreme Court held that the defendant did not have to be physically present within the jurisdiction of the forum court and that the forum court may exercise jurisdiction over a non-resident "where an alleged injury arises out of or relates to actions by the Defendant himself that are "purposefully directed towards residents of the forum State. It was held that "purposeful availment" would not result from "random" or "fortuitous" contacts by the defendant in the forum state requires the plainti....
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.... the Defendant in a court in Connecticut, which in any event had a long arm statute. The District court held that the Defendant had "purposefully availed itself of doing business in Connecticut because it directed its advertising activities via the Internet sites and toll-free number toward the State of Connecticut (and all states); Internet sites and toll-free numbers are designed to communicate with people and their businesses in every state; an Internet advertisement could reach as many as 10,000 Internet users within Connecticut alone; and once posted on the Internet, an advertisement is continuously available to any Internet user". 15. However, the approach in Bensusan Restaurant Corp. v. King 937 F. Supp.295 (S.D.N.Y. 1996) was different although New York too had a long arm statute. The Defendant there had a small jazz club known as "The Blue Note" in Columbia, Missouri and created a general access web-page giving information about the said club as well as a calendar of events and ticketing information. In order to buy tickets, web browsers had to use the names and addresses of ticket outlets in Columbia. Bensusan (the plaintiff therein) was a New York corporation that own....
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.... 2002) the Court of Appeals held that the purposeful availment requirement is satisfied "if the web site is interactive to a degree that reveals specifically intended interaction with residents of the state". In that case, the plaintiff (Neogen), a Michigan Corporation, was in the business of developing and marketing a range of health care, food, and animal-related products and services, including certain diagnostic test kits. It filed a suit in the Michigan District Courts alleging, inter alia, trademark infringement against the Defendant (Neo Gen Screening), a Pennsylvania Corporation performing diagnostic testing of blood samples from newborn infants. The District Court dismissed the suit for lack of personal jurisdiction. The Court of Appeals held that the maintenance of the Defendants website, in and of itself, does not constitute purposeful availment of the privilege of acting in Michigan. It observed that "the level of contact with a state that occurs simply from the fact of a websites availability on the Internet is therefore an attenuated contact that falls short of purposeful availment." However, the Court in that case did not decide the question that whether the Defendan....
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....r non-forum related activities when the defendant has engaged in "systematic and continuous" activities in the forum state Helicopteos Nacionales de Colombia, S.A. v. Hall 466 US 408. In the absence of general jurisdiction, specific jurisdiction permits a court to exercise personal jurisdiction over a non-resident defendant for forum-related activities where the "relationship between the defendant and the forum falls within the "minimum contacts framework" of International Shoe Co. v. Washington 326 US 310 and its progeny Mellon, 960 F.2d at 1221. (emphasis supplied) 19. The Zippo court then noted that "a three pronged test has emerged for determining whether the exercise of specific personal jurisdiction over a non-resident defendant is appropriate: (1) the defendant must have sufficient "minimum contacts" with the forum state, (2) the claim asserted against the defendant must arise out of those contacts, and (3) the exercise of jurisdiction must be reasonable." The court in Zippo classified websites as (i) passive, (ii) interactive and (iii) integral to the defendants business. On facts it was found that the Defendants website was an interactive one. Accordingly....
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....ybersell FL (the Florida Corporation) "did was post an essentially passive home page on the web, using the name "CyberSell," which Cybersell AZ (the Arizona Corporation) was in the process of registering as a federal service mark. While there is no question that anyone, anywhere could access that home page and thereby learn about the services offered, we cannot see how from that fact alone it can be inferred that Cybersell FL deliberately directed its merchandising efforts toward Arizona residents". It was further noticed that "the interactivity of its web page is limited to receiving the browsers name and address and an indication of interest-signing up for the service is not an option, nor did anyone from Arizona do so. No money changed hands on the Internet from (or through) Arizona". It was held that "Cybersell FLs contacts are insufficient to establish "purposeful availment". 21. There have been difficulties experienced in the application of the Zippo sliding scale test in terms of which the assertion of a courts jurisdiction depended upon the "level of interactivity and commercial nature of the exchange of information" as a result of the use of the website. The courts have....
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....ll regulate an activity only if it is shown having originated in its territory - exemplified by the decision in Louis Feraud Int'l SARL v. Viewfinder Inc 406 F Supp 2d 274 (SDNY 2005)] to an 'objective territoriality' or "effects test in which the forum court will exercise jurisdiction if it is shown that effects of the Defendants website are felt in the forum state. In other words it must have resulted in some harm or injury to the plaintiff within the territory of the forum state. Since some effect of a website is bound to be felt in several jurisdictions given the nature of the internet, courts have adopted a 'tighter' version of the 'effects' test, which is intentional targeting. Thomas Schultz in his illuminative piece "Carving up the Internet: Jurisdiction, Legal Orders, and the Private/Public International Law Interface" EJIL 2008 19 (779) points out that the dynamics of jurisdiction is reasonableness and fairness. Schultz concludes that both the subjective territoriality and objective territoriality or the 'effects' test, if construed too broadly, are bound to be unfair and unreasonable. According to Schultz, a middle path had to be chose....
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....s. One of the most discussed decisions of a French court where the "effects" doctrine was applied is the Yahoo! Case (UJEF et LICRA v. Yahoo! Inc. et Yahoo France, Tribunal de Grande Instance de Paris, No RG:00/0538, May 22, 2000 and November 22, 2000). A French Jew while surfing on the net came across Nazi memorabilia being offered for sale on a web page hosted by Yahoo!. Offering Nazi memorabilia for sale was an offence under the French Penal law. Although the website of Yahoo! France did not host a similar web page, it could be viewed on Yahoo! Website hosted from the U.S. by anyone in France. LICRA, an organization fighting racism and anti- Semitism, and the Union of Jewish students in France (UJEF) sued Yahoo! And Yahoo! France in the court in France. The French court ordered the US Internet portal to block access to its US website from France, in order to prevent internet users in France from accessing the objectionable items offered for auction sale on that site. It found that this was technologically feasible through a series of devices for which it examined experts. It thus rejected Yahoo's argument that the French court's order was not capable of being implemented....
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.... structured its affairs to avoid the forum state, the court found that the Defendants use of its website to infringe the plaintiffs mark did have effects in the forum state and its purpose may be said to targeting the forum state and its citizens. In Nissan Motor Co. v. Nissan Computer Corp.89 F. Supp. 2d 1154 (C.D. Cal. ,2000) although the Defendant did not sell goods to its consumers on its websites (which were registered under the domain names nissan.com and nissan.net) it had intentionally changed the content of its web site to exploit the goodwill of the plaintiff (a leading car manufacturer) by profiting from confusion among the consumers. It was therefore held to have "deliberately and substantially directed its activity toward the forum state." 26. The courts in the U.S.A. have adopted a combination of the "Zippo sliding scale test" and the Calder "effects" test in examining whether the forum court has jurisdiction in a case involving infringement by use of the internet. Recently in Toys "R" US, v. Step Two 318 F.3d 446 (2003), the US Court of Appeals revisited the issue. In that case, the plaintiff, Toys "R" Us (Toys), a Delaware corporation with its headquarters in New....
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....ed that "the mere operation of a commercially interactive website should not subject the operator to jurisdiction anywhere in the world. Rather, there must be evidence that the Defendant "SXESRsefXlly availed' itself of conducting activity in the forum state, by directly targeting its website to the state, knowingly interacting with residents of the forum state via its website, or through sufficient other related contacts". 27. Thomas Schultz (supra) points out that since the concept of "targeting does not have an inherently precise meaning, "what it means to target seems to be very much up for grabs." He suggests that positive actions by a Defendant to "direct activities towards specific states may also constitute the threshold of what amounts to targeting." It could be the language or a currency used on the website, the language in which the terms and conditions of use are drafted. Schultz also challenges the notions that the internet is inherently incapable of being regulated or that it is "global" or "borderless" as is largely believed. He points out that while there has been a "horizontal fragmentation" of the internet by constitution of legal systems which are transnat....
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....ts principal office in Los Angeles, used to offer ostensible free software programs. When the plaintiff, a resident of Canada, installed a free Intermix Screensaver or game from "www.mycoolscreen.com", he also unwittingly installed one or more spyware programs. Thereafter the plaintiff brought an action against the Defendant in Canada for violating the misleading representations provisions of the Competition Act, 1985 (of Canada). The Federal Court of Ottawa, after referring to the decision of the Ontario Court of Appeal in Muscutt v. Courcelles (2002) 213 DLR (4th) 577, took the following eight factors into account while determining whether it had jurisdiction: (1) The connection between the forum and the plaintiffs claim; (2) The connection between the forum and the Defendant; (3) Unfairness to the Defendant in assuming jurisdiction; (4) Unfairness to the plaintiff in not assuming jurisdiction; (5) Involvement of other parties to the suit; (6) The Courts willingness to recognize and enforce an extra-provincial judgment rendered on the same jurisdictional basis; (7) Whether the case is interprovincial or international in nature; (8) Comity and standards of jurisdiction, recognitio....
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....ilar to a mark protected in another jurisdiction, he may do so at his peril that someone from that other jurisdiction may download it; though that approach conjured up in argument before us the potentially disturbing prospect that a shop in Arizona or Brazil that happens to bear the same name as a trademarked store in England or Australia will have to act with caution in answering telephone calls from those latter jurisdictions. However that may be, the very idea of "use" within a certain area would seem to require some active step in that area on the part of the user that goes beyond providing facilities that enable others to bring the mark into the area. Of course, if persons in the United Kingdom seek the mark on the internet in response to direct encouragement or advertisement by the owner of the mark, the position may be different; but in such a case the advertisement or encouragement in itself is likely to suffice to establish the necessary use. Australia 33. As far as Australian High Court is concerned, its judgment in Dow Jones & Company Inc. v. Gutnick (2002) HCA 56 (10 December 2002) is instructive of the application of the "effects" test. Dow Jones & Compa....
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....deception, whereby an average person is likely to be deceived or confused was sufficient to entertain an action for passing off, it was not at all required to be proved that "any actual deception took place at Delhi. Accordingly, the fact that the website of Defendant No. 1 can be accessed from Delhi is sufficient to invoke the territorial jurisdiction of this Court ..." 35. A different approach was adopted in a later judgment by another learned single Judge of this Court in (India TV) Independent News Service Fvt. Limited v. India Broadcast Live Llc And Ors. 2007 (35) FTC 177 (Del.). The facts in brief of that case were that the plaintiff company ran a Hindi news channel "INDIA TV" which was launched in March 2004. The plaintiff claimed to have adopted the mark "INDIA TV" since 01.12.2002. The plaintiff had applied for the registration of the said mark and the said applications were published in the trademarks journal. The plaintiff was also the owner of the domain name "INDIA TV" which domain name was registered on 18.11.2003. The channel was made available for live viewing on the said website. Defendant Nos. 1 and 2 hosted a website "indiatvlive.com" which the plaintiff came ....
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....e is accessible in a particular place may not itself be sufficient for the courts of that place to exercise personal jurisdiction over the owners of the website. However, where the website is not merely 'passive' but is interactive permitting the browsers to not only access the contents thereof but also subscribe to the services provided by the owners/operators, the position would be different. However, as noticed in the judgment in CyberSell Inc. case (supra), even where a website is interactive, the level of interactivity would be relevant and limited interactivity may also not be sufficient for a court to exercise jurisdiction. In Panavision International LP case (supra), it was found that the registration of the plaintiff's mark as a domain name by the Defendant had the effect of injuring the plaintiff in California and therefore the court had jurisdiction. In Compuserve case (supra) again it was found that the Defendant had contacted Ohio to sell his computer software's on the plaintiffs Ohio based systems and sent his goods to Ohio further for their ultimate sale and thus those courts had jurisdiction. 47. In the present case, the website "indiatvlive....
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....ere the host of the website is located, cannot vest the forum court with jurisdiction. This Court is therefore unable to agree with the proposition laid down in Casio. The said decision cannot be held to be good law and to that extent is overruled. 39. India TV appears to be somewhat closer to the development of law in this regard since the decision in Casio. In India TV, the learned single Judge impliedly doubted the correctness of the decision in Casio. The learned single Judge in India TV acknowledged that a mere accessibility of website may not be sufficient to attract jurisdiction of the forum court. This, in the considered view of this Court, is the correct position in law. 40. There was no occasion for this Court even in India TV to examine the finer aspects of the question of jurisdiction based on the nature of the website, the intention of the host of the website to specifically target viewers outside its jurisdiction, and the effect of hosting such website on audiences outside such state. It appears to this Court that for the purposes of a passing off action or an action for infringement where the plaintiff is not carrying on business within the jurisdiction of the ....
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....intiff it would have to be shown that viewers in the forum state were specifically targeted. Therefore the "effects" test would have to be applied in conjunction with the "sliding scale" test to determine if the forum court has jurisdiction to try a suit concerning internet based disputes. 43. The question No. (i) is accordingly answered. Question (ii): In a passing off or infringement action, where the defendant is sought to be sued on the basis that its website is accessible in the forum state, what is the extent of the burden on the plaintiff to prima facie establish that the forum court has jurisdiction to entertain the suit? 44. This brings us to the question as to the extent of burden of proof on the plaintiff to prima facie show that the Defendant has purposefully availed of the jurisdiction of this Court. In the present case, it is argued that by enabling customers to go on the website and get a copy of its brochure and make enquiries, the Defendant must be held to have purposefully availed of the jurisdiction of this Court. The question that arises is for the purposes of Section 20(c) CPC, in such circumstances, is what is the extent of the burden on the plaintiff....
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....ntiff has to show that a part of the cause of action in a suit for passing off or infringement has arisen within the jurisdiction of the forum court. Relevant to this, it would have to be shown by the plaintiff that the Defendant "availed" of the jurisdiction of the forum court by commercially transacting with a viewer located in the forum state through the internet. The question is whether this transaction can be a 'trap transaction' that is engineered by the plaintiff itself, particularly when it is not otherwise shown that the Defendant intended to specifically target customers in the forum state. 47. Courts in foreign jurisdictions have underlined the need for fairness and certainty while accepting evidence in the form of trap orders. In California Fig Syrup &RP SD12I IL1IL7LI CRr'sIL' MI Company Ltd. (1897) 14 RPC 564 (Court of Appeal, UK), the plaintiffs trade name was "California Syrup of Figs" and the Defendants trade name was "American Syrup of Figs". The plaintiffs sought trap orders for "California American Syrup", thereby creating ambiguity as to the name under which the defendant was selling its own syrup of figs product. Carr & Sons v. Crisp & Co Lt....
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.... call them, trap orders are in a case of this kind, it seems to me, quite essential. I fail to see how the plaintiffs can safeguard themselves or the public without having regard to such methods of testing the matter as is used in the present case; but, trap orders or test orders, whichever they may be called, are scrutinised by the Courts with some jealousy, and rightly so, because, if as the result of a trap order or a test order, a person is to be charged with the very serious offence of fraudulently misrepresenting the goods which he is supplying to the public, to the detriment of the public as well as of the plaintiffs, the Court must be satisfied that the offence has been proved strictly. Further, if a person is resorting to a test order or a trap order, even in a case of this kind, where the necessity for such a device may be a real one, that person is bound to carry out the proceeding with the utmost fairness to the prospective defendant to the action. It is essential, if the plaintiff is to succeed in the action which he ultimately brings, that he should be able to satisfy the Court that he has acted throughout with the utmost fairness to the defendant and given him every ....
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....s Bureau. Chadwick J observed that "if it is the law that a plaintiff is entitled to misrepresent himself as a bona fide customer in the guise of executing a trap order then his solicitor must be entitled, first, to advise him that this is so and secondly, to set up the arrangements which enable the trap order to be executed effectively. It is but a short step from that for the solicitor to be present at the execution of the trap order, if only to ensure that a proper record is made of what occurs." 53. In Hilti AG v. Ucan Development Limited (1963) 7 RPC 160 (High Court of Justice, Chancery Division), the Court, while considering the likelihood of repetition and the danger of further instances of passing off, was concerned with only one transaction, which was a trap order. The Court refused to grant an interlocutory injunction on the basis of an isolated instance. Even in cases where no trap purchase was involved, the Courts have not granted relief where only an isolated instance was shown. [See: Rutter and Co. v. Smith (1901) 18 RPC 49 (High Court of Justice, Chancery Division); John Knight & Sons v. Crisp (1904) 21 RPC 671 (High Court of Justice, Chancery Division); Burberrys....
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....ion on the court. It was held that: the use of a trade mark on the Internet, uploaded on a website outside of Australia, without more, is not a use by the website proprietor of the mark in each jurisdiction where the mark is downloaded. However, as explained above, if there is evidence that the use was specifically intended to be made in, or directed or targeted at, a particular jurisdiction then there is likely to be a use in that jurisdiction when the mark is downloaded. Of course, once the website intends to make and makes a specific use of the mark in relation to a particular person or persons in a jurisdiction there will be little difficulty in concluding that the website proprietor used the mark in that jurisdiction when the mark is downloaded. A reference was made to the Section 9 of the Trade Mark Act of Australia which gave rise to the question whether the plaintiff had consented to the application of the mark in the sense of the use of its physical manifestation in Australia by the website proprietors. It was sought to be contended by the plaintiff that trap purchases had never been regarded as consent by the trap purchasers to the infringing use. Rather, they....
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.... jurisdiction of the forum court. This cannot possibly be a solitary trap transaction since that would not be an instance of "purposeful" availment by the Defendant. It would have to be a real commercial transaction that the Defendant has with someone not set up by the plaintiff itself. If the only evidence is in the form of a series of trap transactions, they have to be shown to be obtained using fair means. The plaintiff seeking to establish jurisdiction on the basis of such trap transactions would have to aver unambiguously in the plaint, and also place along with it supporting material, to prima facie show that the trap transactions relied upon satisfy the above test. Question (iii) is answered accordingly. Summary 58. We summarise our findings on the questions referred for our opinion as under: Question (i): For the purposes of a passing off action, or an infringement action where the plaintiff is not carrying on business within the jurisdiction of a court, in what circumstances can it be said that the hosting of a universally accessible website by the Defendants lends jurisdiction to such Court where such suit is filed ("the forum court") Answer: For t....