TMI Blog2009 (11) TMI 983X X X X Extracts X X X X X X X X Extracts X X X X ..... t is not able to accept the submission of the learned Counsel for the plaintiff that the test of purposeful availment must be replaced by the test of purposeful avoidance . While the Defendant may in his defence show how he avoided the forum state, the initial burden is on the plaintiff to show that the Defendant purposefully availed itself of the jurisdiction of the forum court. The issue of incorporating filters to block access to the website by viewers located outside the forum state will have to be considered while deciding if the Defendant had purposefully avoided the forum state. However, that question will arise only if the plaintiff has been able to show that the website of the Defendant is interactive and permits commercial transactions to be concluded by the Defendant with a user of the website. This 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. The degree of the interactivity apart, the nature of the activity permissible and whether it results in a commercial transaction has to be examined. For the effects test to apply, the plaintiff must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d website, whether euphemistically termed as passive plus or interactive , was specifically targeted at viewers in the forum state for commercial transactions. The plaintiff would have to plead this and produce material to prima facie show that some commercial transaction using the website was entered into by the Defendant with a user of its website within the forum state and that the specific targeting of the forum state by the Defendant resulted in an injury or harm to the plaintiff within the forum state. Question No. (ii) is answered accordingly. Permissibility for the plaintiff to establish such prima facie case through trap orders or trap transactions - A lone trap transaction will not be sufficient evidence of infringement or passing off. For the purposes of establishing that a part of the cause of action arose within the jurisdiction of the court, the plaintiff would have to show that the Defendant has purposefully availed of the jurisdiction of the forum court by entering into a commercial transaction with an internet user located within the jurisdiction of the forum court. This cannot possibly be a solitary trap transaction since that would not be an instance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 www.makprojects.com/banyantree. The plaintiff alleges that the use of the said mark and device by the Defendants was dishonest and was an attempt to encash on the reputation and goodwill of the plaintiff and was calculated to cause confusion and deception among the public by passing off the services of the Defendants as that of the plaintiff. Accordingly, the present suit was filed by the plaintiff for an injunction to restrain the Defendants from the use of the said mark and device. 5. The learned single Judge has, in the referral order dated 11.8.2008, noticed that the plaintiff has in para 30 of the plaint claimed that this Court has the territorial jurisdiction under Section 20 of the Code of Civil Procedure, 1908 (CPC) to entertain the suit. According to the plaintiff the Defendants solicit business through use of the impugned mark BANYAN TREE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 )? (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? (iii) Is it permissible for the plaintiff to establish such prima facie case through trap orders or trap transactions. 8. At the outset it needs to be noted that the present suit is not one for infringement by the Defendants of the plaintiff's trademark and the plaintiff carries on business within the jurisdiction of the court. If it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diction. 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 that for jurisdiction of the forum court to get attracted, there should be an intention on the part of the website owner to target potential customers in the forum state. This intention can be presumed unless the website owner demonstrates purposeful avoidance by placing filters or blocking off the website to viewers outside the state within whose territory he is located. Where the owner has not applied his mind to target a specific city, region or state, but if some 'effect' is nevertheless felt in the forum state, the forum court would have jurisdiction. It is submitted that when there is no intention to target a specific city or a customer and there is no effect on the market, the forum court would have no jurisdiction. Learned Counsel for the plaintiff has relied on a large number of judicial precedents, including those of foreign courts, in support of his plea that this Court has ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 plaintiff to show that such contracts resulted from the actions by the defendant himself that created a substantial connection with the forum State. He must have engaged in significant activities within the forum state or have created continuing obligations between himself and residents of the forum state. It was held on facts that the 20 year relationship that the defendant had with the plaintiff reinforced his deliberate affiliation with the forum state and the reasonable foresee ability of litigation there. 13. In Asahi Metal Industries v. Superior Court 480 U.S. 102 (1987) a Japanese company sold assemblies manufactured by it to a company in Taiwan which in turn incorporated them into the finished tyres and sold them worldwide including the US where 20 per cent of its sales took place in California. A product liability suit was brought in the Superior Court in California against the Tai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneral 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 owned The Blue Note, a popular jazz club in the heart of Greenwich Village in New York. It owned the rights to The Blue Note mark. It accordingly sued the Defendant for trademark infringement in New York. It was noticed that New York had a long arm statute. The New York court held that the Defendant had not done anything to purposefully avail himself of the benefits of New York. Like numerous others, the Defendant had simply created a web site and permitted anyone who could find it to access it. Creating a site, like placing a product into the stream of commerce, may be felt nationwide or even worldwide but, without more, it is not an act purposefully directed towards the forum state . (emphasis supplied) 16. In Ballard v. Savage 65 F.3d 1495 (1995) it was explained that the expression purposefully availed meant that the Defendant has taken deliberate action within the forum state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an. 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 Defendants website alone would be sufficient to sustain personal jurisdiction in the forum State as it held that the website must be considered alongside NGS's [Neo Gen Screenings] other interactions with Michigan residents. Most significantly, when potential customers from Michigan have contacted NGS to purchase its services, NGS has welcomed their individual business on a regular basis . The Court further observed that although customers from Michigan contacted NGS, and not the other way around, NGS could not mail test results to and accept payment from customers with Michigan addresses without intentionally choosing to conduct business in Michigan. It was in this context that the Court of Appeals reversed the finding of the District Court and remanded the matter. The 'Zippo' sliding scale test 18. The sliding scale test for determining the level of interactivity of the websi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 it was held that the court had jurisdiction to try the suit. The Zippo courts observation that the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of commercial activity that an entity conducts over the internet has been compared by that court to a sliding scale . 20. In Cyber sell ,Inc. v. Cyber sell .Inc. 130 F.3d 414 (1997), the facts were that an Arizona Corporation that advertised for commercial services over the internet under service mark Cybersell , brought an infringement action against Florida Corporation which offered web-page construction services over the Internet. As part of its marketing effort, the forum Cybersell Inc in Florida created a web-page at http://www.cybsell.com/cybsell/index.htm. The same page had a logo at the top with CyberSell over a depiction of the planet earth, with the caption underneath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficulties 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 been finding it problematic in determining the degree of interactivity that should suffice for jurisdiction to be attracted. Mere ability to exchange files with users through the internet has been held not to be sufficiently interactive for the forum court to assume jurisdiction (Desktop Technologies v. Colourworks Reproduction Designs Inc 1999 WL 98572 (E.D.Pa. 1999). In People Solutions v. People Solutions 2000 WL 1030619 (N.D.Tex., 2000), although it was possible for customers visiting the Defendants website to download information, obtain product brochures and order products on-line, the court refused to assert jurisdiction since the plaintiff failed to show that Defendant had sold its products or contracted for services with any person in the forum state through the website. Again in Mink v. AAAA Development 190 F.3d 333 (5th Cir. 1999) although the Defendants website offered printable mail-in orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urisdiction 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 chosen between the too narrow ( subjective territoriality ) and too broad ( effects ) jurisdictional bases for better managing trans-border externalities. This middle path was targeting. Schultz defines targeting to mean in essence that the activity must be intended to have effects within the territory of the state asserting jurisdiction. According to another scholar, Professor Michael Geist ( Is There a There There Towards Greater Certainty for Internet Jurisdiction 16 Berkeley Tech UJ (2001) 1345 at 1357) the principle of targeting is to identify the intentions of the parties and to assess the steps taken to either enter or avoid a particular jurisdiction. Targeting is described as something more than effects, but less than physical presence. We now examine the decisions in which the above tests were evolved. 23. The effects test was first evolved in Calder v. Jones 465 U.S. 783 (1984). The plain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 beyond the borders of France. The French court essentially applied the effects test to assert jurisdiction. It held that by permitting visualization in France of nazi objects and eventual participation of a surfer established in France in the exposition/sale of such objects Yahoo! Had committed a wrong within the territory of France. Although the website was capable of being viewed from anywhere in the world, the French court concluded that it had caused harm to the two claimants located in France. The mere downloadability of the objectionable information/material did not alone determine the question of jurisdiction. The French court also considered the effect it would have on the public at large in France who could access Yahoo's website and who were targeted. This the Court concluded from the fact that Yahoo! Inc. U.S.A displayed advertisements in French to visitors at the US based server and Yahoo! Fra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Jersey, owned retail stores worldwide where it sold toys, games, and numerous other products. In August 1999, Toys acquired Imaginarium Toy Centers, Inc., which owned and operated a network of Imaginarium stores for the sale of educational toys and games. In this process, Toys also acquired several Imaginarium trademarks. The Defendant, Step Two, a Spanish corporation owned or franchised toy stores operating under the name Imaginarium in Spain and nine other countries. It had registered the Imaginarium mark in several countries where its stores were located. At the time of trial, there were 165 Step Two Imaginarium stores having the same unique facade and logo as those owned by Toys, and selling the same types of merchandise as Toys sold in its Imaginarium stores. However, Step Two did not operate any stores, maintain any offices or bank accounts, or had any employees anywhere in the United States. In 1995, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 transnational and largely autonomous of state control (he cites the example of e Bay's dispute resolution mechanism) there is also vertical fragmentation of the internet by states exercising greater controls over web based information flows within (and into) their territory based on local values and preferences. The latter has been triggered by a variety of factors including libel originating in distant countries, online casinos, domain name cyber squatting, hate speech websites and so on. He predicts that this inevitably leads to carving up of the internet for the purposes of regulation and control. 28. To summarise the position in the US, in order to establish the jurisdiction of the forum court, even when a long arm statute exists, the plaintiff would have to show that the Defendant purposefully availed of jurisdiction of the forum state by specifically targeting customers within the forum state. A mere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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, recognition and enforcement prevailing elsewhere. The Court observed that the Defendant had no office in Canada although in the past it subsidized office space for contractors working on two websites purchased by Intermix. Intermix had no server in Canada and www.mycoolscreen.com also was not hosted on servers located in Canada but on a server in California. It was also observed that 66% of downloads from either the Defendants websites or third parties distributing the Defendants applications were made by American users and the remaining were made throughout the world. Canada accounted for only 2.5% to 5.3% of downloads. On the basis of these facts, the Federal Court held that the Canadian courts had no jurisdiction over the Defendant since there was no substantial connection between the Defendant and the forum. United Kingdom 32. In 1-800 Flowers Inc v. Phonenames (2002) FSR 12 CA, the Defendant was a UK based phonebook c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 Company Inc, a corporation registered in the US had published material on the Internet that was allegedly defamatory of Mr. Gutnick who sued in the Supreme Court of Victoria to recover damages to vindicate his reputation. The Victorian law was treated as a long arm rule which provided for jurisdiction based upon the mere happening of damage within a jurisdiction. The High Court held that the primary judge was correct in deciding the issue of jurisdiction in favour of the plaintiff. Since the long arm was found to be valid and applicable, the arguments that the Defendant had minimal commercial interest in the sale of its magazine in Victoria and that it had published them principally for the benefit of US readers was considered irrelevant. However, what is important to note is that the state of Victoria in the said case did have a long arm law which was held to be valid and which permitted extension of jurisdiction. India 34. Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intiff 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 across in January 2007 while carrying out an internet search. The website contained the words INDIA TV which were displayed prominently inside the sketch of a television. A passing off action was initiated to injunct the Defendant No. 2 from using the domain name www.indiatvlive.com. While the suit was pending, Defendant No. 1 was proceeding with the action instituted by it in the Arizona District Court in US, where the Defendants were located, against the plaintiff in respect of reverse domain name hijacking seeking a declaration of non-infringement of the plaintiffs mark by Defendant No. 1. The plaintiff then applied to this Court stating that the Defendant had suppressed the fact of having filed the aforesaid action in Arizona and prayed for an injunction against Defendant from proceeding with the said action in the Arizona courts particularly since the suit of this Court was prior action. In resisting the said application, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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.com of Defendant No. 1 is not wholly of a 'passive' character. It has a specific section for subscription to its services and the options (provided on the website itself) for the countries whose residents can subscribe to the services include India. The services provided by Defendant No. 1 can thus be subscribed to and availed of in Delhi (India) i.e. within the jurisdiction of this Court. 37. After referring to the articles posted on the net the learned Single Judge concluded in India TV that the Defendant No. 1 intended to target expatriate Indians as well as Indians within the country. Further the stand taken by Defendant No. 1 in its written statement was that it had a global presence including in India. It claimed to be the first IPTV delivery system of Indian content from India. The website of Defendant No. 1 was launched in India as well as in Los Angeles. It was accordingly held that Defendant No. 1 company has suffici ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 forum court, and where there is no long arm statute, the plaintiff would have to show that the Defendant purposefully availed itself of the jurisdiction of the forum court. It is not enough merely to show that the website hosted by the Defendant is an interactive one. It would have to be shown that the nature of the activity indulged in by the Defendant by the use of the website was with an intention to conclude a commercial transaction with the website user. 41. This Court is not able to accept the submission of the learned Counsel for the plaintiff that the test of purposeful availment must be replaced by the test of purposeful avoidance . While the Defendant may in his defence show how he avoided the forum state, the initial burden is on the plaintiff to show that the Defendant purposefully availed itself of the jurisdiction of the forum court. The issue of incorporating filters to block access to the website by viewers located out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to show prima facie that a part of the cause of action arose within the jurisdiction of the forum court. 45. This Court holds that in order to prima facie establish that the Defendant purposefully availed of the jurisdiction of this Court, the plaintiff would have to show that the Defendant engaged in some commercial activity in the forum State by targeting its website specifically at customers within that State. This is consistent with the law laid down in Cybersell and reiterated later in Toys R Us. It is also consistent with the application of the tighter version of the effects test which is targeting . In any action for passing off or infringement, it would have to be shown that the Defendant by using its mark intended to pass off its goods as that of the plaintiffs. A mere hosting of a website which can be accessible from anyone from within the jurisdiction of the court is not sufficient for this purpose. Also a mere posting of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de 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 Ltd. (1902) 19 RPC 497 (High Court of Justice, Chancery Division) was another case where there was ambiguity as to what was actually said at the time of the trap purchase, coupled with difficulties of subsequent recall. The Court observed that it would be wise on the part of the person setting the trap to send a written order in order to avoid ambiguity. 48. In Fox's Glacier Mints Ltd. v. Joblings (1932) 49 RPC 352, (High Court of Justice, Chancery Division), there was a possibility that requests for 'Glacier' mints were misunderstood or not heard, particularly as there was a common use of the word 'glassy' for sweets of that kind in the relevant market (the city of Leicester). In C Stillitz (a Firm) v. Jones Higgins Ltd. (1943) 60 RPC 15 (High Court of Justice, Chancery Division), there was a conflict in evidence as to what happened in the making of the trap purchases. In Cellular Clothing Coy Ltd. v. G White Coy Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 reasonable chance of investigating the matter for himself, so that he may be in a position to put forward in the action, if one follows, any and every defence properly open to him. His Lordship's concern was not to grant an injunction unless satisfied that the conduct was likely to continue. On the basis of an isolated instance of passing off, he was not prepared to do so, unless satisfied that the defendant had been intentionally seeking to pass off the plaintiffs product (which he was not). 50. Showering Ltd. v. Fern Vale Brewery Coy Ld. [1958] RPC 484 (High Court of Justice, Chancery Division) was a case involving passing off constituted by several trap purchases (asking for the plaintiffs Babycham perry at the same public house and being supplied with another perry drink). Danckwerts J rejected criticisms that were made of the plaintiffs trap orders here, noting that they were not based on one isolated instance and that the plaintiffs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lief 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 v. Watkinson (1906) 23 RPC 141 (High Court of Justice, Chancery Division); Armstrong Oiler Company Ld. v. Patent Axlebox and Foundry Company (1910) 27 RPC 362 (High Court of Justice, Chancery Division)]. In any event, to show that the Defendant was availing a jurisdiction, a series of transactions by way of commercial dealings would have to be shown to have taken place within the forum state. 54. Although evidence of trap orders has been accepted by courts in both trade mark infringement and passing off cases, [See Bostitch Inc v. McGarry Cole Ltd. (1964) RPC 173; Thomas French Sons Ltd. v. John Rhind Sons Ltd. (1958) RPC 82; Pearson Brothers v. Valentine Co (1917) 34 RPC 267; Procea Products Ltd. v. Evans Sons Ltd. (1951) 68 RPC 210] the nature of business transacted through an internet website and the nature of goods or services offered by the Defendant would be relevant. This would involve two levels of examination. The nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 are often a necessary step to establish that use. It was explained by the High Court that why trap purchases were not generally considered a consent to infringing use is that the infringing conduct is usually already occurring when the goods bearing the infringing mark are advertised or offered for sale to the public in the jurisdiction. In that situation the trap purchase is made to establish that fact, and cannot be seen to be consent to the infringements that are occurring . However, the above situation was distinguished from one where goods bearing the mark are being offered for sale by an overseas vendor to the world at large and a trap purchase is made by a purchaser in Australia, who not only procures the sale and delivery of the goods in Australia but also procures the sole use of the infringing mark by the overseas vendor in Australia. In that situation, but for the trap purchase, no use of the mark in Australia would have occurred. In those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 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 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, and in the absence of a long-arm statute, in order to satisfy the forum court that it has jurisdiction to entertain the suit, the plaintiff would have to show that the Defendant 3 SAGSR efAll) DIDileE' itself of the jurisdiction of the forum court. For this it would have to be prima facie shown that the nature of the activity indulged in by the Defendant by the use of the website was with an intention to conclude a commercial transaction with the website user and that the specific targeting of the forum state by the Defendant resulted in an injury or harm to the plaintiff within the forum state. 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 fac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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