Earlier today, a decision by the Delhi High Court in Impresario Entertainment & Hospitality v. S&D Hospitality dismissed a trademark infringement claim against a Hyderabad-based Defendant for the Claimant’s failure to make jurisdiction in Delhi.
It is a decision that hinges on three points.
First, the Court holds that a cause of action claim that rests on online bookings capable of being logged in jurisdiction A for the Defendant’s restaurant physically located in jurisdiction B is not good enough to make jurisdiction against the Defendant in A. This is because the booking transaction can only be said to be concluded if the booking (of a table at a restaurant, in this case) is acted upon or accepted. This acceptance can only occur “when the person making the reservation goes to [B] and eats at the [Defendant’s] restaurant”.
The Claimant’s jurisdiction claim here was based, in large part, on the 2016 Delhi appeals court decision in Ultra Home Construction. Ultra Home had imported into Section 134(2) of the Trade Marks Act a statutory explanation to Section 20(c) of the CPC. Read in the manner permitted by Ultra Home, a corporate Claimant can make jurisdiction at a location where the cause of action coincides with a subordinate office of the Claimant. (The CPC rule, in isolation, only recognizes jurisdiction over a corporate Defendant where the cause of action coincides with a subordinate office of the Defendant.)
As a result of this finding, a jurisdiction claim that relies on this coincidence of the cause of action with the subordinate office of a corporate Claimant cannot survive if one of these two things — the cause of action, in this case — falls through.
Second, the language employed by Ms Justice Gupta to communicate this proposition is of note. She borrows the framework of offer and acceptance (as in the case of a contract) that was endorsed by a 2014 Delhi appeals court in WWE.
The judge’s conclusion is that the determining factor in whether “the commercial transaction [takes] place” between a consumer and the Defendant is of “the customer availing [of] the services of the Defendant”. This, she reasons, can only occur where the Defendant is physically located. Even if bookings can be made from jurisdiction A, “the services of the defendant cannot be availed unless the customers go to” jurisdiction B.
This is pointedly different from WWE, which had found that an online transaction for the Claimant’s merchandise can be said to be concluded if it can be paid for in jurisdiction A. Ms Justice Gupta’s disagreement with this position is not articulated but it can go one of two ways.
The first possibility, which would preserve the scope of WWE, would be that the conclusion of payment rule applies to products, where it is possible and common to pay for something in advance. This is not usually the case with in-person services such as dine-in restaurants. (This view, however, generates confusion over grey areas such as home delivery by restaurants which are often paid for in advance, booking fees, and things of that nature.)
The second possibility, which cuts against WWE, would be that the physical place where the service is availed of is what determines cause of action, and not the place where the payment is made, in the event that these two places are different. There are difficulties with this view as well, of course, not least its unreasoned abandonment of WWE and, indeed, its contested extension to rival products.
Finally, Ms Justice Gupta finds that a solitary instance of a consumer booking online with the Defendant at B, assuming it was the Claimant’s restaurant in A, is not enough to support a cause of action in A.
This, again, is a point of no small significance. The WWE Court had found for the Claimant even though the Claimant had not demonstrated a single instance of consumers in the jurisdiction either attempting to purchase from the Claimant or being confused between the Claimant and the Defendant.
In the event, this Court relies heavily on the well-known Delhi appeals court decision in Banyan Tree, which offers the position that a cause of action made out online must, at a minimum, demonstrate that the Defendant intended to conclude transactions and specifically target consumers in jurisdiction A.
Neither condition is met here, of course. However, there is something to be said for how these lines aren’t as clear-cut with the presence of middleman platforms like Zomato and Dine-Out, both of which are used heavily by the Claimant to set up not just jurisdiction but also a putative case for consumer confusion.
There are two things to say at this point.
First, it is fast becoming inarguable that Delhi judges have, of late, developed a tendency to apply two standards of scrutiny while evaluating jurisdiction claims — one for cases where Defendants are set ex parte, and another for where Defendants contest jurisdiction.
One example with suffice to illustrate the point. Ms Justice Gupta herself, not four months ago, found for the Claimant in Icon Health & Fitness (which I wrote about in a previous story here) in another remote location jurisdiction case. The finding sprung almost entirely from WWE, a decision that she has now demonstrated little hesitation in departing from.
The only obvious difference? The claim in Icon Health & Fitness was ex parte, with no obvious recrimination in the event of a pro-Claimant finding. The Claimant’s case in Impresario, on the other hand, was thoroughly contested by the Defendant, and has prompted a detailed 21-page decision that was held under advisement for nearly two months. There’s a genuine gap in rigour here, and it’s a troubling one.
Second, and I cannot emphasize this enough, WWE and Ultra Home Construction are having us judge jurisdiction claims from an extremely convoluted baseline. On the face of it, Impresario is little more than a straightforward application of the Banyan Tree tests. (Indeed, Ms Justice Gupta admits as much at the conclusion of this decision. “Facts pleaded in the [claim],” she states tersely, “do not pass the tests laid down by the [appeals] Court in Banyan Tree.”)
However, judges are now, by sheer weight of precedent, compelled to consider two possibilities that did not complicate such an inquiry even four years ago.
The first — Ultra Home Construction — asks Courts to consider a jurisdiction permutation that is not authorised by statute. The second — WWE — effectively asks Courts, as a matter of routine, to consider whether jurisdiction is possible at a place neither the Claimant nor the Defendant principally operate out of, simply because the internet exists.
Credit then, to Ms Justice Gupta, for wading through these possibilities and arriving at a well-justified conclusion. However, I cannot shake the feeling that it may well be a conclusion that shuts the door to one unfavourable outcome only to open the door to several others.
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