GUEST POST: KOMAL CHHAJER : JURISDICTION FOR IP SUITS OF CIVIL AND COMMERCIAL NATURE

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Vishal Pipes Limited v. Bhavya Pipes Limited [i]

Facts-

The Delhi High Court’s Judgement dated 3rd of June 2022 details about the IP disputes’ jurisdiction as in accordance with their valuation from Commercial Courts Act 2015.

The instant case was an appeal to Delhi High Court where the grievance of the Plaintiff was that the ADJ(Non-Commercial) of Patiala House Court, Delhi had refused to grant an ex-parte order of injunction and had also failed to appoint a Local Commissioner for seizure of the alleged infringing goods. Upon enquiring the reason for the same, the Court was informed that the suit is valued below Rs.3,00,000 which is not in coherence to Section 12 of Commercial Courts Act but in reality the valuation was way beyond 3 Lakh Rupees therefore, the matter is for Commercial Court.[ii]

Arguments-

  1. The ones who approach the Courts tend to undervalue the suits so as to escape the rigors of CCA, as CCA is not merely a procedural law it is also a substantial law. And any undervaluation of suits not only destroys the very purpose of CCA but also is against the principles of public policy.
  2. In this judgement, the Court came across the harmonious construction of all the specific statutes of IPR as well as Commercial Courts Act 2015; in furtherance of which, a ‘twin test’ must be accomplished in order to apply the provisions of CCA. Twin Test includes two conditions for an IP dispute to be a commercial dispute:-
    1. pecuniary jurisdiction- i.e. as per Section 1 of Commercial Courts Act 2015, matters above 3 lakhs
    2. and the subject matter jurisdiction i.e. as per Section 2 of the Commercial Courts Act.

Ratio Decidendi of Judgment-

  • All the IP disputes are Commercial Disputes as per Section 2(xvii)[iii] of CCA and must be listed at the Court of District Judge, but to apply the law of CCA twin conditions must be satisfied i.e. valuation of suit of 3 lakhs or above.
  • For determining the valuation of suit, there is no specific method for calculation but the guidance can be taken from Section 12 (d) of the Commercial Courts Act that“where the relief sought in a suit, appeal or application relates to any other intangible right, the market value of the said rights as estimated by the plaintiff shall be taken into account for determining Specified Value.” Court clearly held that, the relief claimed in Plaint cannot be considered as specified value as it can be arbitrary, whimsical, an escape to rigorous provisions of CCA, etc. The valuation must be reasonable to the business and the case pertinent for time being.
  • And till the Court is not satisfied by such a valuation the matter must be listed before the District Judge (Commercial). After the valuation confirmed by the Court the case maybe tried as per the pecuniary jurisdiction i.e.:-
    • If valuation is below 3 lakh Rupees, then the matter is to be processed by CPC as a normal civil Dispute.
    • If the valuation is 3 lakhs Rupees or more, then the matter is to be processed by Commercial Courts Act 2015, at Commercial Court of District Judge.

Obiter Dicta of Judgement

  • The purpose of CCA was to expedite the higher stake commercial disputes in a more flexible manner and less procedural manner. Therefore, the forum of CCA for adjudicating the disputes is chosen very wisely by the Counsels of the litigants as in convenience to their facts and favor, to curb this the Court laid down several observations and ratio decidendi to stick by the objective and purpose of CCA and basic principles of law.
  • However, the settled principle of law that is the maximum pecuniary jurisdiction bars the Court to try the matter cannot necessarily be equated to the reverse. In other words, the matter of lower valuation which can be tried by any other Courts doesn’t mean that it cannot be tried my a Higher Court. Hence, the court reiterated that even if the matter may not satisfy the minimum valuation doesn’t mean it cannot take the provisions of CCA, upon a discretion of Court.

Analysis

The instant Judgement is more of focusing on the valuation and calculation of 3 lakh rupees and less for the consequence of the undervaluation or overvaluation in the plaint. If a brand owner ‘correctly values’ its IP, for perhaps 98% of them, the brand/specified value will be well over Rs. 2 Crores. Even Vishal Pipes for that matter which has a turnover in excess of 600 Crores, brand value can’t be less than Rs. 2 Crores and not something they would state on affidavit to be so knowing that it’s not true[iv]. Therefore, the judgment gives a precedent wherein, the excess misuse and misinterpretation can lead to the similar problem before the enactment of Commercial Courts Act 2015 that is overburdening and excessive delay of IP disputes. Specially in city like Delhi wherein the pecuniary value of Court of ADJ is also 3 Lakhs, which means that if a separate commercial section is formed then the matters can be taken up by the level of ADJ as well. This creates confusion among other city’s courts wherein the pecuniary value differs.

For an IP dispute to be correctly imbibed under Commercial Courts Act 2015, every High Court must come up with their individual guidelines as for specified value in Section 12 is concerned. Simultaneously, the methodology for calculating the exact or approximate valuation for the purpose of pecuniary jurisdiction must be codified by Ministry of Commerce and Industry, Government of India or by Controller of Patents and Trademarks.

ABOUT AUTHOR: Komal Chhaje, fourth year BA LLB student, Indore Institute of law, DAVV, Indore (M.P.)

End notes:

[i] (2022) Del. HC (India).

[ii] “approximately Rs.67306 lakhs over the last three financial years”, para 57.

[iii] intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits.

[iv]  Mathews P. George, Delhi High Court on ‘Specified Value’ of IP suits under Commercial Courts Act, (June 19, 2022) https://spicyip.com/2022/06/delhi-high-court-on-specified-value-of-ip-suits-under-commercial-courts-act.html

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