The judicial process in India is often time consuming and leads to situations that might not be in the interests of either party. This is of concern in commercial matters where delay in resolution of commercial disputes may result in heavy financial losses to the parties. This is especially so for matters relating to Intellectual Property Rights (IPR), especially trademarks, where a lengthy dispute would result in the brand owner not being able to use the trademark which may result in loss of recognition among customers.
The Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 which is commonly known as the Commercial Courts Act (‘the Act’) was enacted to ensure that commercial disputes could be resolved in a time-bound manner. The Act allows for subordinate courts; such as District Courts to be declared as Commercial Courts and would have the power to hear commercial matters as defined under Section 2 of the Act. The Act brought in strict statutory timelines for filing documents, Written Statements and Replies, hence ensuring speedier disposal of matters.
The pecuniary jurisdiction for filing a Commercial Suit, i.e. the ‘specified value’ as under the Act has been brought down to Rs. 3 lakhs in case of District Courts and the pecuniary limit for High Courts that have ordinary original civil jurisdiction. For example, the pecuniary jurisdiction for the Delhi High Court starts at Rs. 2 crores.
Section 2(c)(xvii) of the of the Act states that Intellectual Property matters (which include matters related to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits) will be adjudicated as commercial matters. In IP matters, where the territorial jurisdiction falls within the territory of a High Court with original jurisdiction, the suit can be directly filed in the High Court where it is often easier to obtain interim injunctions as the judges are better aware of IPRs.
Trademark owners in India face the problem of blatant infringement where local manufacturers and retailers sell everything from electronic equipment to apparel. Let us take the example of street sellers retailing t-shirts branded ‘Gucci’. Even if an interim injunction is granted and a raid conducted (Click here to read our article on conducting IP raids), the suit remains pending for years. This results in higher costs for the trademark owners, especially for a case where there is no substantive ground in favour of the infringer.
The entire process of examining witnesses and recording evidence would often take months or even years to be concluded. Even though, an IP holder might be entitled to all the rights and there was no defence for the Defendant to have used the Plaintiff’s registered trademark, the Plaintiff would be forced to go through an expensive and time-consuming trial process. Trademark owners would rather avoid this unnecessary strain on their legal budgets. If the suit can be favourably concluded earlier, resources can be allocated towards pursuing other infringers in the market.
Summary Judgments under Order 13-A
A mechanism for a summary adjudication of commercial disputes has been brought in with the Act. The Civil Procedure Code (CPC) has been amended to include Order 13-A titled ‘Summary Judgment’. The new provision allows either of the parties to argue that the matter does not involve any substantial dispute and can be summarily decided without resorting to a trial. Below is a brief look at important parts of this provision –
- Form of Application
A judgment under the provision can be granted only upon filing of an application to the court. The Application must specifically mention that it is being filed under Order 13A and must disclose all material facts relevant to the case and identify the relevant points of law that are sought to be applied to the matter.
- When can the provision be invoked?
As per Rule 2 of Order 13A, the application can be filed at any stage after service of summons and before the framing of issues.
- Grounds for filing
Rule 3 of Order 13A elaborates the grounds for filing a summary judgment. The Plaintiff or the Defendant needs to show that the counter-party has ‘no real prospect’ of succeeding in its claim. The party further needs to demonstrate to the court that there is no other compelling reason as to why the claim should not be disposed of before the stage of evidence.
Rule 4 of Order 13A allows the parties to file documents along with the application. This can be utilised to file fresh documents that bring on record fresh facts that may be relevant in adjudicating the dispute. For IP matters that involve raids, the parties can use this Rule to bring in evidence found during the raid and file it with the application for summary judgment.
IP matters under Order 13A
As mentioned above, trademark infringement in India is generally the activity of informal counterfeiters, who intend to make a quick buck by trading upon the reputation of well-established brands in the market. The infringers have no defence under law as they are simply not authorised to use the registered trademarks.
E.g. An infringer selling packaged bottles of water under the brand ‘Bisleri’ is blatantly attempting to utilise the brand to make illegal profits and has no defence under the law. This is an ideal scenario for invoking Order 13A and prevent the matter from going through a lengthy and expensive trial where there is no real prospect for the Defendant to prove that he was legally dealing in ‘Bisleri’ branded packaged water.
Prior to the Commercial Courts Act
Although the Act brought in provisions of summary judgment, the courts had already devised their own way to deal with cases that had no prospect of one of the parties succeeding. In Satya Infrastructure Ltd. & Ors. v. Satya Infra & Estates Pvt. Ltd., 2013 (54) PTC 419 (Del), the Plaintiffs sued the Defendants for illegal use of the mark ‘Satya’. The Defendants were served but chose not to appear, so the matter would have to trial where the Plaintiff would be required to lead ex-parte evidence and prove their case. The Plaintiff’s counsel, however, pleaded that they were willing to give up the reliefs for damages, rendition of accounts and delivery up if they could obtain a permanent injunction.
In view of the Plaintiff’s submissions, the Court held that the “no purpose will be served in such cases by directing the parties to lead ex-parte evidence… which is invariably a repetition of the contents of the Plaint.” In view of the Plaintiffs’ trademark registrations and the documents evidencing that the Plaintiffs were carrying on business under the trademark in dispute, the Court was pleased to hold in favour of the Plaintiff and pass a decree of permanent injunction against the Defendants. Before the Act, it was possible to go through this route if one was willing to give up the reliefs of damages, rendition of accounts and delivery up.
Post the Commercial Courts Act
There have not been a lot of cases where the courts have thrown light on Order 13A. One of the first cases where the Court commented on the initiation of a summary suit was Bright Enterprises v. MJ Bizcraft, RFA(OS)(COMM) 8/2016 & CM 37888/2016. In this case, the High Court of Delhi authoritatively looked into whether a summary judgment could be made where no application was filed but, the Court deemed that there was no real prospect of the Defendant succeeding. The Plaintiff’s trademarks were ‘MBD Prive’ and ‘Prive’ and the Defendant’s trademark was ‘Privee’. The Single Judge dismissed the suit in limine by stating that “Suits which are doomed to fail and of which there is no chance of success should be dismissed at whatever stage the court finds it to be so”.
Among the reasons for so dismissing the suit, the Ld. The judge cited Order 13A and that a suit could be dismissed without recording ‘oral evidence’. The suit was dismissed before the filing of summons. The dismissal was appealed by the Plaintiff and the Division Bench held that powers under Order 13A could be exercised only once the Defendant had been served and after an application under the said Order had been filed.
The Division Bench further held that the provisions under the Order are special provisions where a suit can be decreed even without recording ‘oral evidence’. The Bench held that the procedure in the Order is a departure from an ‘ordinary’ civil suit, hence, the procedure within it must be followed strictly and not doing so could result in grave injustice to the parties. Therefore, it was held that the Single Judge could not have invoked the provisions of Order 13A.
Another case where a specific application under Order 13A was made and the court was pleased to award damages to the brand owner is Glaxo Group v Aar Ess Remedies & Ors. CS (Comm) 1328/2016 delivered on July 27, 2017, by Justice Mukta Gupta, Delhi High Court, a case in which the author was fortunate to be involved. In this matter, the Plaintiff sued the Defendants for trademark infringement and passing off. The Court awarded an ex parte ad interim injunction in the matter, and when the Defendant did not appear the Court was pleased to proceed against the Defendants ex parte.
Before the issues had been framed, the Plaintiff filed an application under Order 13A arguing that the Defendants had no prospect of succeeding in the suit and that a decree ought to be granted in favour of the Plaintiff. The Court held that the in view of the multiple violations by the Defendants, it would be pleased to award compensatory and punitive damages worth Rs. 20 lakhs.
Although Order 13A is not a route that is commonly used, the IP Bar, especially in Delhi, is becoming increasingly aware of how helpful this provision can be and has started using it regularly. This procedure is an easy way for the IP holders to prevent lengthy litigation that is no longer effective in view of their business goals, i.e. matters in which an injunction has been obtained and a raid has been conducted. If the Defendant stops appearing, the Plaintiff has to bear the costs of going through the motions and obtain a decree that is often ineffective as the small traders or retailers engaging in selling infringing materials often shut shop and shift.
With more judgments we expect greater clarity emerging with respect to the interpretation of the Order 13A. The author predicts that provisions such as Rule 4 of Order 13A that allow for the filing of documents will see heavy use by parties and the courts may impose some limits on the same. In the near future, we can expect a few ‘hard cases’ to come up and provide greater clarity regarding how to make the best use of this interesting new provision.