Since laws are made in Parliament, taking twice the time a snail would circle the building, the courts have to fill in the crevices ignored by lawmakers. They have to apply the existing laws to a new jurisprudential environment. It is indeed a tough task to interpret IPR disputes applying the time-honoured provisions of the Trademarks Act, 1999 and the Copyright Act, 1957.
The law was simpler when business was done from a particular place, through agents in distant places or via mail. Offers and acceptance concluding a contract were done on telephone, fax or by telegram. But now goods are increasingly sold through websites and online retailers deal with customers in obscure places.
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In this new global scenario, IPR violators could also be operating in the virtual sphere with no physical presence. If there is a dispute, where is the place to sue? This is a new question that has arisen. The Delhi High Court judges have recently differed in their views and ultimately a division bench has decided the issue in its recent judgment, World Wrestling Entertainment vs Reshma Collection. The answer turned on the interpretation of the phrase "carries on business" found in the Trademarks Act and the Copyright Act.
These laws were conceived when the old model was prevalent and there was a physical shop or a business office. However, with the spread of e-commerce, the phrase required a new interpretation. In the above case, the US company was selling its goods with its trademarks and names from Delhi on its website. The server might have been in its home country. It alleged that a firm in Mumbai was imitating its trademarks and copyrights and the potential customers were misled.
The division bench ruled that the suit could be filed in Delhi, overruling the single judge. It said that "the availability of transactions through the website at a particular place is virtually the same thing as a seller having shops in that place in the physical world... When the shop in the 'physical sense' is replaced by the 'virtual' shop because of the advancement of technology, it could be said that the (US firm) carried on business in Delhi."
There is no authoritative pronouncement of the Supreme Court on this new business model. Two judgments that came closest to this issue discussed sale through telephone and fax. Internet commerce was not developed when it delivered its judgment in Dhodha House vs S K Maingi in 2006. Another case is even older, of the 1966 vintage, Bhagwan Goverdhandas vs Girdharilal Parshottamdas & Co. While enacting the Information Technology Act, 2000 and amending other statutes, Parliament had failed to update the Trademarks Act, the Copyright Act or the Code of Civil Procedure to deal with the "new media". As far as the Contract Act is concerned, the 1872 law has not even recognised telephone and telegrams and envisaged only the postal means of offer and acceptance of sale of goods.
The high court in the Wrestling Entertainment case followed the Supreme Court ruling in the Dhodha case and stated that the rule that applies to contracts concluded over the telephone would apply "with equal vigour to contracts concluded over the internet". In other words, contracts would be completed at the place where the acceptance is communicated. The verdict has temporarily suspended the debate and the US firm can now invoke the jurisdiction of the Delhi High Court. The case, however, highlighted the legal conundrums that are thrown up by the new models of commerce and the degree of unpreparedness of our Luddite lawmakers.