Author: ASHISH GUPTA, LL.M(IPR) from GUJARAT NATIONAL LAW UNIVERSITY, GANDHINAGAR.
This dispute is not a classic registered design dispute, but also a dispute regarding the jurisdiction. Whether the High Court in M.P. has the jurisdiction or the High Court in West Bengal. The Hon’ble Supreme Court has been approached via a Special Leave Petition (SLP) under Article 136 of the Constitution.
Facts
Initially, M/S Mold Tek filed a suit for declaration to obtain a permanent injunction against S. D. Containers from using a design which had been duly registered under the Design Act in the Commercial District court which was used in some of the containers and lids they manufacture. However, on the contrary, the contention from the Defendants/Appellants has been that said designs could not have been registered under Section 4(2) of the Design Act on the grounds that they are not novel nor original, and hence, their registration should be revoked or cancelled to be set in accordance of Section 19 of the Design Act. Section 4 states about ‘prohibition of registration of certain designs’ and Section 19 states about Cancellation of registration, which has been sought after by the Respondents.
In addition to this, the appellants filed another application seeking to transfer these proceedings to the MP High Court, Indore Bench. This application had been made under Section 22(4) of the act read with Section 19 (2). The further developments took an unexpected turn as the District Judge transferred these applications to the Calcutta High Court. Respondents appealed in the High Court of MP, when the Hon’ble court set aside that order of transfer of the case under Section 22(4) of the Design Act, 2000. Hon’ble Supreme Court decided to intervene and decide and interpret the jurisdiction issues arising out of this dispute between the courts under Design Act and the Commercial Courts Act.
Issue
Whether M.P. High Court or W.B. High Court have the jurisdiction to hear the matter in question?
Rule
Section 4 of the Design Act, 2000 - Prohibition of registration of certain designs
Section 19 of the Design Act, 2000- Cancellation of registration
Section 21 of the Commercial Courts Act, 2015 - Transfer of pending cases
Decision
The Apex Court stated that the suit should be transferred to MP High Court, Indore Bench since cause of action had arisen in that state.
Analysis
The Hon’ble Supreme Court has been approached through an appeal in this particular case and has analysed the relationship of the provisions of the Commercial Courts Act and the Design Act. In a situation like this where one party alleged a use of a registered design by another party or where cancellation of a design is sought by the Respondents, there are two options available to the complainant. Those options are:
Approach Controller under Section 19 of the Design Act, 2000
The text of this provision states that “An appeal shall lie from any order of the Controller under this section to the High Court”. This provision also enables any aggrieved party to approach the controller for cancellation of a registered design.
Approach High Court under Section 22 (4) of the Design Act, 2000
This provision states about ‘Piracy of registered design’, and “where any ground on which the registration of a design may be cancelled under section 19 has been availed of as a ground of defence under sub-section (3) in any suit or other proceeding for relief under sub-section (2), the suit or such other proceeding shall be transferred by the court, in which the suit or such other proceeding is pending, to the High Court for decision.”
Where did the aspect of Commercial Courts Act come from?
The inclusion of Commercial Courts Act comes from the interpretation by the Apex Court, scrutinizing the Section 21 of the act, which states that the Commercial Courts Act shall have a precedence over cases in case of conflict with any existing law/statute, which has been the case in the present scenario with jurisdiction disputes as to whether MP High Court or West Bengal High Court.
The crucial aspect analysed by the court was that the act “gives an overriding effect, only if the provisions of the Act have anything inconsistent with any other law for the time being in force.” This is interpreted according to the literal interpretation. Hence, the Hon’ble Apex court concluded that the Commercial Courts Act cannot possibly put a stop to the transfer of proceedings to the High Court as there are no inconsistencies relating to the Design act and the stipulated law, meaning that Commercial Courts act does not apply.
Jurisdiction Of The High Court
The Apex court has stated about the options for the cancellation of registration i.e., with the Controller, and which can be appealed before the High Court. The MP High Court had relied on the case of M/S Godrej Sara Lee Limited vs Reckitt Benckiser Australia (CIVIL APPEAL NOS. 996-997/2010), wherein a plea for cancellation of a design had been made in accordance with Section 19, and the decision was that High Court had jurisdiction in case of appeal only. Thus, it dealt with Section 19(2), while the present suit deals with action under Section 22(4). The court has stated that Sections 19(2) and 22(4) are independent provisions, and hence, question of whether ‘independent’ means that the two provisions can operate simultaneously.
The Commercial Court, Indore had initially transferred the present suit to West Bengal High Court, as the designs were registered in that state. The court referring to the Godrej Sara Lee case held that jurisdiction lies within the High court where the ‘cause of action’ arises. Since the suit had been filed in Indore and no part of the cause of action had arisen in Kolkata, the Supreme Court transferred the suit to MP High Court, Indore Bench.
The cited Godrej Sara Lee case consists of observations of a cancellation action under Section 19. Hence, the Supreme court had stated one of the cause of actions was the cancellation of registration itself, that took place in Kolkata, rendering the jurisdiction with the Calcutta High Court applicable.
But the key point to be noted is that in case of a cancellation action under Section 19, the jurisdiction lies with the High Court where the cancellation action has been taken. And in case of a counter-claim in an infringement suit, the cause of action arises where the suit has been initially filed by the Plaintiff, which was Indore, and in this present case a counter claim has indeed been filed.
In cases like these, the Hon’ble Supreme Court has often applied the ‘prima facie tenable’ test which is often put to use “to further the cause of justice by elimination of false, frivolous and untenable claims of invalidity that may be raised in the suit”. A test of this nature helps perform a preliminary assessment which helps avoid wasting of time. This test can be applied in the present situation for assessing design infringement disputes before transferring it to the High Court under Section 22(4). The Supreme Court’s decision of concluding that the jurisdiction exists with the court of original appellate jurisdiction as well as counter-claim jurisdiction in the present case seems to be sound in law and a step in the right direction.
Conclusion
This judgment by the Supreme Court has brought clarity to the interpretation of the complex provisions such as Sections 19, 22 of the Design Act, and Section 21 of the Commercial Courts Act. The court relied on different high court judgements in the deciding the commercial court jurisdiction issue. If MP High Court’s decision had not been petitioned for appeal and the Supreme Court had not adjudicated on it, the decision would have created conflicting precedents. Hopefully, in the future a similar provision could be added in the Designs Act, 2000 that clears out the ambiguity regarding the appellate jurisdiction to approach a High Court.