Jurisdiction Matters

The problem of jurisdiction is inherent in the very nature of Internet. The
concept of jurisdiction has been traditionally based on the territoriality of
courts. Also, in cases of multi-territorial transactions, it is still the
physical presence of either a person or a thing that determines the
jurisdictional question.

However, information on the web, entered from one physical location can be
accessed from any other location on the globe. The universal and intangible
nature of the web gives rise to questions such as which court shall have
jurisdiction in a matter where information is entered from one server and
received at another server? Or as most often the case, which court will exercise
jurisdiction when information can be viewed at different locations. Would it be
the court where the defendant resides or one of the locations where the
information is received or any of the numerous locations from where the
information may be received?

Such questions pertain to ascribing jurisdiction to courts when it appears
that more than one court may be competent to hear a dispute. And as in all
matters of international law, the question of enforcement also remains unclear.
Would the court of a country be competent to call upon and enforce its orders on
a person under the authority of another sovereign?

In answering these questions, a number of guidelines may be followed.
Primarily, the law prescribed in Section 20 of CPC may be taken as a guide in
this regard. However, it is often seen that while the defendant may be a foreign
national and resident, his activities may be prejudicial for persons in India,
worse still, in a number of locations in India. In such a case, it is often the
rule relating to effect of an action may be followed. This would mean that the
place or situs of the effect of the action shall determine jurisdiction.
However, these rules may only be treated as rough guidelines. Law in this regard
is still at the stage of development and debate.

Over the years, several parameters have been developed by various courts to
determine jurisdiction over Internet related matters. The Australian case of Dow
Jones and Co Inc vs Gutnic, (2002) HCA 56, was one of the first and highly
debated matter pertaining to online disputes. This was a suit for defamation
over the Internet wherein the publishers of an online journal were sued by an
Australian businessman for references in an article which he deemed defamatory.
One of the first challenges to the matter concerned jurisdiction of the
Australian Court where it was contended that since the publisher was based in
New Jersey, the Australian Court should not be allowed to hear the matter.
However, in a unanimous verdict, the Australian Court cited the universality,
ubiquity and utility of the Internet and allowed the matter to be heard at the
place where the plaintiff resided and suffered much of the damage.

This has also been followed in India in the case of Casio India vs Ashita
Tele Systems which pertained to the passing off of a domain name and website as
that of the plaintiff. Citing the above mentioned case and also the
universality, ubiquity and utility of the Internet as a means of
communication, the court stated that the mere fact that a website was accessible
from within the territorial jurisdiction of a court was sufficient to allow
jurisdiction to the said court.

However, under the rule stated in the above two cases, jurisdiction would
remain universal and this had the potential to open a floodgate of new problems
arising from multiplicity of actions. The above broad rule for narrowed somewhat
in the case of Zippo Manufacturing vs Zippo Dot Com, Inc where the dispute
concerned certain .com domain names of Zippo Manufacturing While the plaintiff
was based in California and contracts had been entered into over the Internet,
the complaint was filed in Pennysilvania where about 2% of the users of the
service were located. Herein, the Federal Court held that "the likelihood that
personal jurisdiction can be constitutionally exercised is directly
proportionate to the nature and quality of commercial activity that an entity
conducts over the Internet".

However, in later years, the test for determining jurisdiction was further
defined in the case of Toys R US vs Step Two wherein it was held that it
wasnt just sufficient to state merely that the website was interactive. It was
also important to establish that the website was targeting customers within the
territorial jurisdiction of the court for it to be competent to hear the matter.
This addition, while narrowing the Zippo Doctrine, is understandably a more
prudent approach. Should this criterion be removed, it is possible that the
jurisdiction over a website may be bestowed just as easily on any court in the
world.

On similar lines, in the case of India TV vs India Broadcast Live, holding
that the court could exercise jurisdiction over the matter, it was stated that
where the website was an interactive one, as opposed to one merely conveying
information and where the target audience and a large consumer base of the
website was located, the court could exercise jurisdiction over the matter,
irrespective of the location of the defendant. The level of interactivity of the
website was held to be of vital importance.

The judgments in the Casio and India TV matters are quite disparate, with the
former stating that mere access to a website would suffice and the latter
stating that commercial transactions at a particular location and the level of
interactivity of a website were vital. Predictably, the law in this regard is
quite uncertain. As a result, in the matter of Banyan Tree Holdings, the single
bench of the Delhi High Court made a reference to the division bench to clarify
the law in this regard. In answering the reference, the High Court examined the
judicial precedence regarding what constitutes use and those relating to
questions of jurisdiction. The reasoning of the High Court is two-fold. Firstly,
it states that the mere fact that a defendants website is accessible within or
is hosted from within the jurisdiction shall not be sufficient. In addition, it
is also essential that the website should not be entirely passive. Secondly, it
must be shown that the defendant has purposefully availed of the jurisdiction
of the Court. This would imply that the nature of activity of the defendant
should be with an intention to conclude a commercial transaction and that the
forum state must have been targeted by the defendant.

Since there is no ruling in this regard from the Supreme Court, it is unclear
as to what direction the law would take. However, considering that the ruling of
the division bench of the High Court holds up, and in the absence of clarity on
the matter at other courts, the ruling in the Banyan Tree matter may be taken to
be highly persuasive. Therefore, as a matter of caution, it is extremely
essential for trademark owners bringing actions before courts in India to
examine the nature of the website and to satisfy themselves that the conditions
laid down by the division bench are fully met. While it is still premature in
the present stage of jurisprudence in this regard, it is as yet unclear as to
the precise scope of interactivity that may be required to show that a website
is not merely passive.

In light of the provisions of Section 20 of CPC and Section 132 (2) of the
Trademarks Act, it would be safe to assume that a rule of thumb would be that in
case a website is merely passive, relaying information and providing data, but
being incapable of accepting data or commands of the human user, the
jurisdiction of the court shall lie in matters of Trademark infringement with
the court where the plaintiff resides and in all other matters at the court
where the defendant is available. In cases of an interactive website that allows
a two-way transmission of data and targets consumers irrespective of
territoriality, jurisdiction shall lie with every such court where consumers
have been targeted or sales made.

It is interesting to note that in the questions of jurisdiction there are
several lessons that might be learnt from the jurisprudence regarding domain
name disputes which may be adapted to other e-commerce related disputes. The
availability of large volumes of these disputes makes it a useful tool to
examine jurisdictional issues in cyber space. The trickiest aspect of a domain
name dispute also relates to the question of jurisdiction. Just as in other
matters concerning the Internet, it is difficult to assign jurisdiction to a
single court. Traditional concept of jurisdiction based on questions of
territoriality of do not apply here. However, as rightly stated by an American
Court, the universality, ubiquity and utility of Internet nullifies these
traditional notions.

Rahul Chaudhry

The author is partner at an IP law firm, Lall Lahiri & Salhotra
maildqindia@cybermedia.co.in