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December 12, 2018

Merely inviting potential franchisees to make licensed use of trademark as franchisee is also use of trademark

Rejecting an application by Defendants to dismiss for want of territorial jurisdiction at the threshold itself a commercial suit titled Burger King Corporation vs. Techchand Shewakramani and Ors., [CC (COMM) 122/2017 in CS (COMM) 919/2016], the Delhi High Court (Singh J.), vide its order dated 2018.8.27 has clarified that actions such as promotion, advertising, publicity etc. of trademark by a Defendant is also be liable to be construed as ‘use’ of trademark for the purposes of Section 2 (2)(c) of the Trade Marks Act, 1999 read with Section 20(c) of the Civil Procedure Code, 1908 (CPC).

The suit was filed in Delhi seeking permanent injunction restraining infringement, passing off, damages and related reliefs in respect of the Plaintiff’s trademark ‘Burger King’. Territorial jurisdiction of the Court was challenged on the ground that the plaint fails to aver the Mumbai-based Defendants as residing or working for gain in Delhi or as operating even a single outlet under the ‘Burger King’ brand in Delhi. It was countered that even if there is no territorial jurisdiction under Section 134 of the Trade Marks Act, 1999 over infringement there is still territorial jurisdiction under Section 20(c) of the CPC over not only infringement but also over passing off by the plaint averring the Defendants have ‘used’ the trademark in Delhi forming part of the cause of action. The plaint alleged use – “a) by promoting the mark Burger King in Delhi; b) by entertaining franchisee queries from the territory of Delhi; c) by seeking franchise requests through the website theburgerking.in; d) by openly and publicly expressing their intention to expand all across the country including Delhi; e) by allowing would be franchisees to apply through the website by filling a form.”

The question before the Court was whether at the preliminary pre-trial stage itself, the aforesaid alleged acts of the Defendants even if true as proven eventually in trial, are insufficient to constitute ‘use’ by them of the trademark for the purposes of Section 2 (2)(c) of the Trade Marks Act, 1999 thereby forming ‘part of the cause of action’ under Section 20(c) of the CPC, or whether instead they are sufficient? Is it that only if Defendants would have actually entered into a franchise agreement with some person in a place and possibly further that through that franchisee actually opened an outlet under the trademark in that place, that the mark would have been ‘used’ by them in that place for the purposes of the aforementioned statutory provisions, or whether that is not a necessary ingredient of those statutory provisions?

The Court took note of the definition of ‘use of a mark’ as provided by Section 2 (2)(c) of the Trade Marks Act, 1999 which states that ‘use’ could either be in a physical form or ‘in any other relation whatsoever to such goods’. The Court observed: The phrase `in relation to’ has been interpreted to include advertising, promotion, publicity, etc. Thus, in addition to actual sale of goods and providing services, if a person advertises his or her business under the mark in a territory, promotes his or her business under the mark in a territory or for example invites franchisee queries from a particular territory, sources goods from a particular territory, manufactures goods in a particular territory, assembles goods in a particular territory, undertakes printing of packaging in a particular territory, exports goods from a particular territory, it would constitute `use of a mark’.” Accordingly, the Court proceeded to a prima facie finding subject to final determination in trial that the plaint along with documents does disclose use of trademark in Delhi by Defendants and thus that the Court in Delhi is vested with the necessary territorial jurisdiction.

The Court distinguished the judgements relied upon by Defendants to urge a contrary statutory interpretation. It found the reliance misplaced for only interpreting Section 134 of the Trade Marks Act, 1999 but not diluting the principle of or the position under Section 20(c) of the CPC, a separate independent gateway for territorial jurisdiction.

On this aspect, the judgement held: “ the provisions of Section 134 of the TM Act and Section 62 of the Copyright Act are in addition to and not in exclusion of Section 20 of the CPC. If the Plaintiff can make out a cause of action within the territorial jurisdiction of this Court under Section 20, no reference needs to be made to Section 134.

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