Judgeement of the Day.-Banyan tree holding case

FACTS-

Banyan tree holding case

The Plaintiff, since 1994 has adopted and used the word mark ‘Banyan Tree’ and also the banyan

tree device. The Plaintiff maintains the websites www.banyantree.com and

www.banayantreespa.com since 1996. The said websites are accessible in India. Pt. does not

hold the registration for the said mark in India, it is pending. The Plaintiff learnt that the

Defendants had initiated work on a project under the name ‘Banyan Tree Retreat’. Plaintiff states

that the Defendants have advertised their project on their website. Plaintiff alleges that the use of

mark by defendants is dishonest and they want to take over plaintiff’s reputation. Accordingly,

the present suit was filed by the Plaintiff for an injunction to restrain the Defendants from the use

of the said mark and device.

ISSUES-

(i) For the purposes of a passing off action, or an infringement action where the Plaintiff is not

carrying on business within the jurisdiction of a court, in what all circumstances it can be said

that the hosting of a universally accessible website by the Defendants lends jurisdiction to such

Court where such suit is filed (“the forum court”)?

(ii) In a passing off or infringement action, where the defendant is sought to be sued on the basis

that its website is accessible in the forum state, what is the extent of the burden on the Plaintiff to

prima facie establish that the forum court has jurisdiction to entertain the suit?

(iii) Is it permissible for the Plaintiff to establish such prima facie case through “trap orders” or

“trap transactions?”

(iv) whether a cause of action arises under Section 20(3) CPC based on the fact that the website

of the defendant was accessible in Delhi and was used for soliciting business in Delhi?

DECISION-

• The court held that to establish jurisdiction in cases where the defendant does not

reside/carry on business in the forum state but the website in question is ‘universally

accessible,’ the plaintiff will have to show that “the defendant purposefully availed the

jurisdiction of the forum court.” This includes proving that (1) The website was used with

an intention to effectuate a commercial transaction and (2) The defendant specifically

targeted the forum state to injure the plaintiff. While in cases where the website is

‘accessible in the forum state’ it needs to establish that (1) The website was not a passive

but an interactive one (2) It was targeted towards the consumers of the forum state for

commercial transactions (3) A commercial transaction was entered into by the defendant

using such a website which resulted in injuring the plaintiff.

• Court holds that jurisdiction of the forum court does not get attracted merely on the basis

of interactivity of the website which is accessible in the forum state. The degree of the

interactivity, the nature of the activity permissible and whether it results in a commercial

transaction has to be examined. Also, ‘effects’ test would have to be applied in

conjunction with the “sliding scale” test to determine if the forum court has jurisdiction to

try a suit concerning internet-based disputes.

• 3

rd issue- The commercial transaction entered into by the Defendant with the user located

within the jurisdiction of the forum court cannot possibly be a solitary trap transaction

since that would not be an instance of “purposeful” availment. The Plaintiff seeking to

establish jurisdiction on the basis of such trap has to prima facie show that the trap

transactions relied upon satisfy the above test.

• 4

th issue- The Court held that it would have to be prima facie shown that the nature of the

activity indulged in by the defendant by the use of the website was with an intention to

conclude a commercial transaction with the website user and that the specific targeting of

the forum state by the defendant resulted in an injury or harm to the plaintiff within the

forum state. To show that some cause of action has arisen in the forum state, the Plaintiff

will have to show prima facie that the said website was specifically targeted at viewers in

the forum state for commercial transactions.