In a recent order dated 15th Feb, 2016, the Single Judge of the Delhi High Court in the case of Guinness World Record and Ors. v. Sababbi and Ors. (CS(OS) No.1180/2011 & connected matters) adjudicated upon the interpretation of the recently passed Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (hereinafter referred to as the Commercial Courts Act) as it applies to intellectual property (IP) cases and this decision has important implications on pending IP enforcement suits.
The Commercial Courts Act was originally brought in as an Ordinance in October, 2015 and later passed by the Parliament in December, 2015. It was enacted with the purpose of creating commercial courts at the District Court levels, Commercial Divisions at the High Court levels and Commercial Appellate Divisions, to hear “commercial disputes” under a fast-track procedure. “Commercial disputes” have been broadly defined to cover IP enforcement disputes as well, but the law also placed a limitation that only “commercial disputes” that are of a “specified value” could be heard by such Commercial Courts or Commercial Divisions under a fast-track procedure. The term “specified value” was, in turn, defined to mean at least INR 10 Million (though each jurisdiction retained the power to increase this minimum amount). Pending cases in relevant High Courts that fulfill this criterion were to be transferred to the Commercial Divisions within these High Courts.
Issue with respect to IP cases:
The Commercial Courts Act, however, contained a specific provision relating to IP cases before High Courts, which reads as follows:
“7. Jurisdiction of Commercial Divisions of High Court–All suits and applications relating to commercial disputes of a Specified Value filed in a High Court having ordinary original civil jurisdiction shall be heard and disposed of by the Commercial Division of that High Court:
Provided that all suits and application relating to commercial disputes, stipulated by an Act to lie in a court not inferior to a District Court, and filed or pending on the original side of the High Court, shall be heard and disposed of by the Commercial Division of the High Court:
Provided further that all suits and applications transferred to the High Court by virtue of sub-section (4) of section 22 of the Designs Act, 2000 or section 104 of the Patents Act, 1970 shall be heard and disposed of by the Commercial Division of the High Court in all the areas over which the High Court exercises ordinary original civil jurisdiction.”
The Delhi High Court was called upon to decide whether the expression “filed or pending” in said proviso meant that the Courts designated under the Act were to entertain all pending matters, irrespective of their value? If yes, this would imply that all pending IP cases in relevant High Courts would be transferred to the Commercial Division within these High Courts for disposal under the fast-track procedure, even where the “specified value” of the cases were below INR 10 Million.
Finding of the Delhi High Court:
The Single Judge of the Delhi High Court, traced the legislative history behind the first proviso to Section 7 of the Act, reproduced earlier. The Court observed that in the original ordinance issued in October, 2015, the same proviso only referred, inter alia, to IP cases that were “filed” in the respective High Courts. On 16th Dec, 2015, the Government of India Cabinet, Press Information Bureau, issued a Press Note, making it clear that an amendment was required to ensure that this proviso would also be applicable to pending cases.
Thereafter, when the legislation was enacted in December, 2015, the said proviso was amended to refer to cases that were “filed or pending” in the respective High Courts rather than just “filed”. The Court also referred to one of the Reports prepared and submitted to the Parliament on this law, which appears to emphasize the relevance of “specified value” for fresh cases but not pending cases. Based on the above sequence of events, the Single Judge of the Delhi High Court concluded that the intention of the legislature was to ensure that pending cases (as on the date of coming into force of the Commercial Courts Act), filed with the relevant High Courts will be heard by the Commercial Division of the High Court irrespective of whether they bear a “specified value” of INR 10 Million or above.
What this implies:
This decision (unless reversed on appeal) implies that pending IP cases, including enforcement cases, filed at the relevant High Courts will be heard and disposed by the Commercial Divisions of the High Court, even if they carry a “specified value” below INR 10 Million and would be entitled to the fast-track procedure.
Although not an issue before this Court, the observations of this Court suggests that for fresh IP cases, the Commercial Courts Act and the fast-track procedure thereunder will apply only if the “specified value” of the case is above INR 10 Million.
Where does the confusion still lie?
The Delhi High Court in this case appears to have considered the “specified value” under the Commercial Courts Act to be same as the value of the suit for the purpose of the pecuniary jurisdiction of the Court itself. However, suit valuation for the purposes of pecuniary jurisdiction is governed by different provisions of law, and is normally assessed on the basis of the value associated with the remedies sought. In respect of IP cases, these provisions of law do not refer to “market value” of the IP involved. In other words, prima facie, the method of determining “specified value” under the Commercial Courts Act may not appear to be the same as the methods employed to determine the value of the suit for the purpose of pecuniary jurisdiction of the court itself.
The issue arises because, as per the latest Delhi High Court (Amendment) Bill, 2014 that came into effect in October, 2015, the minimum suit value that would fulfill the pecuniary jurisdiction of the Delhi High Court (suit valuation) is now INR 20 million, which is double the minimum “specified value” under the Commercial Courts Act. Therefore, the question remains – for fresh IP cases, would both these magic numbers, that is market value more than INR 10 million and suit value more than INR 20 million, govern the application of the fast-track procedure in the Delhi High Court?