The internet is often referred to as a "borderless world" with no defined territorial limits. This borderless nature presents unique challenges when it comes to enforcing laws, especially in cases of online trademark infringement. The key legal question is: Where can a lawsuit be filed when such infringement occurs online? In traditional legal setups, the "cause of action" serves as a guide to determining territorial jurisdiction. But when both the plaintiff and the defendant operate in the virtual world, things get tricky.

Section 62 of the Copyright Act and Section 134 of the Trademarks Act do not explicitly define or even mention the phrase "cause of action" in the context of territorial jurisdiction. This omission makes the invocation of Section 20(c) of the Civil Procedure Code (CPC) crucial. While these acts offer venues for filing suits, courts have ruled that the principles under Section 20 remain applicable. In a key ruling, the Delhi High Court in Burger King Corporation v. Techchand Shewakramani & Ors held that Section 20 of the CPC operates in addition to Sections 134 and 62 of the Trademark and Copyright Acts, respectively.

Invocation Of Section 20(C)
The phrase "cause of action" is nowhere defined in the CPC, however as clarified by the case of Om Prakash v UOI, it implies the conditions required for the enforcement of the action, including the violation of the right. However, when it comes to cyberspace, the phrase takes on a new dimension where the latter has infringed the trademark or "use" of a mark or "in relation to goods" of the former online through a lucrative website.

The case of Burger King clarified that the phrase `in relation to' has been interpreted to include advertising, promotion, publicity, etc. and the word "use" in cases of trademark infringement includes not only the unauthorized physical use of the mark, but also an unauthorized reference to such marks. However, all these terms i.e. Advertising, promotion, and publicity have a wide ambit. Then when does this "use" cross the line into trademark infringement? And how do courts determine the cause of action in online disputes?

Legal Theories In Jurisdictional Aspects Of Online Trademark Disputes
India has been walking in the footsteps of the United States Courts with respect to cyberspace jurisdiction. Therefore, a brief analysis of US case laws that have influenced the response of the Indian Judiciary in addressing the need to "localize the transaction" to establish jurisdiction must be seen.

Courts in the USA and Canada came up with the "minimum contacts test" which was established to prove the defendant's activities were directed towards the forum state. This entails that the defendant's conduct should be significant with the forum state and mere foreseeability will not do. An element of "deliberate action" must be proved which is necessitated by the expression "purposefully availed", as in the case of Ballard v. Savage.Another test i.e. the sliding test aimed to determine the degree of interactiveness of the website.

It classified websites as i) passive ii) interactive iii) integral to the defendant's business. A distinction is thus created between passive websites which merely post information while an active website transmits, manages, and markets data, making it subject to the laws of the jurisdiction where it advertises. Through this method the courts have been differentiating the level of interference to determine what constitutes infringement.

 An element of targeting is of essence which has been determined by the effects test which sees the effect on the people which arose due to the defendant's website. This cemented the principle that downloadability of the objectionable information/material was not enough to determine the question of jurisdiction. Instead, the focus would be on the impact it had on the targeted audience.

The same reasoning was applied in the case of Yahoo where the court held that Yahoo! was intentionally targeting people in France by displaying ads in French on its U.S based website and intended to make money from them. This discussion concluded that a mere hosting of an interactive web page without any commercial activity occurring within the forum does not grant the forum court jurisdiction.

Now analysing the same in the Indian context, we need to see how Indian courts have interpreted this understanding and have, if not explicitly but impliedly relied on the tests formulated by the foreign jurisdictions to determine the "cause of action". According to Section 20 of CPC for the invocation of jurisdiction, the traditional requirements encompass two areas:  first, it must be shown that the defendant resides, carries on business, or personally works for gain, or, secondly a part or the entire cause of action must arise within a particular jurisdiction for the court to entertain the suit. However, in the context of the internet, these criteria are difficult to establish with certainty since the internet does not pay attention to the physical location of the parties because transactions in cyberspace are not geographically based.

Beyond Clicks: Establishing Jurisdiction For Online Commercial Transactions In Indian Court
Therefore, to establish jurisdiction it must be shown that, first, the defendant intended to engage in commercial transactions within the forum state and secondly, the website facilitated these transactions actively rather than passively.

Defendant's intention to engage in a commercial transaction specifically at a forum state.
To define the defendant's intention to engage the Impresario Entertainment case differentiated between the purposeful availment test and the purposeful avoidance test. The court explained that to decide jurisdiction, it was not sufficient for the defendant to show that he had avoided the forum state, instead it is essential for the plaintiff to prove that the defendant had purposely availed the jurisdiction of the forum state through its "interactive" website that facilitated commercial transactions. Some examples to prove purposeful availment include displaying infringing content in Indian media, specific claims by website operators that India is a key market for their products or services, and offering the option to accept Indian currency on their websites.

The Delhi High Court ruled that the defendant merely attracting customers from other jurisdictions through third-party platforms like Zomato was not enough to establish jurisdiction. This means that mere existence of the website without proof of 'the effect' does not grant the Court territorial jurisdiction to entertain the present suit. Hence for the purpose of Section 20(c) the plaintiff must demonstrate that part of the cause of action occurred in the forum state due to the defendant's use of the internet.

Along with this it must be prima facie shown that some commercial transaction using the website was entered into by the Defendant with a user of its website within the forum state and that the jurisdiction was intentionally availed through a website deemed as "interactive," which was aimed specifically at users in the forum state for commercial transactions. 

What constitutes a substantial commercial transaction
A substantial commercial transaction is a series of repeated transactions and not a solitary trap transaction set up by the Plaintiff himself. For instance, in the case of Impresario, the plaintiff's claim that since one customer through the defendant's website booked the table at the defendant's restaurant from Delhi believing that it was a restaurant of the plaintiff, the cause of action has arisen in Delhi.

This was rejected as the cause of action cannot be based on a solitary transaction. The court further clarified that merely placing an order or booking a service online is not the same as forming a contract. Booking a table online is considered an "invitation to offer," similar to looking at a menu in a restaurant. The actual contract is only formed when the customer visits the restaurant and dines there i.e. when the services are "availed". Hence, this reinforces the point that Section 20(c) gets invoked upon a "use" or in "relation to goods" which is not taking place in the current scenario due to lack of an actual deception.

Decoding Section 20(C): Are Indian Courts Narrowing Or Expanding Digital Jurisdiction?
As Indian courts walk in the footsteps of their U.S. counterparts, they are working to strike a balance between local interests and global commerce. Applying foreign principles like "specific targeting" or "commercial impact" to Indian cases, courts must guard against over-protectionism. Overzealous application could lead to "cyber borders," fragmenting the internet and complicating jurisdictional issues further.

For instance, let's take the hypothetical case of a copyrighted MP3 song uploaded to a server and then advertised and sold across multiple jurisdictions. Applying the principles above, it can now be said that the jurisdiction will lie where there has been a conclusion of a commercial transaction i.e where the server was bought. Hence an invocation of cause of action only takes place only when it leads to a conclusion of a commercial transaction and impacts the goodwill of the plaintiffs.

As the internet evolves, so will the law. Indian courts thus need to stay vigilant, ensuring that they neither overreach in their protective stance nor neglect the need to establish fair rules of engagement in the online world. However, by focusing on the defendant's intent and targeting, substantial commercial activities, and the "purposeful availment" of jurisdiction, courts are gradually defining the contours of cause of action in the digital realm.

End Notes:

1. Burger King Corp v. Rudzewicz, 471 U.S. 462 (1985).
2. Om Prakash Srivastava v. Union of India, (2006) 6 SCC 207.
3. Ballard v. Savage, 65 F.3d 1495 (1995).
4. Tribunal de grande instance, [T.G.I.] Paris, May 22, 2000.
5. Impresario Entertainment v. S & D Hospitality, (2018) 73 PTC 275.
6. Tata Sons Private Limited v. Hakuna Matata Tata Founders & Ors, (2021) 284 DLT 648.