Delhi High Court on the valuation of IP subject matter

Delhi High Court on the valuation of IP subject matter.

The Court opined that by merely valuing the relief of a suit below 3 lakhs, the plaintiff should not be permitted to escape the rigors of CCA.

The Delhi High Court in a significant judgment recently held that all IPR disputes irrespective of their valuations should be listed before the commercial district court judge. However, in the event, the subject matter of the IP is valued at less than Rs. 3 lakhs, the courts will examine whether such valuation is correct or not.

Therefore, for subject matter valued at less than 3 lakhs, the case will be adjudicated as a normal civil suit by the District Commercial Court. If the value is equal to or more than 3 lakhs the case will be a commercial suit as per the Commercial Courts Act (CCA).

The present issue arose when Plaintiff Vishal Pipes filed a suit for a permanent injunction against Bhavya Pipes for trademark and copyright infringement. The subject matter of the IP was valued at less than 3 lakhs, therefore the case was heard in a non-commercial court. The court did not grant an ex-parte injunction against Bhavya Pipes, aggrieved by which Vishal Pipes filed the present appeal at the Delhi High Court.

The main question before the court was "whether IPR suits filed before District Courts valued below Rs. 3 lakhs, ought to be listed before and adjudicated upon by the District Judges (Commercial) under the provisions of the CCA or by District Judges (nonCommercial), as normal civil suits."

It was noted that the suit was listed as a non-commercial suit even though the subject matter of the IP appeared to be much higher.

Whilst deciding on the case, the Court also took note that the existing legislation does not specify the method of valuation of IP disputes and that the specified value of IP should be based on the market value of the subject matter rather than the relief claimed.

The court observed, "For instance, in the present appeal which is before this Court, the mark being sought to be protected is 'VPL INDIA' against the Defendant's mark 'BPI'. The turnover of Plaintiff as pleaded in the suit and as per the CA Certificate placed on record dated 5th August 2021, is approximate Rs.67306 lakhs over the last three financial years, i.e., 2018-2021. Moreover, Plaintiff has stated in its plaint that it has "commanded handsome sales running into Billions of Rupees". It is also stated to have spent "enormous amounts of money" on advertising and publicity. The said mark, including the label, is stated to have extensive goodwill and reputation, having been adopted in 1988, with copyright and trademark registrations dating back to 2006. The Plaintiff has stated that it has reputed clients such as Uttar Pradesh Jal Nigam, NTPC, BSNL, MTNL, L&T, etc., across India and worldwide. The Plaintiff is also stated to have extensive reach and online presence through both its website and third-party sites like IndiaMART, Facebook, LinkedIn, etc. The Plaintiff also has numerous quality certifications and recognitions, including ISO, BIS, and One Star Export House (recognized by the Director-General of Foreign Trade). Despite all these facts, it is puzzling that the reliefs of injunction as also delivery-up, are valued at Rs. 200/- each for Court fee and jurisdiction, which is much below Rs.3 lakhs. The Court fee paid is Rs.100/- for such reliefs. Additionally, the relief of rendition of accounts is valued at Rs. 1000/- and Court fees of Rs. 150/- is paid for the same. Such a course of action appears to be quite unusual and quixotic, as there is no basis in the suit as to why a trademark suit of a brand having such a huge turnover is sought to be valued at such a low threshold. Moreover, the suit in the present case does not mention the 'specified value' at all, but merely the value of reliefs sought"

Thus it is clear that all IPR disputes irrespective of their specified value may not invoke CCA, however, there is a need to conduct a preliminary excursive to confirm if the valuation of the suits has not been done arbitrarily.