Can damage be considered as specified value of IP property ?

As an IP lawyer, I must appreciate the welcoming step taken by the Indian Parliament for enacting an Act 'THE COMMERCIAL COURTS, COMMERCIAL DIVISION AND COMMERCIAL APPELLATE DIVISION OF HIGH COURTS ACT, 2015'(herein after referred as Commercial Court Act) for the commercial disputes by invoking the legislative powers of Parliament under Article 245 read with Article 246 of the Constitution of India. It is due to the enactment of Commercial Court Act, the State Government  may constitute Commercial Court/s at District level after prior consultation of High Court of such State. and A judge of Higher Judicial Service in the State (cadre of District Judge); having experience in dealing with commercial disputes can be appointed as Judge of Commercial Court.

The interesting fact is that the jurisdiction of  Commercial Court for commercial dispute can only be invoked if a specified value of the subject matter with regard to suit is not less than one crore. Now the questions are arisen that what commercial dispute is  and what  a specified value is. The is a big list provided in the definition clause section 2 (1)(c) of the Commercial Court Act regarding what commercial dispute is and definition of 'specified value' is provided under section 2 (i) of that Act.

Now as per the definition clause under Section 2 (1) (c) (xvii) intellectual property rights relating to registered and unregistered trademarks, copyright, patent, design, domain names, geographical indications and semiconductor integrated circuits are under the umbrella of the definition of commercial dispute. The provision of 'specified value' provided in section 2(i) of the Commercial Court Act must be read with section 12 of that Act as it is for determination of specified value. It is pertaining to note that Intellectual Property Right(IPR) is an intangible right and therefore, section 12( d) is applicable for the cases related to the IPR, The said section says "where the relief sought in a suit, appeal or application relates to any other intangible right, the market value of the said rights as estimated by the plaintiff shall be taken into account for determining Specified Value..."

The literary and plain meaning of the provisions of section 2(c) (xvii) read with section 12 along with section 2(1) (i) of the Commercial Court Act  is that the Intellectual Property (IP), having value of one crore or more than one crore is entitled to be protected by invoking the jurisdiction of Commercial Court.

The intention of Legislature behind establishing the Commercial Court under Commercial Court Act is to provide speedy disposal of high value of commercial disputes as per the statement of objects and reasons of the Commercial Court Act, 2015. Such speedy disposal establishes good faith of the class and mass of commercial people into the judicial system of India and the investor from any corner of the world may attract to invest more and more money after thinking that if any commercial is arisen, his money would not be held up for years and years. Thus the intention of the legislature is good enough to make this Country commercially progressive with the help of law.

Now the Commercial Court Act is silent about the how the specified value or market value of Intellectual Property is analyzed or examined. No method is provided for it in the entire Act.  It is provided in the Act that market value estimated by the plaintiff shall be taken into account for determining specified value, meaning thereby, the person who files a suit , determines the value of the property in respect of IPR. Is such scale given in the hands of the plaintiff who knows nothing about the market value of the IPR or Specified value of IPR fair enough to get justice in respect of the commercialization suit of IPR ? There is always possibility that the plaintiff is of no knowledge about the specified value of the IPR in this Country where the awareness of IPR is being grown up or very less, then under such socio- economic scenario of this Country, it is hard to justify the value of IPR property on the basis of determination of the specified value or market value of IPR made by the plaintiff. The market value determined by the plaintiff may be correct or incorrect that is not known or there is no provision given in the Act for justifying the same.

True present scenario is  that a plaintiff goes to Advocate instead of going to Chartered Accountant or to some IP property valuer. That Advocate advises him to file a suit of Rupees One Crore or more  by inducing him for claiming DAMAGE to invoke the jurisdiction of Commercial Court which is totally wrong practice being prevailed now a days. That plaintiff becomes happy that the suit of Rs. 1 crore is filed against the defendant. The Commercial Court has not taken objection in respect of jurisdiction being invoked on the basis of Damage and not on the basis of specified value of market value of IPR. The question arises in my mind that whether Damage can be considered as specified value of market value of the Intellectual Property. There is no such word like 'damage' mentioned in the provisions of the sections as discussed earlier for invoking the jurisdiction of Commercial Court and there is no intention of legislature that under the guise of damage of Rs. 1 crore, suit may be filed before Commercial Court. Such dilemma has not been imagined by the legislature while providing the provisions for specified value under Commercial Court Act. Damage of Rs. 1 crore or above can be claimed by any other legal way, then why the birth of Commercial Court Act is required if by way of claiming damage; the value of IP is determined for invoking jurisdiction of Commercial Court. This practice is against the object and reasons of the Commercial Court Act. Such practice is nothing but a forum shopping to invoke the jurisdiction of Commercial Court. Such wrong practice must be banned otherwise the purpose of the Commercial Court Act becomes imfructuous and Commercial Court merely becomes the tool for obtaining the Damage of Rs. 1 crore or above by filing suit in it.  it is surprised to note that those experienced Judges of  'The Commercial Courts' do not restrain such suit of IP being filed on the basis of damages and not on the true basis of specified value. Isn't it a miscarriage of the object of the Commercial Court Act ? 

Interesting and shocking bare fact is that the advocates are filing IP suits in commercial court suit for passing off of shape of goods  under Trade marks Act as if the value of the shape of goods were not than one crore ! moreover, such advocates are also filing suit for infringement of Design in the name of damage of rs one crore which is totally against the provisions of section 22 (2)  wherein not exceeding Rs. 25 thousand  to be paid to the registered proprietor by the a person who has infringed the registered design as a contract debt and if suit is filed in respect of the recovery of damages of infringement of design, the total sum recoverable is not exceeded fifty thousand rupees. This means that damages can be claimed only under Design Act and it can not claimed under the commercial Court Act for the cases related to Designs, otherwise the provisions of Commercial Court Act prevails over the Special Act like Designs Act, 2000, which is again not the intention of legislature. There are also cases where the total sale of particular intellectual property is not more than one lac, and that plaintiff files a suit in a commercial court and injunction is granted in favour of the plaintiff !!  This is astonishing reality of experienced judges of Commercial Courts. 

IPR is a movable or intangible property. Can all the Intellectual properties like a trade mark, a shape of goods, a design, a copyright, a patent  have the market value of Rupees One Crore or above to invoke the jurisdiction of Commercial Court? The answer is 'NO'. It is not possible that each and every Intellectual Property has market value of Rupees One Crore. It is possible that the value of the IP can be more than rupees One crore, these may be in the cases of well-known brands like 'COCA-COLA, TATA, PARLE, NIKE, GOOGLE, LEGO and many more. 

The judiciary and advocates must play their active roles by being guards of the IP laws that there should not be a wrong message to spread in commercial or industrial society in respect of the intellectual properties and valuation of them. Say good bye to 'DAMAGE' and welcome the values of Intellectual properties  which is actually intention of the legislature for enacting The Commercial Courts Act by getting the IP valued by professionals like IP property valuer, or C.A. before invoking the jurisdiction of Commercial Courts.

 

Chirag Bhatt 
on 28 July 2017
Published in Intellectual Property Rights
Views : 155
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