Exphar SA v. Eupharma Laboratories Ltd.: Jurisdiction Under Section 62(2) of the Copyright Act, 1957 — The Supreme Court Settles the Law
Introduction
In the realm of intellectual property litigation in India, one of the most practically significant questions has always been: which court has the power to hear a copyright infringement case? The answer to this question determines not just legal strategy but also the very ability of a copyright owner to enforce their rights without being compelled to travel to a distant court. The Supreme Court of India, in its landmark decision in Exphar SA and Another v. Eupharma Laboratories Ltd. and Another, rendered on February 20, 2004, addressed this precise issue with far-reaching consequences. The judgment, delivered by a Bench of Justices Ruma Pal and P. Venkatarama Reddi, settled an important point of law concerning the scope and interpretation of Section 62(2) of the Copyright Act, 1957 — the provision that determines jurisdictional competence of courts in copyright suits. The case also touched upon the legal character of a "cease-and-desist" notice in copyright matters and the manner in which a demurrer on jurisdiction must be adjudicated.
Factual and Procedural Background
The story of this case begins with a pharmaceutical product — a malaria treatment medicine sold under the trade mark "Maloxine" — manufactured and marketed by Exphar SA, the first appellant, a foreign company. The medicine was sold in distinctive packaging with a unique get-up, layout, and design, and Exphar SA claimed ownership of the copyright in the trade mark "Maloxine" and the artistic work comprised in the "Maloxine" carton. The second appellant, M/s Shreechem Laboratories, was a company that carried on business within the jurisdiction of the Delhi High Court and had a registered office in New Delhi.
The commercial arrangement was structured as follows: Exphar SA had entered into a manufacturing/agency agreement with the second appellant, Shreechem Laboratories, authorizing it to manufacture tablets under the "Maloxine" trade mark for sale in the world apart from Nigeria. For the Nigerian market, Exphar SA had a separate arrangement with M/s Shreechem Laboratories. Importantly, a prior agreement had existed with Eupharma Laboratories — the second respondent — but that agreement was terminated.
The trouble began when Respondent 2, despite the termination of its manufacturing arrangement with Exphar SA, allegedly continued to manufacture "Maloxine" tablets and was exporting them, among other places, to M/s Moore Associates Ltd. It was also claimed that the respondents were planning to launch "Maloxine" in the Indian market. As early as November 5, 1993 and again on May 19, 1998, the second respondent wrote letters to the second appellant and to Shreechem Laboratories, calling upon them to cease and desist from manufacturing pharmaceutical preparations under the trade mark "Maloxine." In 1996, Exphar SA had independently filed a civil suit before the Federal High Court of Nigeria against M/s Moore Associates Ltd. and the second respondent, alleging passing off of its "Maloxine" trade mark. That suit remained pending.
The appellants then filed a suit before the Delhi High Court seeking, among other reliefs, an injunction to restrain the respondents from passing off the trade mark "Maloxine" or adopting the distinctive get-up of the "Maloxine" carton, and to restrain infringement of the copyright in the artistic work comprising the "Maloxine" carton. The basis for invoking the Delhi High Court's jurisdiction was two-fold: first, the copyright in the "Maloxine" carton was being infringed by the respondents; second, the appellants (particularly the second appellant) carried on business in Delhi and one of them had a registered office in New Delhi. It was also stated that the defendants themselves carried on business for profit in New Delhi.
On October 26, 1998, a learned Single Judge of the Delhi High Court passed an ex parte interim order in favour of the appellants, which was confirmed on September 28, 1999. The interim arrangement allowed the defendants to continue using the name "MALOXINE" but in a colour combination different from that approved by Exphar SA in 1991, required bold mention of Defendant 2's name and address on all packaging, restrained the use of a deceptively similar colour combination, and required the defendants to maintain quarterly accounts and undertake to pay 10% of sale proceeds as estimated damages in the event the plaintiff succeeded.
Both the appellants and the respondents preferred appeals before a Division Bench of the Delhi High Court. The respondents had not questioned the territorial jurisdiction of the Delhi High Court in their memorandum of appeal. Nonetheless, the Division Bench, acting suo motu on the question of territorial jurisdiction, not only allowed the respondents' appeal but also directed that the appellants' plaint be returned for presentation before the appropriate court, concluding that the Delhi High Court had no territorial jurisdiction. As a consequence, the appellants' own appeal was also dismissed. It is this judgment of the Division Bench that was brought before the Supreme Court by way of Civil Appeals Nos. 1189-90 of 2004, arising out of Special Leave Petitions filed by the appellants.
The Dispute
The central dispute before the Supreme Court was narrow but legally vital. The question was whether the Delhi High Court had jurisdiction under Section 62(2) of the Copyright Act, 1957 to entertain the suit filed by the appellants. The Division Bench of the Delhi High Court had answered this question in the negative, directing the return of the plaint. The appellants challenged this conclusion on multiple grounds. They argued that the Division Bench had gone beyond the pleadings of the parties; that the issue of jurisdiction was never raised in the respondents' memorandum of appeal; that the Division Bench had relied upon facts asserted in the respondents' written statement rather than facts pleaded in the plaint, which was procedurally impermissible when deciding a demurrer; and that the Division Bench had misconstrued Section 62(2) of the Copyright Act, 1957.
There was also a subsidiary but legally interesting question: whether the "cease-and-desist" notices sent by the second respondent to the second appellant at its New Delhi office constituted a sufficient basis for the Delhi High Court to entertain the suit — particularly in light of Section 60 of the Copyright Act, 1957, which provides a remedy to the recipient of a groundless threat of copyright infringement proceedings.
Reasoning and Analysis of the Judge
Justice Ruma Pal, who delivered the judgment of the court, began by identifying two procedural infirmities in the approach of the Division Bench.
The first infirmity was that there had been no application filed by the respondents under Order 7 Rules 11 and 10 of the Code of Civil Procedure, 1908 for rejection or return of the plaint. The Division Bench had gone beyond the scope of the appeals before it by directing the return of the plaint on a ground — lack of territorial jurisdiction — that the respondents themselves had not raised in their memorandum of appeal. This was wholly outside the scope of the pending appeals, and the court noted this with evident disapproval.
The second and more substantive infirmity concerned the manner in which the Division Bench had approached the question of jurisdiction. The Supreme Court explained a fundamental principle: when an objection to jurisdiction is raised by way of demurrer — that is, as a preliminary objection at the threshold rather than at trial — the court must proceed on the assumption that all the facts as pleaded by the initiator of the proceedings are correct. The objecting party, in order to succeed, must show that even granting those pleaded facts as true, the court has no jurisdiction as a matter of law. This is because at the demurrer stage, no evidence is led and no finding of fact is returned. The Division Bench had, however, examined the written statement filed by the respondents — which claimed that the goods were not sold within the territorial jurisdiction of the Delhi High Court and that the second respondent did not carry on business there — and had relied on these assertions to conclude that the court lacked jurisdiction. The Division Bench had even observed that "admittedly" the goods were traded outside India and therefore there was no infringement of the trade mark within the territorial limits of any Indian court, let alone Delhi. The Supreme Court found this observation to be an ex facie contradiction within the Division Bench's own judgment and a fundamental error in methodology.
The court then turned to the substantive question: the proper construction of Section 62(2) of the Copyright Act, 1957. Section 62 of the Act deals with jurisdiction of courts in copyright matters. Sub-section (1) provides that every suit or civil proceeding arising under Chapter 12 of the Act — which deals with civil remedies — in respect of infringement of copyright or any other right conferred by the Act, shall be instituted in the District Court having jurisdiction. Sub-section (2) then adds: for the purposes of sub-section (1), a District Court having jurisdiction shall, notwithstanding anything in the Code of Civil Procedure, 1908, or any other law for the time being in force, include a District Court within the local limits of whose jurisdiction, at the time of institution, the person instituting the suit or proceeding, or where there are more than one such persons, any of them, actually and voluntarily resides or carries on business or personally works for gain.
Justice Ruma Pal drew attention to the word "include" in Section 62(2). She held that this word is significant — it demonstrates that the jurisdiction prescribed under Section 62 is wider than, and not merely co-extensive with, the jurisdiction of the court as prescribed under the Code of Civil Procedure, 1908. The normal rule under Section 20 of the Code of Civil Procedure, 1908 permits a suit to be instituted where the defendant resides or where the cause of action arises. Section 62(2) prescribes an additional ground — over and above the "normal" grounds — by enabling the plaintiff to institute a suit in the court within whose jurisdiction the plaintiff himself resides or carries on business. This provision was not meant to restrict owners of copyright from exercising their rights; rather, its purpose was to remove impediments from their doing so.
To support this reasoning, the court referred to the report of the Joint Parliamentary Committee published in the Gazette of India on November 23, 1956, which had preceded and provided the foundation for Section 62(2). The report stated clearly that many authors were being deterred from instituting infringement proceedings because the court in which such proceedings were to be filed was situated at a considerable distance from their place of ordinary residence. The Committee felt this impediment should be removed and the new sub-clause (2) was accordingly introduced to permit infringement proceedings to be instituted in the District Court within the local limits of whose jurisdiction the person instituting the proceedings ordinarily resides or carries on business. This legislative history reinforced the court's interpretation that Section 62(2) is an enabling, not a restricting, provision.
The Division Bench had, however, held that Appellant 2 (Shreechem Laboratories) was not a "person instituting the suit" under Section 62(2) because it had not claimed ownership of the copyright in the trade mark, infringement of which was the subject matter of the suit. The Supreme Court rejected this interpretation emphatically. Justice Ruma Pal held that it was evident not just from the cause title but also from the body of the plaint that Appellant 2 carried on business within the jurisdiction of the Delhi High Court. Appellant 2 was plainly "a person instituting the suit." The fact that Appellant 2 might ultimately not be entitled to the relief claimed in the suit — because it had not claimed ownership of the copyright — was an entirely different matter going to the merits. That did not mean it was not a person who had instituted the suit within the meaning of Section 62(2). To deprive a co-plaintiff of the status of "person instituting the suit" merely because their claim might fail on merits was to go beyond the express words of the statute and undermine the jurisdictional framework in a manner not warranted by the law.
The court then addressed the second legal question regarding the "cease-and-desist" notices. The appellants' plaint stated that the cease-and-desist notice was sent by the second respondent to Appellant 2 at its New Delhi office and alleged that Appellant 2 had infringed the copyright of the second respondent in the "Maloxine" trade mark. The court explained that a cease-and-desist notice in a copyright context is not a mere notice. It is a threat — it alleges infringement and puts the recipient on notice that they are liable to institution of civil and/or criminal proceedings. The plaint asserted that this threat was received within the jurisdiction of the Delhi High Court, which was itself sufficient to invoke that court's jurisdiction. Crucially, the court drew a distinction between the cases cited by the respondents — Oil and Natural Gas Commission v. Utpal Kumar Basu, (1994) 4 SCC 711 and Union of India v. Adani Exports Ltd., (2002) 1 SCC 567 — which held that service of a mere notice may not be sufficient to found jurisdiction unless it formed an integral part of the cause of action. The Supreme Court distinguished these cases by holding that a cease-and-desist notice in a copyright action cannot be termed a "mere" notice, particularly in view of Section 60 of the Copyright Act, 1957. Section 60 specifically provides that a person who has received such a threat has a cause of action to institute a suit to counter that threat and to seek relief on the ground that the alleged infringement was not in fact an infringement of any legal right of the person making the threat. Therefore, the receipt of such a notice within the court's territorial jurisdiction was a legally relevant event that could itself ground jurisdiction, and was not comparable to the ordinary notices considered in the ONGC and Adani Exports cases.
The court also noted with approval the decision in Ciba Geigy Ltd. v. Sun Pharmaceutical Industries, (1997) 17 PTC 364, which had been cited in the matter.
The Supreme Court concluded that the Division Bench had disposed of the appeals purely on the question of jurisdiction and its conclusion was unsustainable. The matter was remanded to the Division Bench for disposal of the appeals on merits. Pending the Division Bench's decision, the earlier order passed by the learned Single Judge — which had allowed the defendants to use the "MALOXINE" mark subject to conditions including a different colour scheme and the requirement to maintain accounts and deposit 10% of sale proceeds — was directed to continue.
Final Decision of the Court
The Supreme Court allowed both Civil Appeals with costs. The impugned judgment and order of the Division Bench of the Delhi High Court was set aside. The matter was remanded to the Division Bench for fresh disposal of the appeals filed by the respondents and the appellants on merits. The interim order passed by the learned Single Judge was restored and directed to continue pending the decision of the Division Bench.
Point of Law Settled
This case settled the following important points of law. First, the word "include" in Section 62(2) of the Copyright Act, 1957 demonstrates that the jurisdiction conferred under that provision is wider than the ordinary jurisdiction prescribed under the Code of Civil Procedure, 1908. Section 62(2) provides an additional ground of jurisdiction — over and above those under Section 20 of the Code — by enabling the plaintiff to sue in the court within whose local limits they reside or carry on business. This provision was designed to facilitate copyright owners in accessing justice, not to restrict them. Second, where a preliminary objection to jurisdiction is taken by way of demurrer and not at trial, the court must proceed on the basis that all facts pleaded by the party initiating the proceedings are correct, without examining the written statement of the opposing party. Third, a co-plaintiff who carries on business within the jurisdiction of a court qualifies as a "person instituting the suit" under Section 62(2) even if that co-plaintiff has not claimed ownership of the infringed copyright and may ultimately not be entitled to relief. Entitlement to relief is a matter of merits, not of standing to institute proceedings. Fourth, a cease-and-desist notice in a copyright case is not a "mere" notice — it is a threat of civil and/or criminal proceedings, and its receipt within a court's territorial limits can constitute a sufficient cause of action to invoke that court's jurisdiction, particularly in view of Section 60 of the Copyright Act, 1957.
Case Details
Title: Exphar SA and Another Vs. Eupharma Laboratories Ltd. and Another
Date of Order: February 20, 2004
Case Number: Civil Appeals Nos. 1189-90 of 2004 (arising out of SLPs (C) Nos. 3551-52 of 2003)
Neutral Citation: (2004) 3 SCC 688
Name of Court: Supreme Court of India
Name of Hon'ble Judges: Justice Ruma Pal and Justice P. Venkatarama Reddi
Disclaimer: Readers are advised not to treat this as a substitute for legal advice as it may contain errors in perception, interpretation, and presentation.
Written By: Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
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Headnote
The Supreme Court of India, in Exphar SA and Another v. Eupharma Laboratories Ltd. and Another, (2004) 3 SCC 688, decided on February 20, 2004 by a Bench of Justice Ruma Pal and Justice P. Venkatarama Reddi, settled the law on the scope of Section 62(2) of the Copyright Act, 1957. The court held that the jurisdiction conferred by Section 62(2) is wider than the ordinary jurisdiction under the Code of Civil Procedure, 1908, and provides an additional ground of jurisdiction enabling copyright owners to institute suits in courts within whose jurisdiction they reside or carry on business. A co-plaintiff who carries on business within a court's jurisdiction qualifies as a "person instituting the suit" under Section 62(2) regardless of whether that co-plaintiff has claimed ownership of the infringed copyright. The court also held that when jurisdiction is challenged by way of demurrer, the court must proceed solely on the basis of the facts pleaded in the plaint and cannot rely on averments in the defendant's written statement. Further, a cease-and-desist notice in a copyright case constitutes a legal threat — not a mere notice — and its receipt within a court's territorial jurisdiction can ground that court's jurisdiction, particularly in view of Section 60 of the Copyright Act, 1957. The appeals were allowed, the Division Bench's order was set aside, and the matter was remanded for disposal on merits.
