Delhi HC: IP Disputes to be Adjudicated by Designated Commercial Courts

In an appeal against the order of the Additional District Judge (“ADJ”) (non-commercial) refusing ex parte injunction against an alleged act of trademark infringement, the High Court of Delhi noticed the mass practice of undervaluation of IP suits to escape the rigours of the provisions of the Commercial Courts Act, 2015 (“CCA”). The Court, in this case, was called upon to decide if the valuation of the ‘specified value’ of such IPR disputes has any role to play in determining whether the District Court has jurisdiction.

The Court observed that it is clear in the IPR-related enactments that IPR disputes are a set of disputes which lie only before the District Court. But with the enactment of the CCA, the subject-matter jurisdiction over IPR disputes now vests with the Commercial Courts, at the District Court Level. The court held that although Plaintiff is free to value the suit in the manner it so chooses, it cannot be whimsical, arbitrary, or unreasonable. In case of undervaluation, Plaintiff must give definite reasons for such valuation. 

In light of the same, the court has issued the following direction:

1. IPR suits have to be instituted before District Judge who have been notified as commercial courts, by valuing it at Rs. 3 lakhs or above.
2. Even the suits valued below the prescribed valuation shall be heard by the commercial District Judge to determine if such valuation is whimsical, inadequate or has been deliberately undervalued.
3. Upon examination, if the suit is found to be undervalued, the Court shall direct the Plaintiff to either amend the suit or pay additional court fees.
4. Even if the suits valued below the prescribed valuation are found to be adequate, they shall continue to be heard by Commercial Courts, to maintain consistency.

Impact

Litigants who want to institute IP suits  must mandatorily file the same in the district court which has been designated as commercial court, irrespective of the value of the suit. If the value of the suit is below Rs 3 Lakhs, the court will examine whether the valuation is made arbitrarily. If the court accepts the valuation below Rs 3 Lakhs, the suit shall still be adjudicated by the same court but the provisions of the Commercial Courts Act will not apply.