Tata Sons’ 'Hakuna Matata' Worry

Hakuna Matata or no problem or no worries—at least that’s what Timon and Pumbaa sought to teach young Simba in the reel life of The Lion King. In the real life, a certain Hakuna Matata became a cause of worry for Tata Sons Pvt.

The Indian conglomerate found itself before Delhi High Court when it realised that two online platforms in the U.S. and U.K. are selling cryptocurrencies labelled $TATA and TATA coin. Complaining of trademark infringement, Tata Sons asked the high court for an injunction against cryptocurrency sites www.hakunamatata.finance and www.tatabonus.com.

The Delhi High Court has never hesitated to hand down landmark judgments clarifying the law whenever the need arises. This order is no different, Hari Subramaniam, founding partner at law firm SNA, told BloombergQuint. The court has looked into the relevant provisions of the Civil Procedure Code and the Trademarks Act very carefully and has clearly and concisely differentiated the facts of the present case from all cited cases on this point, he added.

The cases cited had to do with the extra-territorial jurisdiction of Indian courts in matters of trademark infringement.

To get over the hurdle of jurisdiction of an Indian court over a foreign entity, Tata Sons had argued that any Indian can purchase cryptocurrency on these sites, India was second in the list of countries with highest internet traffic to www.hakunamatata.finance and admittedly, the site is involved in financial activities relating to India. The site’s Telegram page also indicated that it had several Indian members.

There was clear intent to target an Indian customer base. And TATA coin and $TATA had adversely affected its business and has resulted in dilution of its goodwill, the Indian conglomerate argued.

The high court wasn’t impressed.

It dismissed Tata Sons’ argument that an Indian court can have jurisdiction in this case. Relying on an earlier decision in India TV's case, the high court pointed out circumstances that would merit interference. For instance, a specific section of the foreign entity's website that offers subscription to Indian consumers, public or documented statements that India is a market that's sought to be targeted, etc.

Such indicators, of a conscious attempt by the U.S. and U.K. entities, to target the Indian market are absent in the present case, the high court noted while dismissing Tata Sons' case.

For an Indian court to intervene, there must be ‘purposeful availment’, the court added.

The high court pointed out:

• Indian courts do not possess long-arm jurisdiction to act against non-resident parties.

• Something more substantial, indicating purposefully directed activity, must be shown for an Indian court to intervene.

• The court cannot exercise its jurisdiction just because a website is accessible in India, though interactivity or accessibility of a website is a relevant factor. But the “level” of interactivity is also relevant.

It’s hard to completely agree with the conclusion, Nirav Shah, partner at DSK Legal, said. It’s unclear why the court has not concluded ‘purposeful availment’ even though it seems Indians constitute the second highest traffic on these sites, he said.

Although it is not clear from the order but it is quite possible that the numbers may not have been high enough to qualify as “purposeful availment”, Shah added as one explanation for the court's decision.

Subramaniam holds a slightly different view.

His reading of the high court order is that quantum is really irrelevant. There has to be some evidence of business activity having taken place in India. The mere fact that the website of a party situated outside India is accessible from India would not confer upon the Indian courts jurisdiction over such party, he said.

But this does not mean that the brand owner is without any remedy. They can always institute proceedings in the country where the infringer is located, Subramaniam explained.