Principles For Grant Of Anti-Suit Injunction Recently Revisited By Hon’ble Delhi High Court

The transnational disputes with respect to IPR are seldom filed before the court of law at least in India. The principle governing the anti-suit injunction as per the trend of cases in India is that until the local court declares the proceedings pending before the foreign court are vexatious and oppressive to the proceedings pending before it alongwith additional element of forum non-conveniens and if it appears that there exists an appropriate forum where both the parties can be conveniently tried, only in such cases the anti-suit injunction is granted. Usually, the entire discussion revolves around these principles only. However, in IPR cases there is yet another challenge that adds to the enquiry of the court which is territorial nature of IP rights.

Today, we will discuss the recent judgement of Hon’ble Delhi High Court in the case of Raaj Unocal Lubricants Limited Vs. Apple Energy Pvt Ltd & Anr. [Cs(Comm) 100/2021] that was delivered on 25.05.2021, which summarises the legal principles applicable to anti-suit injunctions in the context of IPR infringement action based upon territorial rights.

The brief facts of the case are as under:

• The Plaintiff namely M/s. Raaj Unocal Lubricants Ltd. had filed the subject matter commercial case against two Defendants namely M/s. Apple Energy Pvt. Ltd. (Defendant No. 1) being the exclusive distributor in India of the products of M/s. Phillips 66 (Defendant No. 2), being an American manufacturer of natural gas liquids and petrochemicals.

• Vide said commercial suit the Plaintiff sought majorly two fold reliefs viz.: (i) seeking restraint orders against the Defendants from passing off their goods as that of the Plaintiff’s Trade Marks and (ii) for restraining the Defendants from pursuing the civil suit filed by them against the Plaintiff before the Texas Court in USA seeking relief of infringement and passing off of Defendant’s American Trade Mark namely numeral “76” marks.

• The Plaintiff’s contention in the instant commercial suit was that it was the exclusive licensee of the Trade Marks “Unocal”, “Unocal 76” and “76” by virtue of license agreement and thereafter vide MoU executed between Unocal and itself, the Plaintiff got vested with the rights in respect of the aforesaid Trade Mark. The Plaintiff further alleged that the Defendant was not entitled to make use of the Trade Marks comprising of the numerals “76” in India.

• The Plaintiff contended that the proceedings initiated by the Defendant in the Texas Court against the Plaintiff are vexatious and oppressive in nature as they seek to obtain a global injunction against the Plaintiffs use of “76” marks with complete knowledge of the fact that the Plaintiff was not claiming any rights in USA. If no anti suit injunction is granted in favour of the Plaintiff and against the Defendant, then the Plaintiff would be compelled to contest the matter before Texas Court which would be vexatious and oppressive.

• That vide order dated 08.03.2021, the Ld. Single Judge of the Hon’ble Delhi High Court restrained the Defendants vide ex parte ad interim order from using any Trade Mark that was similar with that of the Plaintiff’s Trade Mark that resulted into passing off of the goods of the Defendant as that of the Plaintiff and furthermore restrained the Defendants from pursuing the civil suit filed by them before the Texas Court thereby prima facie holding the proceedings in the Texas Court as oppressive and vexatious in nature.

• The Defendants after entering into appearance contended that the Defendant No. 2 was the subsequent owners of the Trade Marks namely numeral "76". The said ownership came flowing from Unocal to some third party entity and lastly devolving into Defendant no. 2. The Defendants further contended that the proceedings before the Texas Court was only in relation to the territory of USA and nothing beyond that.

• The Defendants filed an application under Order XXXIX Rule 4, CPC, 1908 for seeking vacation of the order dated 08.03.2021. The grounds taken by the Defendants for the purposes of vacation of anti-suit injunction were the following

a) The proceedings before Texas Court were only concerned with the Plaintiffs usage of the “76” marks in the USA and not in India.

b) The Trade Marks rights are territorial in nature.

c) The continuance of the proceedings before Texas Court were not oppressive or vexatious to the present proceedings pending before the Hon’ble Delhi High Court.

Thus, the legal issue that was required to be adjudicated by the Court was as given under:

Whether the proceedings initiated in the Texas Court were oppressive and vexatious to the proceedings before the Hon’ble Delhi High Court?

While vacating the anti-suit injunction the Ld. Single Judge gave the following reasoning:

a) Trade Mark rights are territorial rights and therefore the Defendant No. 2 has the right to seek protection of it’s American Trade Mark in the USA to the same extent as the Plaintiff has the right to protect it’s Indian Trade Mark in India.

b) The Texas Court proceedings were directed only against Plaintiff’s activities in the USA and the Defendants were not concerned with activities of the plaintiff outside USA.

c) The proceedings before Texas Court could not have been filed before any other court including the Hon’ble Delhi High Court.

d) Anti-suit injunction is essentially to protect the proceedings initiated by the Plaintiff before the local court and it can not be granted to protect Plaintiff from all orders which a foreign court may pass which are infact not oppressive or vexatious to the proceedings of the local court.

e) That even if the prayers in the Texas Proceedings would be finally granted it would not impact, directly or indirectly, the proceedings before the Hon’ble Delhi High Court pertaining to the Indian Trade Marks.

f) That if the Plaintiff wanted to contest the proceedings it could very well contest before the Texas Court.

Overall conclusion:

The court has re-affirmed the principle of territoriality nature of IP rights in the present case by placing reliance upon the judgement of the Division Bench of Hon’ble Delhi High Court in the case of Magotteaux Industries Pvt. Ltd. V. A.I.A. Engineering Ltd. [FAO(OS) No. 280 of 2008] wherein the territoriality principle has been relied upon to refuse the anti-suit injunction by the court in the case of Patent infringement action. The filing of the case in exercise of territorial right is the prerogative of the right holder in the territory specific. The said right cannot be interdicted by the foreign court at least this much is clear from the very nature of territorial rights such as IP rights which are granted by sovereign nations. The salutary principal has been re-affirmed by this court by vacating anti-suit injunction against Texas proceedings which was granted in the month of March, 2021. The withholding of / withdrawing of discretion is appropriate both legally as well as factually and the court also came to the conclusion that the proceedings in the anti-suit injunction cannot be solely viewed from the perspective of inconvenience of the party but rather it has to be viewed from overall perspective relating to the impact of pendency of the proceedings before the foreign court upon the Local proceedings. If that bearing as such causes unnecessary intrusion in the decision making power / authority of the local court and appears to be frivolous with respect to local proceedings then only in such cases the anti-suit injunction is granted, however, the mere fact that the adversarial party has preferred a remedy per se cannot bar the infringement action to be preferred in exercise of sovereign rights granted in other jurisdiction.

One peculiar aspect to this case which according to the authors deserve close scrutiny was the existence of overlap between Texas proceedings and Indian proceedings to the extent of relief relating to social media. Even if the court was not inclined to pass the anti-suit injunction or wanted to lift the same, still the court could have balanced the rights of the parties by moulding the relief by observing that any order passed by the Texas Court will not intrude upon the rights of the Plaintiff to exercise their vested rights in India. To this extent there was a kind of overlap / interception which the Ld. Judge was looking for. These are the aspects which can be make out some arguable case in favour of the Plaintiffs in the higher court.

It is the view of the authors that trans-national infringement cases are to be dealt with by the courts with extreme delicacy and the facts in the matter are crucial and sometimes makes the analogy of one case different from another. The present case was of peculiar kind where not merely the territoriality aspect was involved but there was also an element of extra territoriality so far as the purview of the order to be passed by the Texas Court is concerned. Therefore, it is only time that can foresee the future of the internet based transnational infringement action in India when the cases are decided more often. At present the conclusion is based upon the conventional territoriality doctrine as well as the conventional principles of anti-suit injunction.

Prepared by Sushant Singh and Kunal Khanna Advocates.