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When goods seized by Local Commissioner at his premise are Genuine

It is normal practice in matters to Intellectual Property Law (i.e. matters pertaining to violation of Trademark, copyright, design, Patent , Geographical Information etc), when ever a right holder initiates an action against the pirates in  order to protect the intellectual property right, the same also files an application under Order 26 Rule 9 CPC, seeking appointment of Local Commissioner in order to ascertain the infringing and violating activities of the pirates. The Provision is extracted as under:
 
Order 26 Rule 9 CPC: Commissions to make local investigations
In any suit in which the Court deems a local investigation to be requisite or proper for the purpose of elucidating any matter in dispute, or of ascertaining the market-value of any property, or the amount of any mesne profits or damages or annual net profits, the Court may issue a commission to such person as it thinks fit directing him to make such investigation and to report thereon to the Court:

Provided that, where the State Government has made rules as to the persons to whom such commission shall be issued, the Court shall be bound by such rules.
 
The basic idea running behind appointment of Local Commissioner is that it can collect the infringing/violating goods of pirates. In case service of summons of a suit is effected on the pirate, it may remove infringing/violating goods from its premise and may deny its involvement in the impugned activities. Once infringing products are seized from the premise of pirates, then the same can not deny its involvement.
 
This basis principle was observed by Hon'ble High Court of Delhi in its celebrated Judgement reported as 2008 (37) PTC 581 (Del): Autodesk Inc Versus AVI Shanke. The relevant extract of said Judgement is extracted as under:
 
14. Coming now to the question of guidelines to be set, we have heard both the counsel for the parties. We are conscious of the fact that it is neither feasible nor practical to lay down guidelines, which would cater to numerous and all the situations that may arise. However, some of the following relevant factors and guidelines are being enumerated which the Court may take into consideration on the question of appointment of a Local Commissioner in software infringement and piracy matters:
  1. The object of appointment of a Local Commissioner in software piracy matters is not, as much to collect evidence but to preserve and protect the infringing evidence. The pirated software or incriminating evidence can only be obtained from the premises of the opposite party alone and in the absence of an ex parte appointment of a Local Commissioner there is likelihood that such evidence may be lost, removed or destroyed;
  2. Request for ex parte appointment of a Local Commissioner in such matters is usual and in fact is intended to sub serve the ends of justice as it is imperative to have an element of surprise so that the actual position is not altered;
  3. The test of reasonable and credible information regarding the existence of pirated software or incriminating evidence should not be subjected to strict proof or the requirement to demonstrate or produce part of the pirated software/incriminating evidence at the initial stage itself. It has to be tested on the touchstone of pragmatism and the natural and normal course of conduct and practice in trade.
  4. It may not always be possible for a plaintiff to obtain any admission by employing decoy customers and gaining access to the defendants premises.

Any such attempt also inheres in it the possibility of dis-appearance of the pirated software/incriminating evidence in case the decoy customers is exposed. Accordingly, visit by decoy customer or investigator is not to be insisted upon as pre condition. A report of private Investigator need not be dis-regarded or rejected simply because of his engagement by the plaintiff. The information provided by the private Investigator should receive objective evaluation.
 
Thought the afore mentioned Judgement was relating to software piracy, however the basic principle laid down in this case is utilized in all matters pertaining to intellectual property right. The Hon'ble Courts in India, have time and again have used  provision of CPC in a Suit proceeding not only at the  ex-parte stage but also sometime at bi-parte stage even at the Appellant stage in order to extract the true picture of the case. This Provision of Order 26 Rule 9 CPC has given tremendous right to the owner of a trademark/copyright/design/patent to fix liability against the pirates.

Of course provision of Order 26 Rule 9 CPC have provided unfettered right in the hands of right holder against pirates. But some times it is not properly utilized by the right holder. Improper market search and improper investigation by the right holder, at times, may result into wrong visit of the Local Commissioner.  Some times the Local Commissioner also visit the premise of such person, where the same is found to be dealing with original and genuine product of the right holder only.

Once of such case was reported in order dated 29.07.2019  passed by Hon'ble High Court of Delhi in Suit bearing CS (COMM) 144/2018 titled as Me N Moms Private Limited Vs Mr Sandeep Gupta.

In this case the Plaintiff filed application under Order 26 Rule 9 CPC seeking appointment of Local Commissioner in order to visit the premise of Defendant for the purpose of seizing the alleged violating product under the trademark MEE MEE. When the Local Commissioner visited the premise of Defendant , the same was found to be dealing with the original product only of the Plaintiff. The relevant extract of the Judgment is as under:
 
2. During the proceedings before the Local Commissioner the representative of the plaintiff conceded that the goods which are found in the shop of the defendant were not spurious/counterfeiting products but were genuine products of the plaintiff. I have put a specific query accordingly to counsel for the plaintiff, inasmuch as if that is so then this is a very serious issue, because if the defendant is not selling spurious/counterfeiting products and is selling only genuine products of the plaintiff, the injunction order as a whole should be vacated forthwith today.

Now question is this , in such a situation what remedy is available to the person against which the raid has been conducted. Of course such raids results loss of good will and reputation of the party affected. The court may award the order of damages , provided the counter claim is preferred by the Defendant. In this case also, the Defendant preferred counter claim and sought the a decree of Rs. 10,00,000/- (Rupees ten lakhs only) in favour of the defendant and against the Plaintiff.

The Hon'ble High Court of Delhi had taken notice of this fact that such raids conducted by the right holder through the Local Commissioner can cause enormous embarrassment, especially where shops and outlets are located in busy commercial areas. The reputation of a shopkeeper could be adversely affected to a great extent. Thus, while seeking an ex-parte injunction and appointment of a Local Commissioner, the Plaintiff is to bear enormous responsibility by ensuring that the allegation of counterfeiting or fake products is made on the basis of some reports or investigation. The Hon'ble Court while awarding the decree of damage to the tune of Rs. 2 Lakhs observed as under:

15. The Plaintiff is the master of its litigation and the present proceedings and is free to withdraw the suit. However, having obtained an ex-parte injunction and having executed the commission at the Defendant's premises, there is no doubt that the Defendant would have incurred enormous legal costs, expenditure of labour and capital as well as embarrassment due to the execution of the Local Commission. Under these circumstances, while permitting the Plaintiff to withdraw the suit unconditionally, the Defendant's counter claim is decreed for a sum of Rs. 2 lakhs as costs. The costs shall be paid within six weeks.

Thus the provision of Order 26 Rule 9 CPC , though has provided lots of rights to a right holder , but the person affected by this order is also not remedy less. It is clear that if exercise of this power has been invoked by the right holder, without proper investigation, then the right holder has to  bear the ill  consequences for that, including in monetary terms, as has been borne by the right holder in the afore mentioned case. It is always advisable that the right holder should conduct proper and thorough market search before asking the appointment of Local Commissioner from the Court.
 
Written By: Ajay Amitabh Suman, Advocate: Hon'ble High Court Of Delhi - Practicing in Hon'ble High Court of Delhi for nearly 2 decades having specialization in matters pertaining to IPR. (D-1027/2002, Ph no: 9990389539, Email: [email protected])

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