Court rejects lack of jurisdiction plea in a quia timet action

A short but interesting point regarding jurisdiction comes up for consideration in the instant dispute between two entities in the healthcare industry. The Plaintiff, Cadila Healthcare Limited (Cadila) filed the passing off action against the Defendants, Uniza Healthcare LLP and another (Uniza) before the Delhi High Court, to safeguard its rights in the mark ZYCLEAR and restrain Uniza from dealing in pharmaceutical products under the name ZACLEAR. 

Further to the filing of the suit Uniza filed applications for return of the plaint as well as rejection of the plaint on the ground that no cause of action has arisen within the jurisdiction of the Delhi High Court.

Uniza in the applications contend:

1. They carry on business at Ahmedabad, in the state of Gujarat and has not made any sales of medicines under the alleged trademark ‘ZACLEAR’ within the jurisdiction of the Delhi High Court.
2. Cadila also has its office at Ahmedabad, Gujarat. None of the parties have their registered office within the territorial jurisdiction of the court and nor has any cause of action arisen within the court’s jurisdiction.
3. In the written statement Uniza contended that there are a large number of marks with the suffix ‘Clear’ and adoption is bonafide.

Cadila counters the applications on the following grounds:

1. Court has jurisdiction as they carry on business in Delhi through its branch office.
2. Suit is in the nature of a quia timet action as Delhi is one of the largest markets for sale and distribution of their products and they apprehend that Uniza will explore Delhi market for sale of products under the ZACLEAR mark shortly.
3. The threat of Uniza attempting to ride off the goodwill and reputation of the ZYCLEAR mark looms large as they have adopted and applied for trademark ‘ZACLEAR’ in class 5 which is visually, phonetically and structurally similar to Cadila’s “ZYCLEAR”.
4. “ZYCLEAR” is a coined word being used for treatment of allergic conjunctivitis since 2017. The trademark application for ZYCLEAR is pending.
5. Uniza is advertising and inviting enquiries and trade interest through its website www.unizagroup.com which is accessible from any part of the world including Delhi within the territorial jurisdiction of the Court.
6. There is a credible and eminent threat Uniza will sell and/or offer for sale the offending products in Delhi giving rise to a substantial and integral part of the cause of action within the jurisdiction of the Court.

The court after considering the pleadings and arguments held:

• Suit is in the nature of a quia timet action and the pleadings clearly state the reasons behind Cadila’s apprehension that Uniza is likely to manufacture and sell products under the impugned trademark ‘ZACLEAR’ in Delhi. At this stage, the court has to decide the application assuming the averments made in the plaint to be correct. Thus, it is manifest that this court has territorial jurisdiction to entertain the present suit.
• With regard to the injunction, documents on record show that Cadila has been using the ZYCLEAR mark since 2017. Uniza’s proposed trademark ZACLEAR is deceptively similar to ZYCLEAR.
• Uniza’s attempt appears to pass off its goods under the mark ZACLEAR as that of Cadila’s ZYCLEAR.
• Cadila has made out a prima facie case and balance of convenience is also in their favour.

Accordingly, court dismissed the applications for return and rejection of the plaint and granted the injunction in favour of Cadila restraining Uniza from using the mark ZACLEAR till disposal of the suit.