In every infringement suit, the plaintiff bears the burden of proving that the Court before which the infringement suit is agitated has the territorial jurisdiction to hear the case. In other words, the issue of territorial jurisdiction would be decided prior to examining the allegations of patent infringement. A plaintiff must show that a genuine and material part of the cause of action has arisen within the Court’s territorial jurisdiction. Mere isolated or arranged purchases of an allegedly infringing product may not be sufficient if they are made only to create jurisdiction. Courts therefore examine whether the defendant has commercially dealt with the infringing product within the forum, or whether the alleged transactions are merely artificial attempts to bring the dispute before a particular Court.
In SML Limited v. M/s Happy Agro Chemicals & Ors. [OMP No. 34 of 2024 in COMS No. 3 of 2024, decided on July 2, 2026], the plaintiff attempted to invoke the jurisdiction of the Himachal Pradesh High Court by relying on three invoices for purchases of the allegedly infringing product from a local retailer. The defendants, however, contended that the retailer was not authorised to sell “SELZIC” and that the purchases were arranged solely to create territorial jurisdiction. The Court refused to grant interim injunction and held that isolated or orchestrated “trap purchases” cannot artificially establish territorial jurisdiction. Relying on Indovax Private Limited v. Merck Animal Health and Banyan Tree Holding, the Court held that the plaintiff must show sales by the defendants on a commercial scale within the territorial jurisdiction of the Court.
Factual Matrix
The plaintiff sought directions from the Court to restrain the respondents/defendants, by themselves, their directors, partners, licensees, stockists, distributors, agents and/or anyone claiming through any of them, jointly and severally, from infringing the patent rights of the plaintiff by advertising, launching, making, using, offering for sale, selling, importing and/or exporting any product including “SELZIC” or any other product covered by the suit patent IN 282092, granted on March 30, 2017 to the plaintiff. The plaintiff alleged that the agricultural micronutrient formulation claimed under the suit patent was being marketed under the brand name “SELZIC” by Happy Agro Chemicals and others.
The Court, vide order dated January 12, 2024, granted an ex parte ad interim injunction in favour of the plaintiff, thereby restraining the defendants from infringing the patent rights of the plaintiff. The defendants preferred Commercial Appeal [OSA No. 05 of 2024], ULink Agri Tech Private Limited v. SML Limited and others, which was allowed by the Division Bench. The Division Bench held that an ex parte ad interim injunction must be supported by reasons showing why notice to the opposite party would defeat the object of injunction under the proviso to Order XXXIX Rule 3 CPC. The Division Bench remitted the application to the learned Single Judge for fresh consideration and also permitted the defendants to file their reply, with a request to the learned Single Judge to decide the application expeditiously.
Defendants’ Counter
The defendants raised the issue of territorial jurisdiction before the learned Single Judge. They submitted that the product was being sold unauthorisedly by the local retailer and that there was no material on record to show that “SELZIC” had been made available by defendants No. 2 and 3 to defendant No. 1 for sale in Himachal Pradesh. On this basis, the defendants contended that the Court did not have territorial jurisdiction to entertain the suit for infringement of the suit patent.
The defendants further submitted that sham or unlawful transactions, whether relating to counterfeit products or false transactions, cannot be made the basis for creating jurisdiction. Relying on Indovax Private Limited v. Merck Animal Health and others, 2017 SCC OnLine Del 9393, they argued that isolated trap purchases cannot be used to procure jurisdiction and that sales by the defendants on a commercial scale within the territorial jurisdiction of the Court must be shown.
Court’s Findings and Ruling
The Court found that the plaintiff had attempted to invoke the Court’s jurisdiction by relying on three invoices for purchases of the allegedly infringing product from a local retailer. The Court observed that these invoices appeared to have been placed on record solely with a view to invoke the jurisdiction of the Court. Agreeing with the defendants, the Court held that isolated trap purchases cannot be used to procure jurisdiction and that sales by the defendants on a commercial scale within the territorial jurisdiction of the Court must be shown.
The Court therefore held that it did not have territorial jurisdiction to deal with the infringement case. Finding no merit in the application for interim injunction, the Court dismissed the same.
Conclusion
In this case, the plaintiff attempted to rely on isolated purchases of the allegedly infringing product to establish territorial jurisdiction in a patent infringement suit. The Himachal Pradesh High Court refused to grant interim injunction, holding that such isolated or orchestrated trap purchases cannot artificially establish the Court’s territorial jurisdiction. The Court held that manufactured or isolated transactions aimed at setting up a forum do not constitute a genuine cause of action.
The decision highlights that territorial jurisdiction is a threshold requirement and must be established before the Court proceeds to examine the underlying patent infringement allegations. Since the plaintiff failed to establish a prima facie case regarding territorial jurisdiction at the interim stage, the Court declined interim relief. The ruling emphasizes that, even at the interim stage, a plaintiff must show genuine commercial activity by the defendants within the territorial jurisdiction of the Court and cannot rely merely on arranged transactions to choose a forum.
Author: DPS Parmar