IPR suits below INR 3 lacs to be sent for valuation determination to District Courts first

To ensure smooth adjudication, in a recent decision, the Delhi High Court has issued directions stating that all matters related to intellectual property rights (IPRs) in Delhi that are valued by the Plaintiff for less than INR 3 lakhs (approximately 3,860 USD) shall be listed before the District Judge, Commercial Court first in order to determine the correct valuation of the suit and whether the valuation is “arbitrarily whimsical or deliberately undervalued”. The directions also prescribe that it shall be mandatory for all IPRs suits to ascribe a specific value.

It is also worth noting that the Court took cognizance of the fact that it is difficult to ensure proper valuation of IPRs and affirmed that, “It is clarified that the Commercial Court is not expected to value the specific IP on the basis of any mathematical formulae but to broadly take into consideration whether the said IP would be worth more than Rs. 3 lakhs, which is the threshold for the Commercial Court to exercise jurisdiction”.

Further, the Court, while recognizing the purposeful undervaluation of suits done by litigants and lawyers to escape the provisions of the Commercial Court Act, also held that “If such valuation is permitted, despite some objective criteria being available for valuing IPR - in the CCA - it would defeat the very purpose of the enactment of special provisions for IPR statutes and the CCA. These statutes would have to be harmoniously construed i.e., in a manner so as to further the purpose of the legislation and not to defeat it. Thus, it would be mandatory for IPR suits to be ascribed a 'specified value', in the absence of whimsical and wholly unreasonable”.

This order by the Court is especially effective in preventing forum shopping and bench hunting by the litigants by undervaluing the suits. All pending IPR suits before the different District Judges (non-Commercial) in Delhi are now to be placed before the concerned District Judges (Commercial) for following the new procedure. By virtue of this order, Plaintiffs who wish to amend the plaint would be permitted to do so in accordance with law.