Costar Group Inc vs Aregate Teleservices Private ...
2021 Latest Caselaw 11930 Raj

HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR S.B. Civil Writ Petition No. 9384/2021

1. Costar Group Inc., A Corporation Registered Under The Law Of The State Delaware And Having Its Principal Place Of Business At 1331 L Street, Nw, Washington, District Of Columbia 20005, United States Of America.

2. Costar Realty Information, Inc., A Corporation Registered Under The Laws Of The State Of Delaware And Having Its Principal Place Of Business At 1331 L Street, Nw, Washington, District Of Columbia 20005, United States Of America Through Power Of Attorney Holder Bharat Madakan Having My Office At Samridhi Bangolow No. 97, Plot No. 123, Sector 4, Bh. Charkop Bus Depo Charkop Kandivali ()W) Mumbai - 400047.

----Petitioners Versus Arcgate Teleservices Private Limited, A Company Incorporated Under The Companies Act, 2013 Having Its Registered Office At G1-10 I.t. Park, Madri Industrial Area, Udaipur, Rajasthan 313001.

----Respondent

For Petitioner(s) : Mr M.S.Singhvi, Sr. Advocate assisted by Mr Muktesh Maheshwari Mr Faraz Sagar Mr Hiren Kamod Mr Aidan Choudhary Ms Simran Agarwal For Respondent(s) :

HON'BLE MR. JUSTICE VIJAY BISHNOI

Order

30/07/2021

This writ petition is filed by the petitioners being

aggrieved with the order dated 06.04.2021 passed by Judge,

Commercial Court, Udaipur (for short 'the trial court' hereinafter)

in C.I.S. No.06/2021, whereby the application preferred on behalf

(2 of 11) [CW-9384/2021]

of the petitioners for ex parte appointment of Court Commissioner

as per the provisions of Order XXVI Rule 9 of the Code of Civil

Procedure, 1908 (for short 'CPC' hereinafter) has been dismissed.

The petitioners filed a suit for injunction against the

respondent - Arcgate Teleservices Private Limited before the trial

court, which is pending consideration. Along with the said suit, the

petitioners also preferred an application under Order XXVI Rule 9

CPC seeking ex parte appointment of Court Commissioner.

As per the petitioners, petitioner No.1 is a company

incorporated under the laws of the State of Delaware in the United

States of America and petitioner No.2 is a wholly owned subsidiary

of petitioner No.1. It is claimed that the petitioners are leading

provider of commercial real estate information, analytics and

online marketplaces in the United States of America and they have

developed the most comprehensive database of commercial real

estate in the world.

It is also claimed that the petitioners are touching

average 24,000 brokers, owners, developers and other real estate

professionals daily through phone calls canvassing a half million

properties per year and are taking nearly one million photographs

annually.

It is contended by the petitioners that website

'LoopNet' (available at http://www.loopnet.com) is the foremost

digital marketplace for commercial real estate in the United States

and it contains petitioners' copyrighted photographs and data from

its database. Every day, buyers, sellers, lessors, lessees, owners

and brokers access and use LoopNet to list, buy, sell, lease, rent

or browse commercial real estate.

(3 of 11) [CW-9384/2021]

It is further contended by the petitioners that one of

the current competitors of the petitioners in the United States of

America is Commercial Real Estate Exchange, Inc. (CREXi). CREXi

is a company incorporated in the State of California in the United

States of America and as per its website, it describes itself as a

commercial real estate marketplace that simplifies transactions for

brokers with a suite of easy to use tools to manage the entire

process from listing to closing. CREXi's website allows to use

commercial real estate listings in markets across the United State

of America. CREXi also runs an online auction marketplace.

It is further contended by the petitioners that the CREXi

has raised a significant amount of funding recently and is

competing with the petitioners. It is alleged that CREXi is

attempting to build its own online commercial real estate

marketplace and auction platform by free riding on petitioners'

billions of dollars of investments and its three decades of hard

work. It is also alleged that CREXi has accessed the petitioners'

database and LoopNet more than a million times and forced the

petitioners to file a lawsuit against it in the United States District

Court for the Central District of California in the month of

September, 2020. In the lawsuit, the petitioners have alleged that

CREXi is involved in copyright infringement, violation of United

States Digital Millennium Copyright Act, misappropriation, unfair

competition, false advertising and breach of contract. In the very

lawsuit, it is alleged that the respondent - Arcgate Teleservices

Private Limited is working for CREXi and is accessing LoopNet

without authorization for competitive purposes on behalf of CREXi

in violation of LoopNet's terms and conditions, committing

contributory infringement of the petitioners' copyrighted

(4 of 11) [CW-9384/2021]

photographs and engaging in piracy/theft, improper access to

petitioners' websites and misappropriation of the petitioners'

proprietary contents at the behest of CREXi.

It is contended that in the lawsuit filed by the

petitioners against the CREXi, it has not denied or disclaimed that

the respondent - Arcgate Teleservices Private Limited is accessing

LoopNet on behalf of CREXi. The petitioners have placed on

record certain documents before the trial court in support of their

allegations that respondent - Arcgate Teleservices Private Limited

is working on behalf of CREXi and is illegally accessing the

LoopNet and transferring the data of the petitioners - company to

CREXi.

The petitioners, by way of an application preferred

under Order XXVI Rule 9 CPC before the trial court, sought ex

parte appointment of a Court Commissioner, which came to be

rejected by the trial court vide impugned order. Hence, this writ

petition.

Learned counsel for the petitioners has argued that the

learned trial court grossly erred in rejecting the application filed by

the petitioners for ex parte appointment of Court Commissioner.

It is further submitted that the trial court failed to appreciate that

granting of ad interim relief is necessary in the present case.

It is argued that the trial court erred in holding that for

the appointment of ex parte Court Commissioner, it is insufficient

to show that it is possible that the respondent committed the said

act of copyright infringement, rather, there must be concrete

evidence that the said act of infringement has been committed by

the respondent. It is submitted that at the ex parte ad interim

stage, the petitioners were required to make out a strong prima

(5 of 11) [CW-9384/2021]

facie case and the petitioners have produced ample evidence on

record that there is possibility that the respondent has committed

the said act of copyright infringement.

Learned counsel for the petitioners has further

submitted that the petitioners have adduced significant evidence

of respondent's wrongdoings including evidence that the

respondent is working on behalf of the petitioners' competitor -

CREXi and is regularly accessing the petitioners' LoopNet website

on behalf of the CREXi without authorization and in breach of

petitioners' binding terms and as such committed contributory

infringement of petitioners' copyrighted photographs and engaging

in piracy/theft and misappropriation of petitioners' proprietary

content.

Learned counsel for the petitioners has further

submitted that the trial court has failed to appreciate that in

intellectual property matters, a party is subjected to strict proof of

infringement because at the initial stage, it cannot be expected

from a party to have full fledged evidence of infringement.

It is further submitted that in case of involving

technology/software/internet activity, it is impossible for a party to

completely understand the nature of activity of a wrongdoer

unless the evidence from its systems and files is taken into

custody and preserved for trial.

Learned counsel for the petitioners has further

submitted that the trial court has failed to consider the ratio in

various judgments relied upon by the petitioners, where in one of

the judgments, the Delhi High Court has laid down the principles

regarding appointment of ex parte Court Commissioner in similar

type of cases.

(6 of 11) [CW-9384/2021]

Learned counsel for the petitioners has also submitted

that though the petitioners were successful in making out a prima

facie case before the trial court but it has illegally rejected the

application filed by the petitioners for appointment of ex parte

appointment of Court Commissioner.

In support of the above contentions, learned counsel

for the petitioners has mainly placed reliance on a decision of

Delhi High Court in Autodesk Inc and Anr. vs. Mr. A.V.T.

Shankardass and Anr., reported in AIR 2008 Delhi 167.

Heard learned counsel for the petitioners.

The learned trial court has rejected the application filed

on behalf of the petitioners for ex parte appointment of Court

Commissioner while observing that a Court Commissioner

appointed by it would not be qualified to retrieve and preserve the

relevant evidence or recover data, which might have been deleted.

The trial court has also observed that only the police have means

to recover any deleted data. The trial court is further of the

opinion that mere existence of photographs on servers is not

concrete proof of copyright infringement and sufficient to warrant

seizing and preserving of evidence at this stage. The trial court is

not convinced that FTI Consulting India Private Limited can act as

a Commissioner as its capability cannot be determined on the

basis of an application and on asking of the petitioners.

From perusal of the impugned order dated 06.04.2021,

it appears that the trial court is of the view that the Court

Commissioner cannot be appointed for the purpose of collecting

evidence for the plaintiff.

Ultimately, the trial court has held that the petitioners

have failed to provide sufficient proof to establish the fact that

(7 of 11) [CW-9384/2021]

some photographs are accessed by the respondent-Arcgate

Teleservices Private Limited from the petitioners' website on

behalf of the CREXi and thereafter transferred to it. The trial court

has observed that until and unless this fact is established, it

cannot be used as a tool to connect the missing link.

The Delhi High Court in Autodesk Inc and Anr. vs.

Mr. A.V.T. Shankardass and Anr. (supra) laid down certain

guidelines for appointment of a Court Commissioner in software

infringement and piracy. The relevant portion of the judgment

reads 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:

(i) 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;

(ii) 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;

(iii) 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.

(iv) It may not always be possible for a plaintiff to obtain any admission by employing decoy customers and

(8 of 11) [CW-9384/2021]

gaining access to the defendant's 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.

(v) In cases where certain and definite information with regard to the existence of pirated software or incriminating evidence is not available or where the Court may nurture some element of doubt, it may consider asking the plaintiff to deposit cost in Court so that in case pirated software or incriminating evidence is not found then the defendant can be suitably compensated for the obtrusion in his work or privacy."

(Emphasis supplied)

I am perfectly in agreement with the view of the

Delhi High Court that 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 and strict proof is not required to be given at initial

stage.

The petitioners, along with an application for

appointment of Local Commissioner, has placed on record

certain documentary evidence in support of their claim that the

respondent is illegally accessing LoopNet's website containing

copyright photographs and database of the petitioners at the

instance of CREXi and is transferring to it unauthorisedly.

After examining the said documentary evidence,

which is also annexed with this writ petition, I am of the view

that the petitioners are able to prima facie prove that the

respondent has illegally accessed the copyright photographs and

database of the petitioners - company from its website and

(9 of 11) [CW-9384/2021]

might have transferred it to the CREXi, which used the said

copyright photographs and database for its profit.

In view of the above discussion, I am of the view that

the trial court has erred in not appointing the ex parte Court

Commissioner in the matter in hand.

Before the trial court, two applications were moved,

one on behalf of Shri Hanuman Sharma, Advocate, who offered

himself to work as Court Commissioner and another by Shri

Saurabh Kumar, Senior Director, Risk Advisory and Investigation

FTI Consulting India Private Limited, who offered his services as

Commissioner/Computer Expert.

Taking into consideration the overall facts and

circumstances of the case, I find it a fit case for appointing ex

parte Court Commissioners and the following directions are

issued:

(1) Issue notice of this writ petition to the sole respondent.

Notices are made returnable on 6th September, 2021.

(2) The petitioners shall deposit cost of Rs.10,00,000/-

(Rupees ten lac) with the trial court within one week from today,

so that in case incriminating evidence is not found, then the

defendant can suitably be compensated for obstruction in its

work.

(3) Mr Hanuman Sharma, Advocate, Udaipur and Mr Saurabh

Kumar, Senior Director, Risk Advisory and Investigation FTI

Consulting India Private Limited are appointed as Court

Commissioners. They shall serve a copy of this order to the

respondent before starting commission. They will have all the

powers under Order XL Rule 1 or under XXVI Rule 9 CPC in

(10 of 11) [CW-9384/2021]

order to attend at and/or enter either by force or by breaking

open the lock or by removing the obstruction or barrier or

otherwise, the respondent's premises including office situated at

G1-10 I.T. Park, Madri Industrial Area, Udaipur, Rajasthan - 313

001 or any other premises owned or occupied by respondent

any time of the day or night without notice to the respondent

and with the help of the representative of the petitioners and

police. The Court Commissioners - Mr Hanuman Sharma,

Advocate and Mr Saurabh Kumar shall make inventory and

seize, take possession, custody and control of the petitioners

infringing photographs, along with all the respondent's material,

printed matter, communication, invoices, records, relevant

passwords and passcodes, and such material and documents

relating to infringing photographs owned by the petitioners

including such material stored electronically on any systems.

They shall also make inventory and take a mirror copy of the

entire electronic data of the respondent stored on the computer

systems, data storage devices, handled devices, hard disks, pen

drives, computer records, cloud-based servers, servers

(including any servers maintained at a different location for

business continuity purposes and/or disaster recovery) of the

respondent (which may be belonging to the respondent or on

lease) and shall submit the said mirror copy to the trial court in

a sealed envelope along with a report within a month.

The respondent is directed to co-operate and provide

all assistance to the Court Commissioners but without limitation

to providing access.

(11 of 11) [CW-9384/2021]

The fees of the Court Commissioners shall be paid by

the petitioners as per agreement between the petitioners and

the Court Commissioners.

List on 06.09.2021.

(VIJAY BISHNOI),J

masif/-PS

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