Trap Purchases and Manufactured Jurisdiction in Indian IP Litigation

 

Trap Purchases and Manufactured Jurisdiction in Indian IP Litigation

A study of SML Ltd. v. M/s Happy Agro Chemicals and the doctrine of trap transactions

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Introduction

In intellectual property disputes, few procedural issues matter as much as deciding where a case can be filed. The choice of court often shapes the entire journey of the case — from how quickly interim orders are granted, to the attitude of the local lawyers, to the practical burden placed on a defendant who must fight far from home.

Because the forum is so important, plaintiffs sometimes try to influence it. The most common method is the trap purchase: a test buy arranged by the plaintiff, where an investigator pretends to be a regular customer, purchases the allegedly infringing product, and keeps the invoice and packaging. Later, this evidence is used not only to show infringement but — more controversially — to argue that the cause of action arose within the territory of the chosen court.

Trap purchases are not new, nor are they automatically improper. In cases of counterfeiting or passing‑off, they are often the only way a rights‑holder can move from mere hearsay to hard proof that the defendant is actually selling infringing goods.

The problem arises when a trap purchase is asked to do double duty: not just to prove infringement, but also to create the jurisdictional link that allows the plaintiff to sue in a court of their choice.

The Himachal Pradesh High Court’s recent decision in SML Ltd. v. M/s Happy Agro Chemicals (2026) is one of the clearest Indian rulings on this issue. Building on the Delhi High Court’s reasoning in Indovax Pvt. Ltd. v. Merck Animal Health, the Court held that a one‑off trap purchase from an unauthorised dealer cannot, by itself, establish territorial jurisdiction. Instead, the plaintiff must show that the defendant is selling the infringing goods within the forum on a commercial scale.

This article explores how Indian law currently treats trap purchases, places the doctrine within the framework of Section 20 of the Code of Civil Procedure, 1908, compares it with how test purchases and manufactured jurisdiction are handled in the UK, US, and EU, and closes with the policy balance the doctrine seeks to maintain: the rights‑holder’s need to enforce their rights versus the defendant’s right not to be dragged into a distant or artificially chosen court.

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Case Law Analysis

SML Ltd. v. M/s Happy Agro Chemicals: three invoices in Shimla

The facts in SML Ltd. v. M/s Happy Agro Chemicals read almost like a textbook example of manufactured jurisdiction. SML Ltd., an agrochemical company with a patent titled “Agricultural Composition” (valid until 2037 and marketed as “TECHNOZ”), sued three defendants over a competing fertiliser sold under the mark “SELZIC.”

The defendants were spread across India:

• A single retail shop in Rohru Tehsil, Shimla (Himachal Pradesh).
• Mitul Industries, a manufacturer based in Mumbai.
• ULink, a wholesaler based in Pune.

Mitul and ULink had an agreement to manufacture and market SELZIC, but neither operated in Himachal Pradesh.

SML chose Himachal Pradesh as the forum, relying almost entirely on three invoices from trap purchases arranged at the Shimla shop. The manufacturer and wholesaler resisted jurisdiction on three key grounds:

1. Neither resided in Himachal Pradesh.
2. SELZIC was regulated under the Fertilizer (Control) Order, 1985, and their authorisations covered Gujarat, Maharashtra, Madhya Pradesh, Rajasthan, and Uttar Pradesh — not Himachal Pradesh.
3. They had never sold SELZIC to the Shimla shop or to any dealer in the State.

The Court’s reasoning unfolded on two levels:

Procedural: Section 20 CPC allows a plaintiff to sue in a forum where one defendant resides, but only with leave of the court or if the other defendants consent. SML had neither. It therefore had to justify jurisdiction based solely on cause of action. Relying on Asma Lateef v. Shabbir Ahmad (2024), the Court confirmed that jurisdiction can be tested even at the interim‑relief stage.

Doctrinal: Could isolated trap purchases establish jurisdiction? The Court accepted that trap purchases are legitimate evidence and can help maintain a suit. But it drew a sharp line: proving infringement is different from creating jurisdiction. To anchor jurisdiction, the plaintiff must show that the defendant’s sales occur in the forum at a commercial scale — a principle drawn from Indovax. Three orchestrated purchases from an unauthorised retailer, disconnected from the manufacturer or wholesaler, did not meet that standard.

The Court clarified what counts as a “commercial sale.” Drawing on Smithkline French Laboratories Ltd. v. Indoco Remedies Ltd., it held that jurisdiction usually arises from sales through the defendant’s own authorised distributor or dealer — not from isolated purchases at a shop the defendant never supplied.

SML’s fallback argument based on online listings also failed. The Court held that merely listing a product on a website or marketplace like IndiaMart does not amount to a commercial transaction in the forum. Otherwise, plaintiffs could conjure jurisdiction anywhere by pointing to an accessible website. Delivery options on ULink’s listing, tellingly, showed only Uttar Pradesh and Maharashtra. This reasoning echoed Helsinn Healthcare SA v. AET Laboratories Pvt. Ltd., where the Delhi High Court held that website accessibility alone does not equal targeting consumers in a territory absent an actual transaction.

Indovax Pvt. Ltd. v. Merck Animal Health: the evidentiary floor

The SML ruling is best understood as an application of the Delhi High Court’s 2017 decision in Indovax Pvt. Ltd. v. Merck Animal Health. In Indovax, the plaintiff sued over the marks INDOVAX and INNOVAX (animal vaccines), claiming Delhi jurisdiction on the basis that the defendant’s goods were “available in Delhi.” The Court rejected this, holding that goods procured elsewhere and later sold in Delhi could not be equated with the defendant itself selling in Delhi. Importantly, the Court stressed that bare claims of availability, without documentary proof such as invoices linking sales to the defendant, are not enough to invoke jurisdiction. Indovax thus set the evidentiary baseline that SML enforces: a single invoice — or even a few — must meet a demanding standard before they can carry jurisdictional weight.

Banyan Tree Holding v. A. Murali Krishna Reddy: fairness and purposeful availment

The deeper conceptual foundation lies in the Delhi High Court’s Division Bench ruling in Banyan Tree Holding v. A. Murali Krishna Reddy (2009). In Banyan Tree, neither party was based in Delhi. The plaintiff tried to anchor jurisdiction on the defendant’s website and a single trap transaction — the ordering of a brochure in Delhi. The Division Bench held that when the plaintiff is not carrying on business in the forum, jurisdiction requires proof that the defendant purposefully targeted the forum by entering into a genuine commercial transaction with a consumer there, and that this caused harm to the plaintiff. Trap transactions may be used as evidence, but they cannot themselves create jurisdiction if the defendant has not otherwise targeted the forum. And if trap transactions are the only evidence, they must be obtained fairly and in good faith. Fairness and bona fides are not incidental; they are conditions of admissibility.

In reaching this conclusion, the Court drew on both UK and US authority: the 1897 UK case California Fig Syrup Co. v. Taylor’s Drug Company Ltd., which emphasised fairness in accepting trap‑order evidence, and the American doctrines of “effects” and “purposeful availment.” Banyan Tree thus forms the bridge between Indian law and comparative jurisprudence, explaining why the language of “purposeful availment” now recurs in cases like SML.

Taken together, a coherent Indian line of authority emerges:

• The Supreme Court in Dhodha House v. S.K. Maingi (2006) held that mere advertisements do not establish commercial sales in a forum.
• A.B.C. Laminart v. A.P. Agencies (1989) supplies the orthodox framework for identifying where a cause of action arises under Section 20(c) CPC.
• The Delhi High Court in Kohinoor Seed Fields v. Veda Seed Sciences (2026) accepted jurisdiction where infringing goods were genuinely available through e‑commerce platforms operating into the forum — the mirror image of SML, showing that online availability matters when it is active, not passive.
• In Safex Chemicals v. SML Ltd. (2026), the Himachal Pradesh High Court set aside an ex parte injunction because no authentic transaction within the forum was shown.

Quick Case Brief Table:

Case	Year	Issue	Court’s Holding	Key Principle
SML Ltd. v. Happy Agro	2026	Trap purchases & jurisdiction	Trap purchases valid for evidence, not for jurisdiction	Requires commercial‑scale, defendant‑driven sales
Indovax v. Merck	2017	Availability claims	Bare claims of availability insufficient	Documentary proof (invoices) required
Banyan Tree	2009	Internet jurisdiction	Trap transactions cannot alone create jurisdiction	Purposeful availment + fairness

 

The doctrine, in short, is not hostile to trap purchases. It is hostile to isolated trap purchases being asked to do jurisdictional work they cannot bear.

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Comparative Perspectives

Indian courts did not develop the trap‑purchase doctrine in isolation. The reasoning in Banyan Tree and later cases draws consciously from three foreign traditions, each grappling with the same problem: how to stop plaintiffs from artificially creating a forum’s connection to a defendant.

United Kingdom: Fairness of the Trap Order

English law has examined “trap orders” for more than a century. The classic case, California Fig Syrup Co. v. Taylor’s Drug Company Ltd. (1897), held that while trap orders are admissible in passing‑off and trade mark disputes, courts must test them for fairness. A trap carried out deceptively, or designed to lure a trader into conduct they would not otherwise engage in, carries little weight. Modern English practice continues this approach: trap purchases are legitimate, but claimants are expected to conduct them fairly and give defendants prompt notice so they can investigate while facts are fresh. The concern is the same as in India — evidence created by the plaintiff’s own contrivance must be reliable and in good faith.

United States: Minimum Contacts and Manufactured Jurisdiction

American law tackles the issue through the constitutional doctrine of personal jurisdiction. Since International Shoe Co. v. Washington (1945), a defendant can be sued in a forum only if it has “minimum contacts” there, consistent with fair play and substantial justice. Two refinements matter for trap purchases:

• The Calder v. Jones (1984) “effects test” asks whether the defendant aimed its conduct at the forum and caused harm there.
• Walden v. Fiore (2014) makes clear that jurisdictional contacts must arise from the defendant’s own conduct — the plaintiff cannot be the sole link.

In other words, a contact that exists only because the plaintiff engineered it is no contact at all. For internet disputes, the Zippo “sliding scale” distinguishes interactive commercial websites (which may support jurisdiction) from passive, merely accessible ones (which generally do not) — a distinction that mirrors SML’s treatment of ULink and IndiaMart listings.

European Union: Accessibility vs. Directed Activity

The EU resolves cross‑border jurisdiction through the Brussels I Recast Regulation. Article 7(2) allows suit where the harmful event occurred or may occur. The Court of Justice has consistently held that mere accessibility of a website in a Member State is not enough; the trader must direct activity to that State. In Pammer and Hotel Alpenhof (2010), the Court listed factors showing “directed activity.” In L’Oréal v. eBay (2011), it held that offers must target consumers in the territory to trigger EU trade mark rights. And in Wintersteiger (2012), it clarified where online trade mark harm occurs. The consistent lesson: accessibility is not targeting — the same principle applied by the Himachal Pradesh High Court when it refused to treat a nationwide IndiaMart listing as a Shimla transaction.

Brief comparative table for clarity:

Jurisdiction	Key Case(s)	Principle	Relevance to India
UK	California Fig Syrup (1897)	Trap orders admissible but must be fair	Mirrors Indian emphasis on bona fides
US	International Shoe (1945), Calder (1984), Walden (2014), Zippo (1997)	Jurisdiction requires defendant’s own contacts; plaintiff cannot manufacture them	Aligns with SML rejection of plaintiff‑engineered jurisdiction
EU	Pammer (2010), L’Oréal v. eBay (2011), Wintersteiger (2012)	Accessibility ≠ targeting; must direct activity to forum	Echoed in SML’s treatment of IndiaMart listings

 

Common Thread Across all three systems, the message is clear: courts will not let plaintiffs substitute contrived evidence or the passive reach of the internet for genuine, defendant‑driven commercial engagement with the forum.

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Statutory Framework

The trap‑purchase doctrine is ultimately about how courts interpret statutory rules on jurisdiction. Here are the key anchors:

Section 20, Code of Civil Procedure (CPC)

• Clause (a): A suit may be filed where the defendant resides, carries on business, or works for gain.
• Clause (b): If there are multiple defendants, suit may be filed where one resides or carries on business — but only if the court grants leave or the other defendants consent.
• Clause (c): A suit may be filed where the cause of action, wholly or in part, arises.

Trap purchases almost always aim to satisfy clause (c): the plaintiff argues that the offending sale within the forum is part of the cause of action.

• In SML, both traps were attempted:
• Clause (b) trap: SML sued Mumbai and Pune defendants in Shimla without leave or consent.
• Clause (c) trap: Three orchestrated purchases were argued to be part of the cause of action in Himachal Pradesh. The Court rejected this, holding that only commercial‑scale sales count.

The Explanation to Section 20 further limits forum shopping by deeming corporations to carry on business only at their principal office, or at a subordinate office where the cause of action arises.

Trade Marks Act, 1999

• Section 134(2): Gives plaintiffs an advantage in trade mark and passing‑off suits. A registered proprietor can sue where it carries on business, even if the defendant does not.
• This is why trap purchases matter most in patent cases and trade mark cases where the plaintiff has no presence in the chosen forum — because Section 134(2) cannot be used, leaving only Section 20 CPC.

Patents Act, 1970

• Section 104: Patent infringement suits must be filed in a District Court (or High Court if revocation is counter‑claimed) with jurisdiction under CPC rules.
• No plaintiff‑friendly shortcut exists here. A patentee must prove jurisdiction strictly under Section 20 CPC.
• In SML, this meant the case turned entirely on whether commercial‑scale sales in Himachal Pradesh could be shown.

Sectoral Overlay: Fertilizer (Control) Order, 1985

• SELZIC could only be marketed in authorised States.
• The manufacturer’s and wholesaler’s licences excluded Himachal Pradesh.
• This regulatory fact reinforced that the trap purchases were disconnected from the defendants’ genuine trade.

Statutory Quick Reference Table:

Statute	Section	Rule	Effect on Trap Purchases	Example Case
CPC, 1908	Sec. 20(a)–(c)	Jurisdiction based on residence, business, or cause of action	Trap purchases usually invoked under 20(c)	SML
Trade Marks Act, 1999	Sec. 134(2)	Plaintiff can sue where it carries on business	Reduces reliance on trap purchases	Trademark suits
Patents Act, 1970	Sec. 104	Jurisdiction only under CPC	No shortcut; trap purchases carry full weight	SML
Fertilizer (Control) Order, 1985	Licensing rules	Restricts authorised territories	Reinforces absence of genuine trade	SML

 

The Interaction in Practice

• Section 20(c) makes the place where the cause of action arises decisive.
• Trap purchases are the plaintiff’s attempt to plant that cause of action in a chosen forum.
• The Indovax–Banyan Tree–SML line of cases polices this attempt by insisting that the transaction reflect genuine, commercial‑scale, defendant‑driven trade — not plaintiff‑engineered evidence.

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Policy Considerations

The trap‑purchase doctrine sits at the crossroads of two legitimate but competing interests. Its coherence depends on keeping them in balance.

The Enforcement Interest

Rights‑holders often have an urgent need to gather evidence of infringement, and trap purchases are frequently the only way to do so. Counterfeiters and infringers rarely advertise their conduct; without the ability to arrange a documented test purchase, a plaintiff may be left with nothing more than rumour or suspicion. Indian courts have never doubted this. Both Banyan Tree and SML affirm that trap transactions are legitimate evidence and that even a single trap order can help maintain a suit. To disable trap purchases entirely would make enforcement prohibitively costly, especially for smaller rights‑holders facing well‑resourced infringers.

The Anti‑Forum‑Shopping Interest

On the other side lies the defendant’s interest — and the system’s interest — in preventing manufactured jurisdiction. If a plaintiff could create a cause of action anywhere simply by sending an agent to make a purchase, or by pointing to an accessible website, they would enjoy an unconstrained choice of forum. That choice imposes real burdens: a Mumbai manufacturer or Pune wholesaler dragged to Shimla must litigate far from its records, witnesses, and counsel, often under the shadow of an ex parte injunction. Forum shopping also undermines predictability and encourages strategic pursuit of “plaintiff‑friendly” benches. The doctrine’s answer is the requirement of commercial‑scale, defendant‑driven sales: trap purchases can prove infringement, but they cannot alone create jurisdiction unless they reflect genuine trade by the defendant.

Evidentiary Reliability and Fairness

A third strand concerns the integrity of the evidence itself. Because trap purchases are arranged by the plaintiff, they carry an inherent risk of contrivance — the transaction may be structured to look more commercial than it is, or the “customer” may induce conduct the defendant would not otherwise undertake. Courts therefore require traps to be conducted fairly and weigh the bona fides of the transaction. This is not hostility to enforcement; it is ordinary evidential prudence applied to a category of proof generated by an interested party.

Policy Matrix for quick reference:

Interest	Risk if Ignored	Safeguard	Case Example
Enforcement	Rights‑holders left with only hearsay	Trap purchases admissible as evidence	Banyan Tree, SML
Anti‑Forum‑Shopping	Defendants dragged into distant courts	Require commercial‑scale, defendant‑driven sales	Indovax, SML
Evidentiary Fairness	Contrived transactions distort record	Traps must be fair & bona fide	California Fig Syrup, Banyan Tree

 

The Balance Struck

The synthesis reached in SML is proportionate. It neither romanticises the rights‑holder’s enforcement need nor indulges every defendant’s objection. It asks a disciplined question: does the trap purchase reflect a genuine commercial reality within the forum, or merely the plaintiff’s choice to litigate there? Where the former, jurisdiction follows; where the latter, it does not. This focus on commercial substance over procedural contrivance is the doctrine’s enduring contribution, and it is why SML is likely to be cited well beyond the agrochemical dispute that produced it.

Residual Tension

A degree of indeterminacy remains. The line between an “isolated” trap and evidence of “commercial‑scale” dealing is one of degree, and judges may draw it differently on similar facts. A defendant genuinely selling into a forum through informal channels may escape jurisdiction if only a handful of transactions can be captured; conversely, an aggressive plaintiff may sometimes assemble enough traps to cross the threshold in weak cases. The doctrine mitigates but does not eliminate this uncertainty. That is perhaps inevitable: jurisdictional rules must be workable at the threshold of a case, before the full evidentiary picture emerges, and some imprecision is the price of early gatekeeping.

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Conclusion

SML Ltd. v. M/s Happy Agro Chemicals crystallises a doctrine Indian courts have been shaping since Banyan Tree: trap purchases are valid evidence of infringement, but they cannot be used to manufacture jurisdiction. A plaintiff who wishes to sue in a chosen forum must show that the defendant’s goods are genuinely sold there at a commercial scale, through the defendant’s own authorised channels — not merely that an investigator managed to collect a few invoices, and certainly not that a product is passively listed on a website accessible everywhere.

By insisting on commercial substance over procedural contrivance, the decision aligns Indian law with three comparative traditions:

• The English focus on fairness in trap‑order cases.
• The American principle that jurisdiction must rest on the defendant’s own contacts, not the plaintiff’s contrivance.
• The EU’s rule that jurisdiction requires directed activity, not mere accessibility.

The result is a workable equilibrium. Rights‑holders retain trap purchases as a powerful investigative tool. Defendants are protected against being dragged into distant, artificially chosen forums. Courts gain a clear threshold test that can be applied early, even at the interim‑injunction stage.

In short, trap purchases remain a vital evidentiary tool — but they are no longer a skeleton key unlocking any forum the plaintiff prefers.

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This article is intended for scholarly and educational purposes and reflects the law as discussed in the cited decisions. It is not legal advice. Case citations should be verified against the official reports before being relied upon in practice; certain 2026 High Court decisions cited here are recent and their neutral or report citations may still be settling.