India: When Can E-Commerce Platforms Claim Immunity As An Intermediary Under The Information Technology Act, 2000?

Last Updated: 15 November 2018
Article by Rajeev Rambhatla

The Delhi High Court in its recent judgement in the case of Christian Louboutin Sas ("Plaintiff") vs Nakul Bajaj and Ors.1, held that an E-commerce platform cannot claim to be an Intermediary under Section 79 of the Information Technology Act, 2000 ("IT Act") if it has played an active role in enabling the violation of Intellectual Property Rights ("IPR"). Justice Pratibha M Singh pronounced the judgement on 02nd November, 2018 while disposing off the instant trademark infringement suit in favour of the plaintiff.

Background of the case

  1. The Plaintiff is a world famous designer of high end luxury products. Its name, likeness, photographs and product names enjoy goodwill and protection under the Trademark Act, 1999 ("TM Act"). The name "Christian Louboutin" in word and logo form, as well as the red sole mark are registered trademarks in India.
  2. The Defendants operate a website called "www.darveys.com" which sells various luxury products to its users. The website offers the entire Christian Louboutin range of products for sale to its users. The Defendants also use the image of the founder of the plaintiff and the names "Christian" and "Louboutin" are used as meta-tags on the Defendant's website. The Defendant's website contains a disclaimer which states that the manufacturers of the products have no relation whatsoever with the website and that the products are sourced directly through sellers/boutiques' in India and abroad.
  3. The Hon'ble High Court of Delhi had granted an interim injunction to the plaintiff on 26th September 2014 whereby the Defendants were restrained from selling any of the Plaintiff's products on their E-commerce website.

Issues raised

The two issues raised before the Hon'ble High Court of Delhi are:

  1. Whether the Defendants' use of the Plaintiff's mark, logos and image is protected under Section 79 of the IT Act, 2000?
  2. Whether the Plaintiff is entitled to relief, and if so, in what terms?

Contentions of the Parties

The Plaintiff argued that its registered trademarks were infringed by the Defendants by using the Plaintiff's name, photographs and trademark 'red sole' on their website. The Plaintiff's also contended that the products displayed/sold by the Defendants on their website were counterfeit/not of genuine quality. The Defendants contended that its website gives users an option to choose from 287 different sellers/boutiques across the globe and that its website is merely an 'enabler' of bookings and orders. The Defendants further argued that no sales warranty or after sales service is provided by them. The Defendants contended that all the products listed on their website are 100% genuine and are sold directly by the sellers. The Defendants website also provides a 'seal of authenticity' guarantee whereby it is claimed that quality checks are carried out on every product before it is shipped to the buyer by third party experts and the Defendants promise to pay twice the money in return to the buyer if any of the products purchased through their website are found to be faulty/counterfeit. The Defendants submitted that they have no direct dealings with the Plaintiff and that the goods of the Plaintiff were offered for sale on the website of the Defendants but the responsibility was taken by the sellers on whose behalf the goods were sold. The Defendants also contended that the advertisement of the products on its website was solely at the risk, responsibility and expense of the Defendants.

Judgement

Active role played by the Defendant's website

Defendants and the Court observed the role played by the Defendants' website i.e. www.darveys.com. The Court then went on to consider the nature of E-commerce sites as opposed to typical websites/aggregators that come under the definition of 'Intermediary'. The Court studied in detail the legal position of various other jurisdictions and the legal position in India itself before concluding that in the case before hand, 'www.darverys.com' plays an active role in the process of selling the products to its customers/members and it is not a mere intermediary. The court was of this opinion because of the role played by the website in not only establishing a link between the seller and the buyer but as the party which inspects/guarantees the authenticity and ensures the delivery by sourcing the goods and storing them at its own warehouses/godowns before delivering the same to the end customer. This role is not the typical role played by a mere intermediary or an online platform which is just an enabler/facilitator/aggregator of bookings between buyers and sellers. The learned single judge of the Delhi High Court opined that E-commerce platforms typically perform a lot of functions and their role/involvement does not end with merely forming link between the buyer and the seller and owing to this active role, E-Commerce platforms cannot claim protection as Intermediaries under Section 79 of the IT Act, 2000. The learned Single Judge while ruling in favour of the Plaintiff directed the Defendants to disclose complete details of all their sellers, including addresses and contact details. The Defendants were further directed to seek the Plaintiff's approval and obtain their permission before selling the Plaintiff's products on its platform. In the case of Indian sellers, the Defendants must get into a proper agreement with them, which guarantees the authenticity and genuineness of the products, and "provide for consequences of violation of the same". The Defendants were also directed to take down all listings of products belonging to the Plaintiff. Also, the Defendants were directed to get a guarantee from the sellers that warranties are applicable and shall be honoured by the seller. A seller who is unable to provide this guarantee will not be allowed to sell on the Defendants' platform. Lastly, the Defendants were directed to remove all meta-tags related to Christian Louboutin from their website with immediate effect. The learned Single Judge did not order any damages to be paid to the Plaintiff, because the Defendants submitted that none of the Plaintiff's products were sold on their platform, even though the website advertised and promoted products using the Plaintiff's brand.

Analysis

(i) Seal of Authenticity and other features of Defendants' which indicate the active role played by their website:

The Hon'ble High Court of Delhi while deciding on the aforementioned two issues first considered the content available on the Defendants' website i.e www.darveys.com, and on perusal of the website, the Court was of the Opinion that the website is a members only portal which sells luxury products to its members and even provided a 'seal of authenticity' guarantee and in shipping information the Court remarked that there is an image of a truck with the name "Darveys" imprinted on it which indicates that the website is actively participating in the delivery of the products to its customers/members. The Court then considered the definition of an intermediary under Section 2(w) of the IT Act, 2000 which includes Online Marketplaces and online-payment sites amongst others. The Court then went on to consider some international judgements to examine the legal position on liability of intermediaries in other jurisdictions namely European Union and USA.

(ii) EU Position:

In L'Oreal SA & Ors. v eBay International AG & Ors2. Wherein, the issue before the Court of Justice for the European Union ("CJEU") involved was regarding sale of L'Oreal perfumes, cosmetics and hair cutting products on the eBay platform by sellers. L'Oreal contended that its products were being sold on eBay in violation of territorial limitations, some of the products being sold on the platform were counterfeit products and that eBay was advertising L'Oreal products through the Google 'Adwords' referencing service. The CJEU held that advertising through Google 'Adwords' does amount to 'use' of the L'Oreal's mark however since the use is with regard to L'Oreal's products only it does not amount to unfair use. Further, the CJEU insisted that in order to claim immunity an online platform must be an intermediary and when the intermediary becomes aware of any counterfeit/potentially trademark infringing products being listed on its platform and fails to inform the owners of the mark (in this case L'Oreal) about such infringement, then immunity as an intermediary for such a platform ceases to exist. Hence, the CJEU ruled that in order to ascertain whether an online marketplace is entitled to exemption as an intermediary, one must consider the role played by the online market place i.e. active or inactive. Thus, ruling in favour of L'Oreal, the CJEU held that operators of online marketplaces have a duty not only to bring to an end infringement but also to prevent further infringement.

(iii) US Position:

Similar questions were considered by American courts as well, namely in the cases of Tiffany v eBay3 ("Tiffany") and in the case of Inwood Laboratories Inc. v Ives Laboratories Inc4 ("Inwood"). The US Supreme Court in the Inwood case held that "if a manufacturer or distributor intentionally induces another to infringe a trademark, or if it continues to supply its product to one to whom it knows or has reason to know is engaging in trademark infringement, the manufacturer or distributor is contributorily responsible for any hard done as a result of the deceit". This test is popularly known as the 'Inwood test'. A US appeals court, in the Tiffany case considered whether the Inwood test of contributory infringement would be applicable to internet based service providers such as eBay. The Court of Appeals held that since eBay did not sell the counterfeit Tiffany good, it shouldn't be held liable however to the extent that eBay advertised the counterfeit merchandise, they were held liable.

(iv) Indian Position:

The Learned Single Judge then went on to consider a judgement of a division bench of the Delhi High Court itself. In the case of Myspace Inc. vs Super Cassettes Industries Ltd.5, the Delhi High Court dealt with issues regarding potential infringement of IPR owned by Super Cassettes. The learned single judge of the Delhi High Court initially held that Myspace was liable for primary infringement under the Copyright Act, 1957 ("Copyright Act"). However, on appeal, a division bench of the Delhi High Court held that owing to the fact that Myspace had general awareness instead of specific knowledge with regard to the Copyrighted content of Super Cassettes, hence they were liable for secondary infringement. The division bunch further opined that "in case of internet intermediaries, interim relief has to be specific and must point to actual content, which is being infringed".

Conclusion

This is indeed a welcome judgement given the growing popularity of E-commerce websites in India. This judgement ensures that E-commerce platforms cannot wiggle away from their liability as infringers or as enablers of infringed goods/products thereby protecting the interests of both the original manufacturers/ owners of the Intellectual Property and the consumers thereof.

Footnotes

1. CS (Comm) 344/2018, I.As 19214/2014, 20912/2014, 23749/2014 & 9105/2015.

2. C-324/09, Court of Justice for European Union (CJEU) dated 12th July 2011.

3. 600 F.3d 93

4. 456 U.S. 844

5. 236 (2017) DLT 478

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
 
Email Address
Company Name
Password
Confirm Password
Position
Industry
Mondaq Newsalert
Select Topics
Select Regions
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions