On 2 November 2018, the Delhi High Court (High Court), in Christian Louboutin SAS v Nakul Bajaj and Others (Civil Suit No. 344/2018) has laid down certain guiding principles in respect of liability of e-commerce platforms as intermediaries and the ambit of ‘service’ as has been used in the definition of ‘intermediaries’ under the Information Technology Act, 2000 (IT Act).
The plaintiff claimed intellectual property rights over the name ‘Christian Louboutin’, which is the name of its founder, Mr Christian Louboutin, a designer of high-end luxury products. The dispute pertained to the sale of “Christian Louboutin” products by the defendants on its website (Darveys.com), using the image and the name of Mr Christian Louboutin. The plaintiff alleged that the defendants attracted traffic on their website by using the names “Christian” and “Louboutin” as meta-tags. Further, it was alleged that the sale of the products (which were allegedly counterfeits) on the website of the defendant gave an impression that such products were in some manner sponsored, affiliated and approved for sale by the plaintiff. This resulted in an infringement of the intellectual property rights of the plaintiff, the personality rights of Mr Christian Louboutin and the luxury status enjoyed by their products and brand. The defendants in their response stated that they were not selling the products but were merely enabling the booking of the orders placed by the customers through their online platform.
The High Court has further observed that the requirement for undertaking due diligence’ by the intermediaries provided under the IT Act, has to be broadly construed. The intermediaries are also obliged to have agreements with the sellers to the effect that the sellers will not host, display or upload products that violate any trade mark rights, copyrights, patent rights or any other proprietary rights.
In this context, the High Court also referred to Section 101 and Section 102 of the Trade Marks Act, 1999 and the Information Technology (Intermediaries Guidelines) Rules, 2011 to interpret what constitutes conspiring, abetting, aiding or inducing the commission of an unlawful act. The High Court went on to state that applying a trademark or falsifying a trademark or falsely applying a trademark could include applying the trademark to the goods themselves, or usage in relation to a service, or applying the trademark to any package in or with which the goods are sold or exposed for sale, placing the goods which are sold or exposed for sale in any package or with any package or any other thing to which the trademark has been applied, etc.
Applying the provisions of the Trade Marks Act, 1999 to the given facts, it was observed that the performance of any service by an intermediary in respect of counterfeit goods or goods which are not genuine, could constitute infringement, and any online market place or e-commerce website, which allows storing of counterfeit goods, would be falsifying the mark. The High Court further went on to note that: “Displaying advertisements of the mark on the website to promote counterfeit products, would constitute falsification. Enclosing a counterfeit product with its own packaging and selling it or offering it for sale would also amount to falsification. All these acts would aid the infringement or falsification and would therefore bring the e-commerce platform or online market place outside the exemption provided under the IT Act”.
The High Court categorically observed that Darveys.com exercised complete control over the products being sold in so far as it was identifying the sellers, aiding the sellers actively, promoting the products and selling the products. Accordingly, the role of Darveys.com was much more than that of an intermediary. It went on to state that the safe harbour provisions for intermediaries are meant for promoting genuine businesses which are inactive intermediaries and, “the obligation to observe due diligence, coupled with the intermediary guidelines which provides specifically that such due diligence also requires that the information which is hosted does not violate IP rights, shows that e-commerce platforms which actively conspire, abet or aide, or induce commission of unlawful acts on their website cannot go scot free.” The High Court further noted:
On the basis of the above, the High Court directed Darveys.com to inter alia disclose the complete details of all its sellers, their addresses and contact details on its website with immediate effect, to obtain a certificate from its sellers that the goods are genuine, to notify the trademark owner before offering their products for sale (in case of sellers located outside India), to enter into an agreement with the sellers (in case of sellers based in India), guaranteeing the authenticity of the products and consequences of violation.
This decision is a big step forward to clarify the extent of the safe-harbour provisions under the IT Act. Since the infamous case of Baazee.com, many e-commerce companies have sought refuge under the safe harbour provisions which essentially provide that intermediaries are not responsible for the products uploaded by the sellers on their websites. This decision will go a long way in protecting trademark / brand owners by imposing an absolute obligation on e-commerce websites and online marketplaces to exercise due diligence in order for them to make use of the benefits provided to them under the IT Act.
- Vineet Shingal (Partner), Vinita Choudhury (Senior Associate) and Probal Bose (Associate)
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