Image Source - http://caglarlaw.com/intellectual-property-law/

In this article, Aditya Swarup Singh of Maharashtra National Law University, Nagpur discusses Christian Louboutin Sas. Vs. Nakul Bajaj & Ors. – Examining the liability of an e-commerce as an “intermediary” of IP rights.

Introduction

On November 2, 2018, the Delhi High Court delivered a landmark judgment in the case of Christian Louboutin v. Nakul Bajaj and Ors.1 and also tried to clarify the responsibilities and liabilities of an e-commerce as an intermediatory of IP rights for trademark infringement. This judgment has somehow tried to clarify but in some parts has also complicated the intermediary liability in the case of trademark infringement. Although, this judgment is important and significant as this is the first time the Indian Court has pronounced any judgment related to the trademark infringement by any e-commerce platform.

Background

In the aforesaid case, the defendant was operating a website in the name of www.darvey.com  and was offering for sale of different opulence products including luxury shoes in the brand name of “Christian Louboutin”. In the argument presented by the plaintiff, Christian Louboutin SAS, they claimed that the defendant’s website gives an impression to their visitors that it is affiliated, sponsored, or in some manner been approved by the plaintiff for the selling of plaintiff’s luxury products through their website. Therefore, it was claimed by the plaintiff that there is an infringement of the trademark rights of the plaintiff and also the cessation of the opulence and richly status enjoyed by the plaintiff on its products which is being displayed by the website.

During trials, it was claimed by the defendants that the website is merely an intermediary as it is being used merely for booking of such products and not for selling directly through its online platform and it only books orders on the behalf of the registered seller who uses these online booking to sell their goods and also these goods are being displayed on their platform  on the behalf of those sellers only and they are entitled to protection under section 79 of the IT Act, 2000.2

Basically, both the parties disputed over the genuineness of the goods sold by them. As no goods were sold till the date of the judgment through that website so there was no issue for determination so only issue to be decided by the court was whether the alleged defendant was protected under the section 79 of the IT Act, 2000.

The court’s analysis and decree over this matter

As early stated, the only question before the honorable bench was to determine the protection of the defendant under section 79 of the IT Act, 2000. So the court basically examined the term  “intermediary” provided under section 2(w) of the IT Act, 2000 and in which condition and circumstances an e-commerce platform will be applicable for protection under the section 79 of the IT Act, 2008.

The high court directly examined the defendant’s website and found that the website takes the full responsibility for the authenticity and originality of the products and it is checked by their commission and after the authenticity of the product is established, they facilitate the final procedure of purchasing and sourcing of the product from the third party and finally arranges the product for the transportation of the goods. It was found by the court that the invoices were raised directly by the supplier without any type of intervention from the website, and all type of guarantees and authenticity is provided by them only.

The court, keeping all these factors in consideration, discusses the principal of intermediary liability in the jurisdictions of European Union, United States and then finally in India.

https://lawsikho.com/course/diploma-entrepreneurship-administration-business-laws

Click Here

Intermediary liability for trademark infringement in the EU and US

The judgment delivered by the Court of Justice of the European Union in the case of L’oreal v eBay International AG (“L’oreal”)3nand the judgment of Federal Court of US in the case of Tiffany (NJ) Inc. v. eBay Inc. (“Tiffany”)4 were basically taken as a reference as both the case deals firmly with the  liability of an e-commerce platform for the liability regarding the display and online sale of infringing or counterfeit goods through their portal.

The Court of Justice delivered that the alleged e-commerce platform has not used any trademark for its own commercial communication but has merely enabled the third parties to display their goods for sale and therefore is not liable for displaying third parties and customer’s post.

But the Federal Court adopted a different and strict approach and said that a service provider must have more knowledge about their service provider. Some deep knowledge of the particular things which may infringe anyone’s right is very important and significant in these type of cases. Therefore, the e-commerce platform will not be held liable until it possesses all the actual knowledge of the specific facts about the infringements of anyone’s right.

Liability of the online marketplace in India

In the following case, the court after analyzing the judgment pronounced by different courts comes to the conclusion that the alleged defendant, in this case, is more than an intermediary. The court decision was based on the fact that the alleged website first identifies, and thus promotes the third parties to sell their product and in some sense, it can be said that they have full control over the products being sold through their platform. The Court additionally takes note of that lead of intermediary, in neglecting to watch ‘due diligence’ concerning IPR, could add up to ‘planning, supporting, abetting or inciting’ unlawful direct would preclude it from the protected harbor exception, according to Section 79(3)(a).

The court also clearly stated that any type of active participation by e-commerce would exempt their right provided under section 79 of the IT Act. the bench also referred to the “Intermediaries Guidelines” which was brought in the year 2011, under section 79(3)(b) talks about the due diligence which must be observed by them from displaying the content from the third party as these must not violate anyone’s IPR rights.

At long last, the Court looks at whether there has, actually, been an utilization of the offended party’s trademark in a way that would establish encroachment. The Court puts together its examination with respect to Sections 2(2)(c), 101 and 102 of the Trademark Act, which identifies with the implications of utilizing, applying and distorting a check, individually. The Court expresses that, regarding applying and misrepresenting a check, the next may establish encroachment, whenever connected to a fake item (yet not a certifiable item). The Court takes note of that submitting any of these exercises would add up to ‘planning, supporting, abetting or instigating’ the unlawful demonstration, examined under Section 79(3)(b), and uproot any protected harbor accessible to a commercial center. Illustratively, and with regards to darveys.com, the Court takes note of that the utilization of the check in a receipt, showing ads containing the stamp, encasing the merchandise with its own bundling and moving them onwards, would all comprise adulteration and encroachment under Section 29 of the Trademark Act and subsequently establish help, abetment or prompting under Section 79 of the IT Act. the court also took the reference of Kapil Wadhwa v Samsung Eletronics5 in which the use of meta-tags by the defendant was said to be infringement.

Final decision

Considering all above, the court held that the respondent was not an intermediary qualified for assurance under Section 79, and would be at risk for encroachment whenever demonstrated that the products it was moving are fake. In any case, without such confirmation, the Court proclaimed rather than the respondent uncover the subtleties of its providers, and will not transfer any items bearing the offended party’s stamp without their simultaneousness. In addition, the Court requested that the litigant must execute a framework whereby after being advised of any fake item by the offended party, the respondent must find out the realness of the item with the dealer, and analyze the proof to check whether it must be expelled. At long last, the Court requested that the middle person must require its merchants to respect the guarantees and assurances given by the offended party, and should likewise evacuate all meta-labels containing the offended party’s check.

The role of E-commerce as intermediaries

In the Louboutin case, the Honorable High Court of Delhi saw that the litigant had an enrollment expense to submit a request for merchandise on the Website, ensured legitimacy that the items acquired and sold were from the global boutiques and extravagance stores, transportation to clients would be simply after quality checking.

The Court opined that the protected harbor arrangements for mediators under section 79 of the Act aren’t supreme. A functioning investment by the intermediary is to be inspected and in the event that there is a functioning cooperation, the ring of assurance or exclusion conceded to the go-betweens would not have any significant bearing.

In the Louboutin case, the Delhi High Court held that the litigant had not sold the offended party’s items on its Website, however, the Website did publicize and advance the offended party’s image and items. The Court did not order any damages to the plaintiff for harms/interpretation of records.

The Court gave the accompanying headings to the litigant on the exercises of running the Website as a mediator in order to:

  • reveal the total subtleties of every one of its merchants, their addresses and contact subtleties on its site
  • get an authentication from its dealers that the merchandise are certifiable
  • If the vendors are not situated in India, preceding transferring an item bearing the offended party’s imprints, it will inform the offended party and acquire simultaneousness before offering the said items available to be purchased on its stage
  • If the dealers are situated in India, it will go into a legitimate assertion, under which it will get ensure as to genuineness and genuinity of the items as likewise accommodate results of infringement of the equivalent
  • Upon being told by the offended party of any fake item being sold on its stage, it will advise the vendor and if the merchant can’t give any proof that the item is real, it will bring down the said posting and tell the offended party of the equivalent, according to the Intermediary Guidelines 2011
  • It will likewise look for an assurance from the dealers that the item has not been disabled in any way and that every one of the guarantees and certifications of the offended party is material and will be respected by the merchant. Results of any merchants who can’t give such a certification would not be, will not be offered on the litigant’s stage
  • All meta-labels comprising of the offended party’s imprints will be evacuated with prompt impact.

Comment

No doubt, this decision is a big step in determining the immediatry’s liability and their protection under section 79 of the IT Act. this decision will surely be protecting the rights of the trademark of the true owner by imposing an obligation on the intermediary e-commerce platforms to exercise due diligence and to take appropriate step regarding the identification of the genuine products to make use of the benefit provided to them under the IT Act, 2000.

Endnotes

  1. CS(COMM) 344/2018.
  2.  According to this section, an intermediary is not liable to any third party for anything done by them in providing the link or hosted by them.
  3.  C-324/09
  4.  600 F.3d 93 (2d Cir.2010)
  5.  FAO(OS) 93/12.

Did you find this blog post helpful? Subscribe so that you never miss another post! Just complete this form…

LEAVE A REPLY