IP owners face challenging times as sellers of infringing products seek shelter behind online platforms: Delhi HC

In a strict note against the unlawful act of selling counterfeits of popular branded products on online platforms, Justice Pratibha M Singh of the Delhi High Court on November 4 ordered an e-commerce platform, Darveys.com, to ensure that each item put up for sale on its site is genuine.

Justice Pratibha said, “In the world of e-commerce, intellectual property (IP) owners face challenging times as sellers of infringing products seek shelter behind the platform's legitimacy and those sites which ‘actively conspire, abet or aide, or induce’ commission of unlawful acts, like sale of counterfeits, cannot go scot-free’."

The Judge added, "Moreover, if the sellers themselves are located on foreign shores and the trademark owner cannot exercise any remedy against the seller who is selling counterfeits on the e-commerce platform, then the trademark owner cannot be left remediless."

Cautioning e-commerce marketplaces & platforms, the Judge said, "Needless to add, e-commerce websites and online marketplaces ought to operate with caution if they wish to enjoy the immunity provided to intermediaries."

Under the Information Technology (IT) Act, intermediaries include e-commerce sites as they are providing services to customers on behalf of another person, the seller; however, inactive intermediaries have protection against infringing activities of sellers.

Concerning the image and reputation of popular brands, the court then noted that in case counterfeits are not up to the mark, the trademark owner's equity and customer base are diluted or lost and the seller of such products however does not suffer.

This order stems from a case wherein Christian Louboutin—a French Luxury retailer known for the designer's red-soled shoes, plus handbags, wallets & select cosmetics—had filed a trademark infringement suit against Darveys.com, an online fashion store, claiming that Darveys sold "impaired or counterfeit" goods in the name of the firm.

The petitioner’s plea stated that his [Christian Louboutin’s] name and image was being used as a meta-tag by Darveys to attract consumer traffic to its site.

Considering the petitioner’s plea, the court then issued certain directions:

• Darveys.com shall disclose on its site complete details of its sellers and their contact details.

• Darveys.com shall obtain a certificate from its sellers that goods they sell on the platform are genuine.

• If seller not located in India, then Darveys.com has to notify the brand owner (Christian Louboutin) and obtain its concurrence before offering the product for sale on its platform.

• If the sellers were in India, then Darveys.com shall enter into a proper agreement with them on guaranteeing authenticity and genuineness of the products as well as consequences of violation of the terms of such contract.

• Darveys.com shall remove the meta-tags, and if the website was informed by the plaintiff about any counterfeit product being sold on its platform "it shall notify the seller, and if the seller is unable to provide any evidence that the product is genuine, it shall take down the said listing and notify the plaintiff of the same".

• The website "shall also seek a guarantee from the sellers that the product has not be impaired in any manner and that all the warranties and guarantees of the plaintiff are applicable and shall be honored by the seller. Products of any sellers who are unable to provide such a guarantee would not be, shall not be, offered on the platform".