Written by Hiya Chowdhary, a student at Maharashtra National Law University, Nagpur
Summary of facts
The plaintiff was a luxury shoes manufacturer company with the name ‘Christian Louboutin’ named after the name of its founder, a renowned high-end luxury designer. Therefore, the company claims that the name and the photographs, etc. of the founder enjoys the protection and goodwill under the Trademarks act,1999. The name of the company “Christian Louboutin” was registered as a trademark in India in both word and logo form and as a red sole mark of the shoes manufactured by the company. The plaintiff claimed to sell its products only through two authorized stores in India which were in Delhi and Mumbai.
The defendants operated a website named Darveys.com which sold various products which bore the names of luxury brands and contained the complete catalogue of the plaintiff’s company. The defendant s further claimed that their products are 100% authentic. The plaintiff alleged that the goods of the defendants were counterfeits or impaired. As per the plaintiff, the website of the defendants used the image of the plaintiff’s company’s founder and the name of the company “Christian” and “Louboutin” were used as meta- tags. These meta- tags were used to attract traffic to their website. As per the plaintiff, the defendant’s website gave an impression that is was in some manner sponsored or affiliated or approved by the plaintiff for the sale of variety of luxury products bearing the logo or mark of “Christian Louboutin’s” genuine products. This had resulted in infringement of the trademark rights of the plaintiff and also on the same hand violation of the personality rights of Mr. Christian Louboutin and also affected the status of luxury brand enjoyed by their products.
During the trials, it was claimed by the defendants that the website was merely intermediary as it was operating solely as a platform for booking of luxury products and not as a platform which sells the products directly online. It only books on behalf on the registered sellers who used that platform and the goods being displayed on their platform were also on the behalf of those sellers as well. Therefore, the defendants claimed protection under section 79 of the Information Technology Act, 2000.
Issue
- Whether the use of plaintiff’s mark, logos or image by the defendant come under the ambit of protection under Section 79 of the Information Technology Act, 2000?
- Whether the plaintiff was entitled to some relief? If yes, then on what terms?
Judgement
The question before the Hon’ble High Court was to determine the protection of the defendant under section 79 of the IT Act,2000. The court examined the term “intermediary” as mentioned under section 2(w) of the said Act. It also examined the conditions and circumstances under which an e-commerce platform would be applicable for protection under the said section and act.
The Hon’ble court found that the defendant’s website took full responsibility for the authenticity and originality of the items being sold and after verifying the authenticity of the products it also facilitate the final procedure of buying and sourcing the product from an independent third party and ultimately it arranges the transportation of the goods. The invoices however were sent directly by the sellers and all kinds of guarantees and authenticity is provided to the buyers by them only and not the website.
The court finally decided in the favor of plaintiff and held that the defendant was not an intermediary under Section 79. Additionally, it would beat the risk of encroachment whenever it displayed that the products its moving are fake. The defendant was made to ensure that the seller guarantee that the product has not been impaired and all the warranties and guaranties are applicable and must be honored by them. If not followed these conditions, such products shall not been displayed by the defendant.
E- commerce platforms and their liabilities as intermediaries
Electronic commerce (e- commerce) is a business that happens online. The buyers can browse through various catalogues and book an item of their choice ad proceed with the payment with their preferred method of payment. Some websites even allow buyers to maintain running accounts which saves their card details and charge them directly with it. These platforms have tie-ups with different sellers. While some display the name of the sellers, some also offer same products though different sellers and assist them in buying by providing reviews. In some cases, the sellers are notified of the purchase which is made through the website but the delivery of made by the seller only. In other cases, the website maintains offline inventories and the packaging and delivery is done by the website company as well. The e-commerce company only just sources the products and stores them in its go downs and maintains the inventories. In this scenario, the e-commerce platform has a much active role to play.
Instances when an e- commerce platform can be considered as an intermediary
The court in the present case declared that the defendant’s website would not come under the definition of intermediary as it performed more functions than an intermediary which along with acting as an e- commerce platform also identify the authenticity and originality of the products. It sells and advertises the products sold by different seller and thus in their sense can be said to have control over the website. The actions of the defendants would not make them qualify under the exception as per section 79(3)(a) under “planning, inciting, abetting or supporting”. The court thus declared that any type of participation by the platform would disqualify it from claiming the exception under section 79(3)(b). The intermediary guidelines under section 73(3)(b) mentions due procedure and diligence that must be observed so as not to violate someone’s IP rights. The court examines the Trademark Act, which identifies the implications of utilizing a check and applying or distorting it individuality. The court established that the regarding applying and misrepresenting a check, encroachment may be established by misrepresentation when connected to a fake item. In the present case, the actions of the defendant come under “planning, supporting, abetting or instigating” the illegal demonstration as examined under section 79(3)(b) and thus nullifies the possibilities of protection as the defendant utilized the check, showing advertisements containing the stamp, packing the merchandise with its own bundling would classify as adulteration ad encroachment under section 79 of IT act.
International Positions
European Union
In the EU, several directives govern the role of intermediaries regarding brands, marks, and their usage. This includes EC Directive 89/104, Directive 2000/31, Regulation 40/94, and Directive 2004/48/EC. Decisions such as Google France SARL v. Louis Vuitton Malletier SA [1] and L’Oreal SA v. eBay International AG[2], outline principles for intermediary liability. Exemptions for technical processes, requirements for neutrality and lack of control over transmitted information, and obligations to remove or disable access to illegal content are included in these principles. However, if the intermediary collaborates with wrongdoers or fails to act upon knowledge of illegal activity, it would be liable. The level of involvement and control exerted by the intermediary to determine liability must be assessed by the courts. Injunctions should be effective, proportionate, and not obstruct legitimate trade, with a focus on preventing further infringements.
Position in US
eBay was charged with direct and contributory trademark infringement in the Tiffany v. eBay [3] case for allegedly enabling the selling of fake Tiffany goods on its website. In a decision that favoured eBay, the Circuit Judge found that the company had operated honestly and taken appropriate action to stop the selling of fake goods. After reaching the same conclusion, the Appeals Court decided that eBay was not infringing directly when it used the Tiffany mark to identify authentic items. Due to its lack of knowledge of particular counterfeit transactions and absence of deliberate blindness, eBay was deemed not responsible by the court when it came to contributory infringement, under the Inwood Test. For more thought on the misleading advertising problem, the Court did, however, remand the case. The decision puts light on differing treatment of intermediaries in various jurisdictions and emphasize the importance of assessing their level of involvement and compliance.
Indian Position
In case of Shreya Singhal V. Union of India [4], Hon’ble Supreme Court considered the constitutional validity of certain provisions of the IT Act which pertains to free speech and liability of intermediaries. Free expression was protected by Section 69A and its governing regulations, which were maintained as constitutionally legitimate. In contrast, Section 66A was declared unconstitutional. It was decided that Section 79 was lawful, but with restrictions attached. For example, intermediaries had to take action as soon as they learned about illegal information through a court order or government notice. By defining the requirements for intermediary immunity, the court stressed the significance of striking a balance between intermediary responsibility and copyright owners’ rights. Under the 2011 Intermediaries Guidelines Rules, it also included the due diligence obligations for intermediaries. The court further stated that absent proof of abetment or conspiracy, intermediaries cannot be expected to actively monitor and identify infringement. The decision of the knowledge requirement was ultimately left up to the court.
Conclusion
The decision was a landmark one in determining the intermediary’s liability under section 79 of IT Act and also its protection. the decision can be seen as protecting the trademark rights of the owner and imposes an obligation on intermediary to exercise due diligence and take appropriate steps regarding identification of genuine products and avail benefits under IT Act,2000.
References
1. In Joined Cases C-236/08 to C-238/08,
2. [Case C-324/09 decision dated 12th July, 2011]
3. 600 F.3d 93
4. (2015) 5 SCC 1 : AIR 2015 SC 1523
