E-commerce platforms cannot become a haven for infringers of intellectual property and allow people to sell counterfeits, the Delhi high court has said, in an order laying down that "safe harbour" protections will not apply in such cases as it pulled up a shopping website.
"IIL's function is not limited to providing access to the communication system over which the information made available by the consumers who use the Indiamart platform is transmitted, stored or hosted. The sellers actually effect sale of their products across the Indiamart platform of IIL, and IIL pockets a part of the proceeds of such sales. The function of IIL, therefore, much transcends mere "providing" of "access". Clause (a) of Section 79(2) is, therefore, not applicable, " the court said, referring to the section of the Information Technology Act that pertains to safe harbour.
The sportswear company Puma filed the case against IndiaMart, an online retailer, alleging that the platform permitted the sale of goods by counterfeiters under its name.
One of the primary issues has been that IndiaMart allows vendors to choose whatever brand they wanted their products to be listed under through a drop-down menu. The court held that e-commerce companies cannot, "with a view to further their financial gains, put in place a protocol by which infringers and counterfeiters are provided an avenue to infringe and counterfeit."
"Here, by making available Puma as a drop-down option to the prospective seller seeking to register himself on the IndiaMart platform, IIL facilitates not only genuine sellers of Puma merchandise, but also counterfeiters in selling their products by masquerading as genuine Puma dealers. Thus, this is not a case in which two genuine competitors are being placed side by side. This is a case in which a counterfeiter is managing, on account of the availability of Puma as a drop-down option, to peddle counterfeits as genuine Puma products. This is, therefore, a case of defrauding consumers, " the court said.
The sportswear brand submitted that the platform was aiding, abetting and facilitating infringement by enabling various dealers to sell goods bearing Puma's fake mark. The counsel further submitted that the platform was not conducting any prior verification before accepting registration of a person as a seller of goods of reputed brands.
The e-commerce platform submitted that since it was only providing a space for the goods put up for sale by the sellers, it was not responsible for the counterfeit goods. He added that it was physically and practically impossible for the platform to monitor or control counterfeiting but was willing to take down any listing put up by counterfeiter when brought to its notice.
Originally published 03 April 2024
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