The Delhi High Court has recently thrown light on the responsibilities and liabilities of online intermediaries in cases of trademark infringement.
Herein, the Plaintiff is a high end luxury brand known for its women’s shoes having red sole. The company is also the sole proprietor of the single color mark ‘RED SOLE’. Defendant operates a website ‘darveys.com’ (hereinafter, ‘website’) which offers to sale and sells high end luxury products with authenticity guarantee. Plaintiff alleged that Defendant was selling impaired or counterfeit products and is using meta-tags ‘Christian’ and ‘Louboutin’ and thus attracting more traffic to their website. Further, Plaintiff alleges that Defendant’s website gives an impression that it is sponsored, affiliated and approved by the Plaintiff, as they bear the mark of Plaintiff’s genuine product thereby infringing the trademark.
In the present suit, Defendant pleaded they are not selling goods but are enabling booking of orders online. Hence, there was no infringement as they are intermediary and should be protected under section 79 of Information Technology Act, 2000 (hereinafter, IT Act) which exempts intermediaries from liability in certain instances.
The Court, however, on examining the definition of ‘intermediary’ was of the opinion that the website does not disclose the details of foreign sellers and exercises the complete control over the products. Moreover, the website is identifying the sellers, enabling the sellers actively, promoting them and selling the products in India. Therefore, the role of the website is more than that of an intermediary.
It was observed by the court that, “the safe harbor provisions for intermediaries are meant for promoting genuine business and not to harass intermediaries. The intermediary Guidelines provides obligation to observe due diligence in such a way that information hosted does not violate IP rights and actively conspire, abet or aide, or induce commission of unlawful acts. Further, if these elements are present then that online marketplace could be liable for infringement for its active participation.”
The Court observed, IT Act has an overriding effect, only if the provisions of Trademark Act, 1999 (hereinafter TM Act) are inconsistent with the IT Act. Intermediary Guidelines 2011 themselves require compliance with TM Act by the persons to host, display or upload the products or services. The provisions of Section 29, Section 101 and Section 102 of the TM Act relates to ‘conspiring, abetting, aiding or inducing’ the commission of unlawful act in context of trademark rights. Moreover, section 81 of TM Act does not provide any immunity to intermediaries who violate the provisions of TM Act.
It was further observed that, “Any service provider, who uses the mark in an invoice thereby giving the impression that the counterfeit product is a genuine product, is also falsifying the mark. Displaying advertisements of the mark on the website so as to promote counterfeit products would constitute falsification. Enclosing a counterfeit product with its own packaging and selling the same or offering for sale would also amount to falsification”.
Hence, the website cannot be termed as intermediary and is not entitled to protection under IT Act as the Act protects genuine intermediaries and not active participants in unlawful acts.
Contributors to present post are Ritu and Srishti.
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