E-Commerce Platforms Must Protect Intellectual Property Rights Of Sellers, Can't Become Safe Haven For Infringers: Delhi High Court

The Delhi High Court has observed that an e-commerce platform cannot become haven for infringers and it must protect the intellectual property rights of others.

“E-commerce websites are commercial ventures, and are inherently profit oriented. There is, of course, nothing objectionable in this; but, while ensuring their highest returns, such websites have also to sedulously protect intellectual property rights of others,” Justice C Hari Shankar said.

The court observed that such platforms cannot, in order to further their financial gains, put in place a protocol by which infringers and counterfeiters are provided an avenue to infringe and counterfeit.

Observing that any such protocol has to meet with firm judicial disapproval, the court said:

“An e-commerce platform cannot become a haven for infringers. Men are not angels. Where easy money is visible, the conscience at times takes a nap.”

The court made the observations while restraining e-commerce platform Indiamart from providing the registered trade marks of PUMA in respect of the goods as search options in its drop down menu presented to prospective sellers at the time of their registration on the platform.

While passing interim injunction in favour of PUMA in its trademark infringement suit, the court also directed Indiamart to forthwith take down all infringing listings containing any of PUMA's registered trade marks relating to goods being sold on its platform.

It was PUMA's case that on searching the word “PUMA” on Indiamart's search option, various counterfeit goods bearing fake “Puma” marks put up by third-party sellers were displayed for purchase.

Justice Shankar observed that though “Puma shoes” option provided in the drop down menu was visible only to the seller at the time of registering himself with the platform, the providing of the option itself constituted “use of a mark” of PUMA within the meaning of the Trade Marks Act.

“Even if one were, therefore, to regard “use of a mark” as necessitating visual representation of the mark, the providing, by IIL, of “Puma” as one of the drop down menus available to the seller at the time of registration, on the Indiamart platform would constitute “use” within the meaning of Section 2(2)(b) and 2(2)(c)(i) of the Trade Marks Act,” the court said.

It added that Indiamart, as an intermediary, is required under the IT Rules 2023 to make reasonable efforts to ensure that infringing content is not posted on its website and that the platform is not used for selling counterfeit goods.

“If it has not made reasonable efforts in that direction, and counterfeiters register themselves on the Indiamart platform as sellers of genuine PUMA products by choosing the “Puma” option from the drop down menu, IIL cannot shrug away its participatory role in the exercise of counterfeiting and consequent infringement of the plaintiff's registered trade mark,” the court said.

Furthermore, Justice Shankar said that where the act of Indiamart is aiding counterfeiters and providing an open field for counterfeiters to sell counterfeit goods of PUMA, the doctrine of exhaustion, which is predicated on honest exploitation of the mark, is ipso facto inapplicable.

“By this token, the providing of “Puma shoes” as a drop down option to the prospective seller prima facie aids the seller in his counterfeiting design. As IIL has, therefore, prima facie aided the commission of the unlawful act of counterfeiting and infringement, it cannot claim the benefit of safe harbour under Section 79(1),” the court said.

However, the court clarified that the injunction does not have to continue ad infinitum and Indiamart can seek modification or vacation of the order, if it can demonstrate that it has put in place sufficient regulatory and protective measures to render impossible abuse of the platform by counterfeiters.

Counsel for Plaintiff: Mr. Ranjan Narula and Ms. Shivangi Kohli, Advs

Counsel for Defendant: Mr. Rajshekhar Rao, Sr. Adv. with Mr. Pulkit Gupta and Ms. Rhea Dube, Ms. Zeya Junaid, Advs

Title: PUMA SE v. INDIAMART INTERMESH LTD

Citation: 2024 LiveLaw (Del) 16

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