HC directs e-commerce site to ensure products for sale on portal are not counterfeits

In a step towards ensuring counterfeits of popular branded products are not sold on online marketplaces, the Delhi High Court has directed an e-commerce platform to make sure that each item put up for sale on its site is genuine.

Justice Pratibha M Singh issued the direction, saying in the world of e-commerce, trademark owners face challenging times as sellers of infringing products seek shelter behind the platform's legitimacy and added that those sites which "actively conspire, abet or aide, or induce" commission of unlawful acts, like sale of counterfeits, "cannot go scot-free".

"In the world of e-commerce, intellectual property (IP) owners face challenging times. This is because sellers of counterfeit or infringing products seek shelter behind the platform's legitimacy.

"Moreover, if the sellers themselves are located on foreign shores and the trade mark owner cannot exercise any remedy against the seller who is selling counterfeits on the e-commerce platform, then the trade mark owner cannot be left remediless," the court 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," it said.

Intermediaries, according to the Information Technology (IT) Act, includes e-commerce sites as it is providing services to customers on behalf of another person, the seller.

Under the IT Act, while inactive intermediaries have protection against infringing activities of the sellers "those e-commerce platforms which actively conspire, abet or aide, or induce commission of unlawful acts on their website cannot go scot free", the court added.

It said that if the counterfeits do not turn out to be up to the mark, it is trademark owner's equity and customer base that is diluted or lost and the seller of such products does not suffer.

The observations by the bench came on a suit of trademark infringement by women's luxury shoe brand -- Christian Louboutin -- which claimed that India-based e-commerce site Darveys.com was selling "impaired or counterfeit" goods in the name of the firm.

The firm is named after its founder, Christian Louboutin, who was a famous designer of high-end luxury products, its plea had said and added that his name and image was being used as a meta-tag by the e-commerce to attract consumer traffic to its site.

Taking note of the contentions of the plaintiff firm, the court issued a slew of directions, including that of Darveys.com shall disclose on its site the complete details of its sellers and their contact details.

Apart from that, the site was also directed to 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, the court said in the 59-page judgement.

It also said that 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.

The court also directed removal of the meta-tags and further ordered that 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".

It also said that 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 honoured 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".

With the directions, the court disposed of the plea moved by Christian Louboutin.