E-commerce platforms can't become haven for counterfeiters: Delhi HC

The Delhi High Court has ruled that an e-commerce platform cannot turn into a shelter for intellectual property violators and have a setup that gives counterfeiters access. The court noted that although e-commerce websites must uphold the intellectual property rights of others, they are nonetheless commercial endeavors with a naturally profit-oriented focus.

New Delhi: An e-commerce platform cannot become a haven for infringers of intellectual property and have such a system which provides an avenue to counterfeiters, the Delhi High Court has said. The court observed that e-commerce websites are commercial ventures and are inherently profit oriented, which is not objectionable, but they have to protect intellectual property rights of others.

"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," said Justice C Hari Shankar in a recent order. "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. They 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. Any such protocol has to meet with firm judicial disapproval," the judge stated.

The court's observations came while dealing with a lawsuit by sportswear brand Puma SE which alleged that e-commerce platform Indiamart was being used by various sellers to peddle its counterfeit goods. The platform submitted that it was not the originator of the information relating to the goods put up for sale on its website as it was merely a space-provider and would be willing to take down any listing put up by a counterfeiter when it is brought to its notice.

In its interim order, the court observed that counterfeiting is a well-known commercial evil, even in the virtual world, and e-commerce platforms are statutorily required to make reasonable efforts to ensure that infringing content is not posted on its website and the platform is not used for selling counterfeit goods.

It said that prima facie, the e-commerce platform in the instant case aided the commission of the unlawful act of counterfeiting and infringement and it cannot claim the benefit of "safe harbour" from liability under the Information Technology Act.

"There is nothing inherently illegal in IIL (IndiaMART IndiaMESH Ltd) providing a drop down menu from which prospective sellers, on the Indiamart platform, can select the brand which they intend to sell. If, however, there are not, in place, sufficient checks and balances to prevent counterfeiters from misrepresenting themselves as genuine sellers, the protocol cannot withstand judicial scrutiny," the court stated.

The court directed taking down of all infringing listings in relation to Puma on Indiamart while also asking the platform to not provide any of the registered Puma trademarks in respect of any goods as search options in the drop down menu presented to prospective sellers at the time of their registration.

"IIL can well seek modification, or even vacation, of the order, if it can demonstrate to the Court that it has put, in place, sufficient regulatory and protective measures to render impossible abuse of the Indiamart platform by counterfeiters. Till then, however, the present position, in which there is rampant counterfeiting '? or even the possibility of it '? on the Indiamart platform, cannot be allowed to continue," the court said.