Source: https://www.itlaw.in/christian-louboutin-sas-versus-nakul-bajaj-ors-cs-comm-344-2018-intermediary-liability-ecommerce/
Timestamp: 2019-04-19 21:12:46+00:00

Document:
JUDGMENT Prathiba M. Singh, J.
1. The present suit has been filed by the Plaintiff, who claims to be a manufacturer of luxury shoes. The name of the Plaintiff Company -Christian Louboutin (hereinafter, ‘Plaintiff’} is based on the name of its founder, namely Mr. Christian Louboutin, a famous designer of high end luxury products. The Plaintiff claims that the name, likeness and photographs of Mr. Louboutin enjoy goodwill and protection under the Trademarks Act, 1999 (hereinafter, ‘TM Act’}. The products of the Plaintiff are worn and preferred by a large number of celebrities. The Plaintiff claims that it enjoys enormous repute and goodwill in the fashion industry and was rated amongst top 5 prestigious women’s luxury shoe brand. The name “Christian Louboutin”, in word form and logo form, as also the red sole mark, are registered trademarks in India, and there are various other applications which are also pending registration. The Plaintiff further claims that its products are sold only through an authorized network of exclusive distributors. In India, there are two stores in Mumbai and one in Delhi which are authorized by the Plaintiff.
2. According to the Plaintiff, the Defendants operate a website by the name www.darveys.com (hereinafter, ‘Darveys.com’). It is the Plaintiff’s allegation that the Defendants, offer for sale and sell various products on their website, bearing the luxury brands/names of the Plaintiff. The Defendants’ website contains the complete “Christian Louboutin” product catalogue. The website further claims that the products are 100% authentic.
3. As per the plaint, the goods of the Defendants are impaired or are counterfeits. Apart from offering for sale and selling the Plaintiff’s products, on the website of the Defendants, the image of the founder of the Plaintiff is also used, and the names “Christian” and “Louboutin” are also used as meta-tags. By using these meta-tags, the defendants attract traffic to their website. According to the Plaintiff, the Defendants’ website gives an impression that it is in some manner sponsored, affiliated and approved for sale of a variety of luxury products bearing the mark of the Plaintiff’s genuine products. This results in infringement of the trademark rights of the Plaintiff, violation of personality rights of Mr. Christian Louboutin and dissolution of the luxury status enjoyed by their products and brands.
4. This Court had on 26th September, 2014 granted interim relief in the following terms.
a) That the praise for Mr. Christian Louboutin is not within the knowledge of the Defendants.
b) That the Defendants are not aware about the various types of goods marketed by the Plaintiff.
c) The Defendants have not had any direct dealings with the Plaintiff.
d) The Defendants offer for sale luxury items of different concerns on the website, by booking orders only.
e) The advertisements for promoting sale are made by the Defendants at their own expense without involving the Plaintiff.
f) The goods of the Plaintiff were offered for sale on the website of the Defendants but the responsibility was taken over by the sellers, on whose behalf the goods were offered for sale.
g) That the website Darveys.com offers products of 287 boutiques/ sellers from across the globe.
h) The goods are imported and are based on the understanding that the products are genuine and that the manufacturers are not liable in any manner; the name, address of brand owners are displayed.
i) There is a disclaimer that the manufacturer does not have any responsibility and involvement in the sale process. There is no imitation because actual name itself is used.
j) The Defendants do not purchase any articles for sale, only book the orders on behalf of the sellers whose products they display on their platform. The names of the sellers are correctly displayed on the website.
k) It is denied that the products are fake or counterfeits. The Defendant’s website claims that only products of the original manufacturers are being sold.
p) That the Defendants offer goods belonging to various other manufacturers also. The Defendants claim that the Plaintiffs should feel happy about the sale of their products in a legalized manner.
6. The Plaintiff, in replication, claims that the Defendants’ manner of use, in fact, alludes to a connection with the Plaintiff due to the following features on the website.
viii. Displaying pictures of shoes with red soles (which is a registered trademark of the Plaintiff) either with the words “Christian Louboutin” or even without the words “Christian Louboutin “.
2009 (hereinafter, ‘IT Act’}. The issue of liability under Section 79 of the IT Act is to be decided on the basis of pleadings and documents on record, none of which are disputed by the parties. The website of the Defendants is admitted. The ownerships of the Plaintiff’s marks are not disputed. Hence this Court, after hearing the parties, is proceeding to decide the suit. Neither party has any objection to the said course of action. Ld. Counsel for the Defendant in fact submitted during oral arguments, that the Defendants are willing to stop sale of any of the Plaintiff’s products.
8. The following issues arise for decision in the present case.
b) Whether the Plaintiff is entitled to relief, and if so, in what terms?
9. Electronic commerce or e-commerce, as it is known in short, is commerce which takes place online i.e. the purchase-sale of goods/services and not from physical brick and mortar shops, malls or kirana stores. The goods are sold through online platforms where the products are displayed and offered for sale. A customer, who wishes to purchase the product, can visit the website, browse the hundreds of choices that exist, identify the products, book an order, and upon delivery of the product, make payment.
In some platforms, however, customers can maintain running accounts and their credit card or debit card would be automatically charged for the purchase so made. So far, the process is quite simple, however, the conundrum does not end here. Owing to a large variety of products that are offered by websites, companies running these platforms have arrangements with various sellers for supply of products. Some websites display the names of the sellers transparently and also offer the same products through different sellers and even assist the customers by providing reviews of all the various sellers of that product.
warehouses. Inventory is maintained by the e-commerce platform. Thus, the e-commerce platform plays a much more active role.
B. When can an e-commerce platform be termed as intermediary ?
“Darveys is a members only club. Our members gets an opportunity to browse and shop from our exclusive collection at the same time as they are available at the international stores”.
“we offer these exclusive products to our members and provide direct shipment from the international boutiques to their doorstep”.
15. The term used in this authenticity guarantee, in effect, means that genuinity of the product is being guaranteed by the website. The terms “lapse in our judgment of a fair deal” also means that if the products turn out to be fake or of not the expected quality, Darveys.com will return twice the money.
“Darveys.com is responsible to check that all the matter given on the website is correct, but it neither warrants nor makes any delegations with regard to the quality, tone, truth or unity of any data, matter, product or service. In no event shall Darveys.com be responsible for any direct, collateral, punishing, accidental, peculiar, consequential harm or any other damages resulting from: (a) the use or the inability to use the services or products; (b) non-authorized get at to or revision of the user’s transmissions or matter; (c) any other matter in relation to the services; including, without restriction, damages for loss of use, data or revenue, arising out of or in any way associated with the use or performance of the website or service. Neither shall Darveys.com be responsible for the delay or lack of ability to use the website or related services, the planning of or failure to allow services, or for any information, software, products, services and related graphics received through the website, or otherwise arising out of the use of the website, whether based on agreement, tort, carelessness, strict liability or differently. Further, Darveys.com shall not be held responsible for non- accessibility of the website during periodic sustenance procedure or any unplanned abatement of access to the website that may occur due to technical ground or for any reason beyond Darveys’ control. The user must understand and agree that any material and/or data downloaded or otherwise received through the website is done entirely at their own prudence and they will be the only one responsible for any harm to their computer systems or loss of data that result from the transfer of such material and/or data.
“We commit to offer 100% authentic products, which are procured from legitimate sources, to our extremely privileged customers, and in case of any lapse in our judgment of a fair deal, we promise to return you two times the price of the product.
20. This shows that each and every product is being claimed to be checked by Darveys.com and is therefore being shipped to the customer only after checking takes place. Surprisingly, the website does not have a list of boutiques/sellers from whom the website is sourcing the products.
c. Regulation 40/94 – “Rights conferred by a Community Trademark”.
purposes of making the transmission more efficient.
of a service, the exemption no longer applies.
or select or modify the information contained in the transmission.
23. The judgment in Google France (supra) was in respect of a paid referencing service called “Adwords”. This is enabled by Google through an automated process for selection of key words. Louis Vuitton objected to the sponsored links on Google’s search engine to websites which were offering imitation versions of Louis Vuitton products. Similarly, two more companies, one running a travel arrangement service and another running a matrimonial agency had raised issues in respect of the Adwords/ sponsored links provided by Google. Various disputes were referred to the European Court of Justice, and the Court came to the conclusion that a trademark owner is entitled to prohibit an advertiser on the Google Adword programme if the link is originating from a third party. However, if the service provider, who merely provides the internet reference through a keyword or a sign identical to the trademark, does not violate Article 51 of Director 89/104, or 9(1 )(a) and (b) of Regulation 40/94.
26. One of the leading judgments on the issue of violation of trademark rights on online platforms is L’Oreal SA & Ors. v. eBay International AG & Ors. [Case C-324/09 decision dated 12th July, 2011] decided by Court of Justice of European Union (hereinafter, ‘CJEU’) on a reference from the High Court of Justice (England and Wales), Chancery Division (United Kingdom). The case involved was of sale of L’Oreal perfumes, cosmetics, hair cutting products on the eBay platform by sellers. The sellers entered into an agreement with eBay called “Online – Market User Agreement”.
territories were being sold in Europe, ii) That some of the products sold on the platform were counterfeit products, iii)That eBay was advertising L’Oreal products through the Google ‘Adwords’ referencing service.
27. The CJEU held that the advertising through key-words/Adwords could constitute “use”, however, since the said use was in respect of products of L’Oreal itself, it would not be in violation of Directive 89/104 and Regulation 14/94. However, in respect of liability of the operator of an online market place, in order for the internet service provider to be exempted from liability under article 14 of the Directive 2000/31 i.e. the E-commerce Directive, such an operator ought to be intermediary. Following the tests in Google France (supra) the Court held that eBay processes the data entered by its sellers. EBay also provides assistance to optimize the sales of the sellers. The Court distinguishes between the operator of an online market place who stores the offers for sale on its servers, sets terms of service, provides general information and is remunerated for the same and an operator, who optimizes presentations of the offers for sale, promotes offers, provides them assistance etc. In the former case, the operator would be entitled to exemption from liability whereas in the latter, it would not be entitled to exemption.
28. The question whether the operator of an online market place is entitled to the exemption, is based on the role played by the operator i.e. active or inactive. If the operator provides assistance “which entails, in particular, optimizing the presentation of the offers for sale in question or promoting them”, even if the operator has not played active role and he . provides the above service, the operator can claim protection as an intermediary. However, the said intermediary, if upon becoming aware of the facts which lead to an inference that the offers made on the website were unlawful, failed to act expeditiously, then the exemption ceases.
30. However, the injunctions should not include an active monitoring of data, the general monitoring obligation would violate Article 3 of Directive 2004/48. The Court ought to also ensure that no barriers are created of legitimate trade. There could not be general and permanent prohibition of selling on that market place of goods bearing the trademark.
31. In contrast in S.A. Louis Vuitton Malletier v. eBay Inc. & Anr. [General docket no. 2006077799 decision dated 4th December, 2008] decided by the Commercial Court at Paris and thereafter, affirmed by the Appellate Court and the Supreme Court of France, in somewhat similar circumstances, the French Courts have held that eBay had not set up sufficient measures to combat infringements. For example by not imposing obligations on the sellers of seeking certificate of authenticity of products, by not commencing a guilty seller by terminating his accounts and by withdrawing the illicit advertisements when notified by the trademark owner. Thus, the Court further held that eBay was wrong in asking trademark owners for financial contribution to combat counterfeiting. Thus, eBay was guilty of abstention and negligence, which both are tortuous act for which it owed compensation.
32. Thus, in the EU, the national courts have to determine whether the service provider has played an active role or not, and whether it has knowledge or control all over the data which is stored by it. If the service provider has no knowledge, then upon obtaining knowledge of the unlawful data, if it failed to expeditiously remove the data or disable access, then the service provider could be liable. The test of whether the service provider is liable is to determine – Whether the role of the service provider is neutral or not? Thus, according to the judgements in the EU, in case of online market places, the injunctions which ought to be passed must be measured and calculated rather than blanket injunctions.
reasons, the Circuit Judge decided in favour of eBay.
infringement i.e. direct trademark infringement and contributory trademark infringement. On the former i.e. direct trademark infringement, the Appeals Court held that eBay was using the mark Tiffany on its platform to describe accurately genuine Tiffany products offered for sale on its website, and hence there was no direct infringement. According to the Court, if a mark is used to signify the genuine product of the trademark owner, it does not constitute infringing use of a mark.
This test for contributory infringement in this judgment is popularly known as the Inwood Test’.
36. After considering the ^Inwood Test’, the Appeals Court in Tiffany v.
(1) Sale of Hard Rock Cafe T-shirts by a flea market owner was infringement1.
discussed the manner in which the judgment in Sony Corp. of America v.
“Thus Tiffany failed to demonstrate that eBay was supplying its service to individuals who it knew or had reason to know were selling counterfeit Tiffany goods.
could be only when it is informed of the infringement but ignores to take action.
reasoned order after complying with several procedural safeguards including a hearing to the originator and intermediary. We have also seen how there are only two ways in which a blocking order can be passed – one by the Designated Officer after complying with the 2009 Rules and the other by the Designated Officer when he has to follow an order passed by a competent court. The intermediary applying its own mind to whether information should or should not be blocked is noticeably absent in Section 69A read with 2009 rules.
79(3)(b). The knowledge spoken of in the said sub-rule must only be through the medium of a court order. Subject to this, the Information Technology (Intermediaries Guidelines) Rules, 2011 are valid.
remove or disable access to such material.
“Intermediary Guidelines” Rules, 2011 are valid subject to Rule 3 Sub-rule (4) being read down in the same manner as indicated in the judgment.
Property Rights was not the subject matter of this case.
knowledge. The Division Bench, however, restricted the knowledge test.
“47. In this Court’s opinion, Section 79 grants a measured privilege to an intermediary. However, that would not mean that the rights guaranteed under the Copyright Act are in any manner curtailed. All Section 79 does is regulates the liability in respect of intermediaries while the Copyright Act grants and controls rights of a copyright owner. Under the circumstances, it is difficult to conceive how one would pose a barrier in the applicability of the other. The true intent of Section 79 is to ensure that in terms of globally accepted standards of intermediary liabilities and to further digital trade and economy, an intermediary is granted certain protections. Section 79 is neither an enforcement provision nor does it list out any penal consequences for non-compliance. It sets up a scheme where intermediaries have to follow certain minimum standards to avoid liability; it provides for an affirmative defence and not a blanket immunity from liability.
copyright owners would have been unable to pursue legal recourse against Internet intermediaries. Under the current regime, while private copyright owners can still demand action against intermediaries who may themselves post infringing content, intermediaries can seek safe harbor where the content is uploaded by third party users or is user generated.
consequence was not intended by Parliament, which mindful of techno- legal developments around the world created for safe harbor provisions. Another aspect is the manner how Internet is accessed. If a strict regime is implemented with respect to intermediary liability, such intermediaries could conveniently migrate to a location where data protection laws are not as rigorous and the content would still be accessible. Under such circumstances while the economic loss is one aspect, it would become near impossible to trace intermediaries to take down content.
47. Insofar as due diligence is concerned, the Court analysed the Information Technology (Intermediaries Guidelines) Rules, 2011 (hereinafter, ‘Intermediaries Guidelines’) and held that the intermediary should not knowingly host information which is contrary to the said rules.
of the Copyright Act have to be read harmoniously.
an intermediary in case of copyright actions.
Electronics and Information Technology v. Star India Pvt. Ltd. [R.P.
any intellectual property rights will then, intimate the intermediaries of their claims and the intermediaries then, before hosting any material on their computer resources would be required to test the material vis-a¬vis all such claims lodged with them, else would be liable for infringement.
intermediaries as the defendant no.2 to only declare to all its users its policy in this regard and advise them not to host any infringing information on the website of the intermediary and to on receipt of complaint remove the same within 36 hours.
“5. This Court has considered the submissions. The observations made by the learned Single-though ostensibly in the course of a discussion on the application for a temporary injunction, virtually foreclosed the plaintiffs’ right to prove if and how the knowledge threshold required by virtue of Section 79(3)(b) of the Information Technology Act, has been met with. Whilst the defendant eBay has a point in highlighting the distinction between the nature and bundle of rights that a copyright proprietor possesses as opposed to a design registrant and also the nature of web portal involved in MySpace (supra) and the present case, at the same time, the complete preclusion of the plaintiffs’ rights to prove that eBay’s conduct betrayed its knowledge of infringement should not in our opinion be foreclosed.
6. In view of our observations, this Court is of the opinion that the plaintiffs may proceed to establish in the course of the trial by way of appropriate evidence as to whether and if so how the knowledge threshold mandated by Section 79(3)(b) was satisfied to render eBay liable as alleged by it. Of course, eBay’s right to refute the plaintiffs’ contentions both in law and on facts are also kept open. The appeal is partly allowed in the above terms. All rights and contentions of the parties are reserved.”. Thus, the Court left the question of the knowledge threshold to be determined at trial.
54. A review of the judgements on Section 79 in India shows that intermediaries in general have been given exemption in various fact-situations including in the case of uploading of content by users, copyright infringement and violation of design rights. However, the position that is being considered in the present case i.e., violation of trade mark rights by e-commerce platforms and the extent of protection/exemption that is to be awarded to them as also the conditions under which the same are to be awarded, are yet to be gone into in extenso.
user simply accepts to purchase it on as is where is basis from the said seller.
or merely technical or automatic processing? Can such platforms be considered as being in a neutral position, or should they be held as having active participation in the trade? These are the questions that arise in the present case.
their website cannot go scot free.
platforms or online market places as one.
communication link made available or hosted by him.
liable for third party information, data, links hosted on the platforms.
• select or modify the information contained in the transmission.
(i) threatens the unity, integrity, defence, security, sovereignty of India, friendly relations with foreign states, or public order or causes incitement to the commission of any cognisable offence or prevents investigation of any offence or is insulting any other nature.
for at least ninety days for investigation purposes.
Intermediary and remove non-compliant information.
of the Act or any other laws for the time being in force.
any law for the time being in force, on a request in writing stating clearly the purpose of seeking such information or any such assistance.
install or modify the technical configuration of computer resource or become party to any such act which may change or has the potential to change the normal course of operation of the computer resource than what it is supposed to perform thereby circumventing any law for the time being in force.
purpose of performing the acts of securing the computer resource and information contained therein.
(zg) the guidelines to be observed by the intermediaries under sub-section (2) of Section 79.
71. They do not and cannot substitute themselves either for the provision in the IT Act i.e., Section 79 or nullify provisions in other applicable laws. These guidelines are framed under Section 79(2) and would not negate the stipulations in Section 79(3)(a). The guidelines would not offer protection to any “intermediary’ that have “conspired’, “abetted’ or “aided’ or “induced the commission’ of an unlawful act. It cannot be argued that anyone who complies with the guidelines is automatically not conspiring, abetting, aiding or inducing commission of an unlawful act. Following the guidelines may in certain cases satisfy that the online market place is behaving as an intermediary but the same is not conclusive. What is lawful or unlawful depends on the specific statute being invoked and the Guidelines cannot be considered as being exhaustive in their manner of application to all statutes.
72. The factors enumerated above are in-line with the test which applies for determining whether there is ^use’ of a mark under Section 2(2)(c) of the Trademarks Act, 1999, or ^falsification of a mark’ or ”false application of a mark’ under Sections 101 and 102 of the TM Act, 1999. The statute is very broad in construing use, falsification and false application. While use for goods is broad and would include any physical or in any other relation whatsoever to goods, even use in respect of services is quite broad i.e. it includes the provision, performance or making availability of services. Would services provided in respect of sale of counterfeit goods constitute use of a mark? The answer to this question depends on Section 2(w) of the IT Act. In the context of an intermediary, it could provide any service and enjoy exemption only if the constituents of Section 79 of the IT Act are satisfied.
the trade mark or trade description as so used.
(2) A trade mark or mark or trade description shall be deemed to be applied to goods whether it is woven in, impressed on, or otherwise worked into, or annexed or affixed to, the goods or to any package or other thing.
alteration, addition, effacement or otherwise.
proprietor, for the purpose of packing, filling or wrapping therein any goods other than the genuine goods of the proprietor of the trade mark.
xi) all references to the mark in the above provisions include identical and deceptively similar marks. The use could be of marks either for goods or for services.
“Section 81 – Act to have overriding effect. – The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force.
76. The overriding nature of the IT Act has application only if the provisions of the Trade Mark Act are inconsistent with the provisions of the IT Act. The Intermediary Guidelines 2011 themselves require compliance with the 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, are being looked at in order to interpret as to what constitutes ‘conspiring, abetting, aiding or inducing’ the commission of an unlawful act, in the context of trade mark rights. The provisions of the TM Act are not in any manner inconsistent with the provisions of the IT Act. Hence Section 81 of the IT Act does not grant any immunity to intermediaries who may be in violation of the provisions of the TM Act. While, use of a mark for any of the purposes elaborated above, in respect of genuine goods of the owner would not be infringement, the performance of any service as elaborated above, in respect of counterfeit goods or goods which are not genuine, could constitute infringement.
a counterfeit product with its own packaging and selling the same or offering for sale would also amount to falsification. All these acts would aid the infringement or falsification and would therefore bring the e-commerce platform or online market place outside the exemption provided under Section 79 of the IT Act.
78. Thus, the various factors that are enumerated in the paragraphs above and the absence/presence of the said factors would hold the key to determining whether an e-commerce website is actually an intermediary or not. When an e-commerce company claims exemption under Section 79 of the IT Act, it ought to ensure that it does not have an active participation in the selling process. The presence of any elements which shows active participation could deprive intermediaries of the exemption.
79. In the world of e-commerce, IP owners face challenging times. This is because sellers of counterfeit or infringing products seek shelter behind the platform’s legitimacy, like in the case of Darveys.com. Darveys.com is involved in the promotion and sale of luxury products. The seller is located on a foreign shore. It is not even clear as to whether the seller is in fact selling a genuine product. As stated above, Darveys.com promotes the products to its members who sign up on Darveys.com. Without becoming a member, one cannot effect a purchase on Darveys.com. In such cases giving exemptions of Section 79 would in fact amount to legalizing the infringing activity. The seller is not known, the person from whom the seller purchases the goods is not known. It is also not known if the product is genuine, though Darveys.com represents to be same to be genuine. In view of these factors, Darveys.com cannot be termed as an intermediary that is entitled to protection under Section 79 of the IT Act. The use of the mark, Christian Louboutin, the name, the photograph of the founder, without the permission of the Plaintiff, and without ensuring that the products which are sold are in fact genuine, would constitute violation of Plaintiff’s rights. The Defendant has relied on a judgement of a Ld. Single Judge in Christian Louboutin v. Abubacker 250 (2018) DLT 475 the court was considering protection for the red sole trademark. In the said judgement the court held that the red sole mark is not distinctive as there can be no monopoly on the colour red. The present suit does not relate to the red sole mark in isolation but the use of the plaintiffs marks, name of its name of its founder, use of the words constituting the mark in various ways including on the website, images, packaging material, invoice etc. by the Defendant which is an e-commerce platform. Thus the said judgement does not help the Defendant in the present case.
whenever a customer searches for the said trade mark. The trade mark used in the code as a keyword is invisible to the end-user or customer. Such use, though invisible to the customer, has been held to be illegal in the case of Kaptt Wadhwa Vs. Samsung Electronics Co. Ltd. 194 (2012) DLT 23. The Plaintiff claims that when a web user enters the Plaintiff’s mark in a search engine such as Google, Darveys.com website is amongst the search results and an analysis of the code shows that the marks of the Plaintiff are used as meta-keyword-tags, with a view to increasing the hits which the Defendant’s website obtains from search engines like Google.
81. The trademark owner loses its huge customer base especially in the case of luxury products. If the products turn out to be counterfeit or not up to the mark, then it is the trademark owner’s brand equity which is diluted. The seller himself does not suffer. Such immunity is beyond what is contemplated to intermediaries under Section 79 of the IT Act. While Section 79 of the IT Act is to protect genuine intermediaries, it cannot be abused by extending such protection to those persons who are not intermediaries and are active participants in the unlawful act. Moreover, if the sellers themselves are located on foreign shores and the trade mark owner cannot exercise any remedy against the said seller who is selling counterfeits on the e-commerce platform, then the trade mark owner cannot be left remediless.
viii. It is submitted on behalf of Darveys.com that no product of the Plaintiff was in fact sold on its platform, though the website did advertise and promote the products using the Plaintiff’s brand. Thus, no order for damages/rendition of accounts or costs is passed.
83. Decree sheet be drawn. Suit and all pending I.As are disposed of.

References: v. 
 CJEU 
 v. 
 v.

 v.

 v. 
 v.