Source: https://www.iptwins.com/en/2018/11/12/8142/
Timestamp: 2019-04-22 04:39:38+00:00

Document:
Louboutin sued Darveys.com before the High court of Dehli for infringement of its trademark rights, an opportunity for the high court to clarify the issue on the liability exemption that intermediaries can potentially benefit. In the present case, given Darveys.com’s active and central role in its business model and in the content of its platform, the High Court considered that this marketplace could not be qualified as an intermediary under the India Information Technology Act (High Court of Delhi, Christian Louboutin SAS v. Nakul Bajaj and Ors., CS (COMM) 344/2018).
3.1. What is an intermediary?
Darveys.com is an online marketplace specialized in luxury goods. Darveys.com claims that the products are obtained from shops in the USA and Europe at discounts as high as 60%. Its business is based on dozens of partnerships with boutiques all over the world. The platform indicates that it does not sell the goods, but only allows consumers to book them from partner stores. In order to shop on Darveys.com, customers have to pay a certain amount of money and obtain a membership. The marketplace ensures that the goods offered are authentic. The platform prides itself on the authentication procedure it has established: a panel of experts reviews and validates or invalidates products before they are sent to consumers. However, Darveys.com does not go so far as to guarantee the authenticity of the products in its terms and conditions. If the products turn out to be counterfeit, Darveys.com will return twice the money.
The French company Louboutin came to know that Darvey.com was offering Louboutin products. The website was also displaying a photograph of the French designer Mr. Christian Louboutin. Louboutin sued Darveys.com before the Indian courts. On September 26, 2014, the High Court of Dehli granted Louboutin an interim injunction ordering Darveys.com to stop promoting Louboutin products.
Marketplaces seem to be specifically targeted. The platform Darveys.com could, therefore, prima facie, be considered as an intermediary (para 11).
“(1) Notwithstanding anything contained in any law for the time being in force but subject to the provisions of sub-sections (2) and (3), an intermediary shall not be liable for any third party information, data, or communication link made available or hosted by him.
(b) upon receiving actual knowledge or on being notified by the appropriate Government or its agency that any information, data or communication link residing in or connected to a computer resource, controlled by the intermediary is being used to commit the unlawful act, the intermediary fails to expeditiously remove or disable access to that material on that resource without vitiating the evidence in any manner.
The India legal regime is supplemented by the Information Technology (Intermediary Guidelines) Rules, 2011. In particular, these guidelines provide that the intermediary that faces illegal content must act within thirty-six hours (Article 3(4). See also Clarification on The Information Technology (Intermediary Guidelines) Rules, 2011 under section 79 of the Information Technology Act, 2000, 18 March 2013).
In the decision rendered on 2 November 2018, the High Court of Dehli, as usual, refers to the case-law of other legal systems: that of the European Union (CJEU, 23 March 2010, C 236 / 08 to C 238/08, Google France SARL, Google Inc. v. Louis Vuitton Malletier SA & Ors., CJEU, July 12, 2011, C-324/09, L’Oreal SA & Ors v. EBay International AG & Ors.) and subsequently that of the French courts (mentioning the various decisions rendered in the litigation between Louis Vuitton Malletier and eBay), as well as the American case law (Tiffany vs. eBay 600 F.3d 93, Inwood Laboratories, Inc. v. Ives Laboratoes, Inc. 456 US 84, Hard Rock Café v. Harry’s Sweat Shop 955 F.2d, Lockheed Martin Corp. v. Network Solutions, Inc. 194 F.3d 980, Sony Corp. of America v. Universal City Studios, Inc. 464 US 417). These references are more than welcome in a legal world swept along in a movement of, if not harmonization, at least “glocalization“, which helps right holders to have a better understanding of the legitimate expectations they can draw with regard to a given legal system.
“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 ecommerce 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 extensor” (para. 54).
In other words, when it comes to marketplaces and e-commerce sites, everything has to be built!
This first step leads the court to consider whether a marketplace performing one or more of these tasks may qualify as an intermediary within the meaning of Article 2(w) (para 58). In other words, can such a platform be considered inactive, passive or merely technical? On the other hand, should such a platform be considered as playing an active role in the marketing and the sale of products? (ibid.).
“When an e-commerce website is involved in or conducts its business in such a manner, which would see the presence of a large number of elements enumerated above, it could be said to cross the line from being an intermediary to an active participant. In such a case, the platform or online marketplace could be liable for infringement in view of its active participation” (para. 63).
“Needless to add, e-commerce websites and online marketplaces ought to operate with caution if they wish to enjoy the immunity provided to intermediaries.” (ibid.).
“So long as they are mere conduits or passive transmitters of the records or of the information, they continue to be intermediaries, but merely calling themselves as intermediaries does not qualify all e-commerce platforms or online market places as one” (para 64).
In this case, the Dehli court considers that Darveys.com exercises full control over the products insofar as the platform is able to identify the sellers, select them, promote and sell the products. For the court, Darveys.com is much more than an intermediary (para 61).
Moreover, and in any event, similarly to the European and American legal systems, the exemption is not absolute. Indeed, the court of Dehli recalls that under Article 79(2)(b), to benefit from the exemption, the intermediary must not initiate the transmission, select the receiver of the transmission and select or modify the information contained in the transmission (para. 66). In these conditions, it is hard to see how Darveys.com could have benefited from the exemption.
The court also reiterated that the exemption from liability does not apply in the two situations set out in Article 79(3). The first (Article 79(3)(a)) excludes the exemption where, actively or by omission, the platform contributes to the performance of the illegal act. The second imposes due diligence on the Internet operator. In this regard, the court makes reference to the need to establish a policy and procedure for the removal of illegal content (para 68). Moreover, Article 3(2)(d) of the Information Technology (Intermediary Guidelines) Rules, 2011 specifically refers to intellectual property rights, including trademarks (para 69). The court states that these guidelines require intermediaries to enter into contractual relationships with their users, which must include clauses whereby users undertake not to infringe the intellectual property rights of third parties.
“any online market place or e-commerce website, which allows storing of counterfeit goods, would be falsifying the mark. 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. 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.” (para. 77).
“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” (para. 79).
The court concludes that Darveys.com cannot be qualified as an intermediary that would be potentially eligible to the exemption provided by Article 79 of the Information Technology Act.
Finally, concerning the use of the “Louboutin” trademark in the source code, as meta tags, the court recalls that this practice, that of a free rider, dilutes the trademark (paras 80 and 81).
vi. It 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 Defendant’s platform.
These injunctions could replace the risk management consultation Darveys.com did not ask for before starting its business. In the United Stated, SunFrog also benefited from the judge’s advice in the recent Davidson c. SunFrog decision, with the difference that it was much more expensive! (see iptwins.com, June 27, 2018).
“It is alleged on behalf of Darveys.com that no plaintiff’s product was actually sold on its platform, although the website advertised and promoted the products under the plaintiff’s trademark. Thus, no order of damage/refunding of accounts or expenses is passed “.
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