E-commerce platforms must protect IP rights; cannot claim safe harbour if used for counterfeiting: Delhi High Court

The Delhi High Court recently held that e-commerce platforms must diligently protect intellectual property rights of others and they cannot claim ‘safe harbour’ as an intermediary if the platforms are used to abet counterfeiting [PUMA SE v IndiaMART InterMESH Ltd]..Justice C Hari Shankar said even though e-commerce platforms are commercial ventures, they cannot become “haven for infringers” and cannot put in place a protocol by which infringers and counterfeiters are provided an avenue to infringe and counterfeit.“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 Court said..The single-judge made the observations in an interim order restraining IndiaMART IndiaMESH Limited (which runs the e-commerce platform IndiaMART) from providing any registered trademark of PUMA in respect of goods as search option in its drop-down menu presented to prospective sellers when they register on IndiaMART platform.Justice Hari Shankar ordered IndiaMART to take down all infringing listings containing any of the PUMA’s registered trademarks.The injunction will remain in force till the Court decides PUMA’s trademark infringement suit against IndiaMART..PUMA filed the case stating that several counterfeit goods bearing fake PUMA marks have been put up by third-party sellers on IndiaMART and when one searches for PUMA products on IndiaMART, these fake products are also displayed.The Court was informed that when a seller registers himself/herself on IndiaMART, a drop-down menu is provided by which the seller can represent himself/herself as a dealer of PUMA shoes. If the person chooses this option from the drop down-menu, he/she is registered with the IndiaMART portal as selling PUMA shoes and, if a purchaser later enters PUMA or PUMA shoes as the product that he wishes to purchase, the PUMA shoes sold by the seller are among the displayed available choices.Through this process, any counterfeiter can register himself as selling PUMA shoes as no prior verification is done by IndiaMART. This ultimately facilitates the infringement of trademarks, it was stated..Justice Hari Shankar considered the case and held that by allowing the prospective sellers to register themselves without any prior verification, it can prima facie be said that “IndiaMART has aided commission of the unlawful act of counterfeiting, using its platform as a springboard for the purpose". Aiding is a step before abetting and providing an avenue for counterfeiting is also aiding in the misdemeanour, the Court stressed.“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 [IndiaMART IndiaMESH Limited] 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 single-judge concluded..He, therefore, passed the interim order against IndiaMART.However, it was clarified that the injunction does not have to continue ad infinitum and IndiaMART can seek modification of the same 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. .Advocates Ranjan Narula and Shivangi Kohli appeared for PUMA.IndiaMART was represented by Senior Advocate Rajshekhar Rao and advocates Pulkit Gupta, Rhea Dube and Zeya Junaid..[Read Judgment]