E-commerce websites need not screen products for IP infringement before posting on its portal, Delhi HC

Nalini Sharma

The Delhi High Court has recently held that e-commerce portals like eBay cannot be asked to screen information/ products for infringement of Intellectual Property Rights before posting the same on its website.

The decision was rendered by Justice Rajiv Sahai Endlaw on January 18 and was corrected and released on February 22.

The case is the result of an infringement suit filed by Kent RO Systems Limited (Plaintiff) alleging infringement of its design registered under the Designs Act, 2000 (Act).

The suit was filed against one Amit Shabhulal Kotak, who is a manufacturer of water purifiers, and e-Bay, the e-commerce platform through which sellers of various products showcase and sell their products.

It was the allegation of Kent that Kotak was selling water purifier systems whose shape, look and appearance were deceptively similar. Kent further alleged that Kotak was infringing the water purifiers of the plaintiff, for which the plaintiff had registrations under the Act.

Since the products were being sold through eBay, Kent had also sought a direction to be issued to eBay to take down, remove and delist all products infringing the registered designs. Further, it had also sought prohibitory injunction from allowing products infringing the registered designs of the plaintiffs from being offered for sale and sold from the portal of eBay.

It was contended by Kent that eBay is an “intermediary” within the meaning of the IT Act and is required to devise a mechanism to verify whether the products hosted on its website infringe the intellectual property rights of any other person. The counsel for the Kent relied on Rule 3 of Information Technology (Intermediaries Guidelines) Rules, 2011 (IT Rules) which lays down law relating to due diligence to be observed by an intermediary.

eBay had referred to Section 79 of the IT Act which provides that an intermediary shall not be liable for any third party information, data or communication link made available by him. It submitted that the function of the intermediary is limited to providing access to a communication system over which information made available by third parties is transmitted or temporarily stored or hosted

This raised the important issue of the role of an intermediary in light of the IT Rules.

The Court analysed Rule 3 of the IT Rules which deals with the due diligence to be observed by an intermediary. It then held that,

“The aforesaid IT Rules only require the intermediary to publish the rules and regulations and privacy policy and to inform the users of its computer resources not to host, display, uphold or publish any information that infringes any patent, trademark, copyright or other proprietary rights.”

The Court, therefore, turned down the contention that there was an obligation on the intermediaries to not only remove infringing content but also screen content before hosting the same on its portal.

In this regard it held that,

“To hold that an intermediary, before posting any information on its computer resources is required to satisfy itself that the same does not infringe the intellectual property rights of any person, would amount to converting the intermediary into a body to determine whether there is any infringement of intellectual property rights or not. All persons claiming 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.”

The Court also analyzed the intention of the legislature at time of enacting the IT Rules stating that,

“If the intention of the Legislature been to require the intermediaries to be vigilant, the Legislature would have merely observed that the intermediary will not permit to be hosted on its website any information infringing intellectual property rights of any other person if such person had informed the intermediary of the same. However, the Legislature has not done so and has required the intermediaries 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.”

The Court, therefore held,

“Merely because intermediary has been obliged under the IT Rules to remove the infringing content on receipt of complaint cannot be read as vesting in the intermediary suo motu powers to detect and refuse hosting of infringing contents.”

This, it concluded, would amount to

“…an unreasonable interference with the rights of the intermediary to carry on its business.”

Interestingly, as a post script, the Court has referred to an order passed by the Supreme Court in the case of Sabu Mathew George Vs. Union of India. In that case, the Supreme Court had evolved the doctrine of ‘auto-block’ and directed constitution of an expert body by Google, Yahoo and Facebook to detect violation of The Pre-conception and Pre-natal Diagnostic Techniques (Prohibition of Sex Selection) Act, 1994. The Court, however, goes on to state that the same was under Section 22 of the PNDT Act and not under the IT Act or Rules.

Read the full judgment here.

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