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Introduction: Facts Of The Case
The Delhi High Court declared that the e-commerce platform Flipkart’s provision allowing 3rd party merchants to grab on to a more popular brand’s name amounts to passing off. In the current case the suit had been filed by the plaintiff Mr. Akash Aggarwal for seeking permanent and mandatory injunction for copyright infringement and passing off.
The facts of the case include
- The plaintiff is a sole proprietor and is the owner of the venture operating with the mark of ‘V Tradition’. Under the use of said mark the venture operates on multiple platforms such as Meesho, Amazon, Myntra as well as the platform of the first defendant.
- The plaintiff makes out in his case that his venture utilizes the mark of V-tradition for all garments that are sold and manufactured by the venture. Further, the venture started making sales on the defendant’s platform i.e., Flipkart since the month of August 2020. Since then, the venture has made a total sale of Rs. 18 crs. and has received approximately 82,000 customer reviews.
- The issue that the plaintiff raises is that the defendant website is allowing different third-party sellers to utilize the mark of the plaintiff with the pictures of the products sold under the plaintiff’s mark and therefore, allow these third-party sellers to portray themselves as the plaintiff and benefit from the popularity, goodwill, products, and success of the plaintiff’s venture.
- Therefore, the plaintiff has filed said petition against the first defendant in order to prevent these third-party sellers to ‘latch’ on to the established mark of ‘V Tradition’. The plaintiff states that this has been possible due to the product listings created on the defendant’s platform under the category of ‘more sellers’ where these third-party sellers unlawfully latch on to the plaintiff’s brand name and sell their own products under the Plaintiff’s mark.
- To prove the same, the learned counsel for the plaintiff even produced the receipts for the purchase of 5 identical looking kurtas that were purchased from said third party sellers which were using the name and photographs of ‘V Tradition’ for making such sale.
Summary Of The Judgement
The court within the case recognized the increased challenges towards the protection of intellectual property and that the traditional concept of ‘passing off’ has gained a new meaning in the purview of e-commerce.
[Image Sources : Shutterstock]
While the court recognized the advantages of the e-commerce which allows entrepreneurs to present their products to a wider consumer base and conduct their business in a more profitable manner it was also concerned about the damage certain feature can cause to the legal rights of sellers on the platforms. The same has been made very clear with the ‘latching on’ feature on the website of the defendant.
With the assistance of the submissions made the plaintiff the court was shocked to learn that whenever a seller wished to add their products on the defendant’s portal, the defendant’s portal would provide the information to these sellers about the best-selling products in the product category and provide guidance for growing business which includes the incentive of latching on. Moreover, the platform also allows these sellers to attach the plaintiff’s product images without any permission of the plaintiff.
The court was further alarmed by the fact that such feature that is offered by the defendant’s platform has not been denied by the defendant at all and in the court’s opinion the feature of ‘latching on’ is the same as traditional passing off allowing these unscrupulous third-party sellers to benefit from the well-built reputation of the plaintiff.
Keeping all these facts in mind the court allowed the interim injunction against the defendant while recognizing the irreparable loss caused to the plaintiff due to the third-party sellers latching on and selling under the established mark of the plaintiff and instructed Flipkart to restrain allowing such ‘latching on’ feature which according to the plaintiff allowed more than 45 third party sellers to take benefit at the plaintiff’s expense.
Analysis And Conclusion
Within the judgement a new concept of ‘latching on’ had been identified which was considered to be the brick-and-mortar equivalent of ‘passing off’ under trademark law. The practice of ‘passing off’ refers to the practice of inducing innocent purchasers to purchase goods under the belief that the goods are of a particular brand or possess a certain mark of distinguishable character. This process can be pursued with complicated and confusing names in the marks or indications for puzzling the customers.
The test for identifying this practice has been laid down in the case of Reckitt & Colman where the courts have held-
- That a goodwill or reputation must be attached to the goods or services being offered to the public which possess such distinct mark or characteristic.
- That it must be demonstrated that the third party is making misrepresentation to lead the public that they are dealing in goods and services of that distinct mark or characteristic.
- Lastly, the affected party must prove that erroneous belief generated on account of the misrepresentation has endangered the product of the affected party.
Comparing these tests to the facts of the case would indicate two things. The first being that all the tests of passing off are satisfied and that the practice of latching on is the same as passing off. The second being that in this case it is not just the third-party sellers that are responsible for causing loss to the plaintiff but the platform as well for incentivizing these third-party sellers to increase sales via using ‘latching on’ practices.
While here the courts did not impose any damages on the portal but this case marks an evolution in the concept of passing off where the platform should also be held accountable for the losses faced by the plaintiff.
Author: : Himagn Malik, A Student of NMIMS School of Law, Mumbai, in case of any queries please contact/write back to us via email to firstname.lastname@example.org or at Khurana & Khurana, Advocates and IP Attorney.