Intermediaries And Their Liabilities: Analysis Of Christian Louboutin Vs Nakul Bajaj

Introduction

The advent of e-commerce has revolutionized the way people shop and conduct business. With the ease of online transactions, e-commerce platforms have become an integral part of our daily lives. However, with the rise of e-commerce, trademark infringement issues have also arisen. In India, the e-commerce industry is booming, and the government has implemented various regulations to protect intellectual property rights. This article will discuss the liability of an e-commerce platform as an “intermediary” of trademark rights in India.

E-commerce Platforms: Trademark infringement & Liability

Trademarks are symbols, words, or phrases that distinguish a company’s goods or services from those of others. Trademarks serve as a brand’s identity and are crucial to businesses. Infringement of trademark rights can occur in e-commerce in several ways, such as selling counterfeit goods, using a similar name or logo to deceive customers, or using keywords to promote goods or services.

In India, e-commerce platforms are considered intermediaries under the Information Technology Act, 2000. As intermediaries, e-commerce platforms are not liable for any third-party content unless they have actual knowledge of such content being illegal. However, the e-commerce platform must act expeditiously to remove or disable access to such content once they have received actual knowledge of its illegality.

The liability of an e-commerce platform as an intermediary of trademark rights in India is governed by the provisions of the Trademarks Act, 1999, and the Information Technology Act, 2000.

An e-commerce platform may be liable for trademark infringement under the Trademarks Act if it:

  1. Uses a trademark that is the same as or confusingly similar to a registered trademark.
  2. Uses a mark that is identical to or misleadingly similar to a registered trademark to sell goods or services.
  3. Aids in the distribution of products or services that violate a registered trademark.

In various cases the courts have held that e-commerce platforms are not liable for trademark infringement if they act as a mere facilitator of the sale of goods and services. An e-commerce platform can only be held liable if it has actual knowledge of the infringing activity and has not taken any action to stop it.

Safe harbor provisions

To protect e-commerce platforms from liability, the Information Technology Act, 2000, provides safe harbor provisions under Section 79. Under Section 79, an intermediary is not liable for any third-party information, data, or communication link made available by it if the intermediary:

  1. Does not initiate the transmission or select the receiver of the transmission.
  2. Does not modify the information contained in the transmission.
  3. Observes due diligence while discharging its duties under the Act.

However, the safe harbor provisions are subject to certain exceptions. If an intermediary receives actual knowledge of unlawful content, it must act expeditiously to remove or disable access to such content. Failure to do so may result in the intermediary being held liable for the content.

Christian Louboutin SAS vs Nakul Bajaj & Ors[i]:

Important Facts:

Christian Louboutin, a firm that makes high-end footwear, filed the lawsuit. It asserts that only two retailers in India are permitted by the plaintiff to offer its items, and that only an approved network of exclusive distributors may sell them. On their websites, which use the plaintiff’s brand name and feature their entire product catalogue, the defendants, according to the plaintiff, sell a variety of goods. The commodities that the defendants sell are counterfeits, according to the plaint. The plaintiffs had previously received a temporary injunction prohibiting the defendants from using their e-commerce website to sell, offer for sale, advertise, or otherwise deal in any goods carrying the plaintiffs’ registered brand. The defendants subsequently submitted a written statement in which they assert that they do not sell the items, only permitting customers to book orders through their online platform. When the plaintiff’s real name is used, they contend that they have not copied. The court must interpret Section 79 of the Information Technology Act, 2000 in order to determine the defendant’s responsibility as an intermediary.

Issues at Hand:

  1. Does section 79’s “safe harbour” protection apply in this situation?
  2. Does the use of Mega Tags that incorporate the plaintiff’s registered trademark constitute a violation of intellectual property rights?
  • Whether the plaintiff should receive redress from the defendant?

Analysis

The defendant’s website falls under section 2(w) definition of an intermediary. In some situations, Section 79 of the Information Technology Act offers safe harbour protection to intermediaries alone with regard to content supplied to or sold by third parties, such as Amazon, Flipkart.

The defendant made many points in their written statement, including the claim that they were unaware of the praise for Mr. Christian Louboutin. The Plaintiff and the Defendants have not interacted directly. They also stated that the deal was conducted legally.

The use of the brand’s trademarks on the website is a clear sign of an infringement, according to the plaintiff’s contentions. It was also illegal to use Mega tags that included brand names. Christian Louboutin’s usage of an article on the website plainly varies from the claim of lack of brand knowledge. It also draws attention to the numerous times the company and its founder have been mentioned in articles and pictures.

The court looked at the Google France SARL, Google Inc. v. Louis Vuitton Malletier SA & Ors.[ii] (hereinafter, ‘Google France’),

“the European Court, after reviewing the provisions of the EC Directive 89/104, Directive 2000/31 and Regulation 40/94 which stipulates the rights conferred by a trademark, considered the position of intermediaries. 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.”

“it is necessary to examine whether the role played by that CS (COMM) 344/2018 Page 17 of 59 service provider is neutral, in the sense that its conduct is merely technical, automatic and passive, pointing to a lack of knowledge or control of the data which it stores.”

[Image Sources : Shutterstock]

Trademark

The court looked at several decisions and came to the conclusion that the intermediaries’ knowledge of the violation causes the culpability to shift. In a court decision from India, MySpace Inc. v. Super Cassettes Industries Ltd.[iii], this was also declared. There was also discussion of the ideas of constructive knowledge and active knowledge. According to the ruling in the MySpace case, an intermediary does not require a court order to ban a product from utilising their intermediate service even if they are aware of the unlawful activity taking place on their website. It is possible to argue that actions taken even after having some knowledge of the violation constitute an acceptance of the violation committed by the third party, in which case the intermediary would be held accountable.

The Delhi High Court’s own ruling in the case of Kapil Wadhwa v. Samsung Electronics[iv] , which ruled that using meta-tags that include the names of other people’s brands would constitute infringement, was used in the discussion on meta-tags.

“Meta tags are links which are provided using keywords. If a trade
name is used as a keyword and a link is provided, the website comes up 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.”

The court ruled that darveys.com would unquestionably be held accountable even as an intermediary for conveying the illegally obtained products to the consumer. The 2011 IT (intermediaries’ guidelines) rules were also mentioned by the court. The court also emphasised that while the aforementioned intermediary principles are recommended, they should not be the only criteria used to ensure that intermediates receive the necessary protection.

Conclusion

A major decision on the responsibility of intermediaries in cases of trademark infringement may be found in the Christian Louboutin Sas vs. Nakul Bajaj & Ors. case. The court ruled that if the intermediary—in this case, the e-commerce platform—has real knowledge of the trademark-infringing action, it may be held accountable for it. The court further pointed out that once the intermediary gets a notification from the trademark owner, it becomes obligated to stop such infringement.

This case is noteworthy because it makes clear the function and accountability of intermediaries in stopping trademark infringement, particularly in the internet world where such conduct is prevalent. It emphasises the need of intermediaries taking proactive steps to make sure that their platforms are not being utilised for illegal operations.

In conclusion, the ruling in this case serves as a reminder to intermediaries that they must take necessary measures to prevent the sale of counterfeit goods on their platforms. It also emphasises how crucial it is for trademark owners to aggressively defend their intellectual property rights and take the necessary steps to alert third parties to any violations.

Author: Anish Jandial, A Student at Treasurer Centre for Study and Research in Intellectual Property Rights, NUSRL, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney.

[i] (2018) 253 DLT 728

[ii] C-236/08 Court of Justice of the European Union (Grand Chamber)

[iii] 236 (2017) DLT 478

[iv] 2013 (53) PTC 112 (Del.)

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