1 June 2017Jurisdiction reportsDisha Dewan

Online infringement: the role of intermediaries

In a decision released on February 22, 2017, the Delhi High Court issued a ruling on the role of e-commerce intermediaries in removing IP infringing products.

Plaintiffs Kent RO Systems and its chairman Mahesh Gupta sued Amit Kotak (defendant one) claiming a permanent injunction, damages and account of profits for infringement of its water purifiers designs, for which they hold numerous design registrations for their aesthetic features.

Defendant one agreed to stop marketing and selling the plaintiffs’ products on online selling platform eBay and requested that the plaintiffs give up their claim to damages and account of profits, to which the plaintiffs agreed and the matter was settled. The parties were required to bear their own costs.

The plaintiffs also brought suit against eBay India (defendant two) claiming account of profits and recovery of damages in addition to an injunction. This was for aiding and abetting design infringement by defendant one and others under the Information Technology Act, 2000, (which lists the circumstances in which exemptions from liability cannot be used by the intermediary).

They claimed that by permitting defendant one to advertise, offer for sale or sell its water purifiers through the online portal, this amounted to piracy of the plaintiffs’ rights.

In the first hearing in December 2016, the plaintiffs informed the court that they had notified eBay of infringing products and that in its response eBay stated it had removed all the products complained of and undertook to continue removing all infringing products complained of by the plaintiffs in the future.

However, here the plaintiffs contemplated a twofold problem:

1)
They had found a large number of infringing products were still being offered for sale/sold on the platform which defendant two had not taken any steps to remove. The plaintiffs showed that out of 100 such infringing products, only 16 had been removed. The court therefore directed eBay to block access to the URLs from which the infringing products were claimed to be sold and also directed eBay to provide the list of the 16 sellers/manufacturers to the plaintiffs to take legal action against.

2)
Once the plaintiffs had lodged a complaint about an offending product with the intermediary, it was the responsibility of the intermediary to actively verify whether any IP was being infringed before hosting any product on any other URL. The plaintiffs contended that it was easy for the intermediary to devise programmes/mechanisms for such inspection in order to carry out the due diligence required to be observed under section 3 of the Information Technology (Intermediaries Guidelines) Rules 2011. This was the ‘bigger issue at hand’.

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