Online infringement: the role of intermediaries

01-06-2017

Disha Dewan

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.

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’.

"The court clarified that, before hosting, an intermediary could not be expected to screen all information in order to check for rights violation concerning complaints previously received."

eBay’s defence relied on section 79 of the IT Act, 2000, which provides that an intermediary 1) shall not be liable for any third-party information, data, or communication link made available or hosted by it as long as 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; and 2) does not initiate the transmission, select the receiver of the transmission or modify the information contained in the transmission.

 The court’s observations

The court noted that eBay had abided by prescribed duties of intermediaries 1) to publish its rules and regulations, privacy policy and user agreement; 2) to inform its users not to host, display, upload, modify, publish or transmit, update or share any information that infringes any patent, trademark, copyright or other proprietary rights; and 3) on receipt of a complaint to remove infringement within 36 hours.

As eBay did not ignore the information given by the plaintiffs about infringing products on its website, the court issued no directions to defendant two and the suit was disposed of.

The court clarified that, before hosting, an intermediary could not be expected to screen all information in order to check for rights violation concerning complaints previously received and that such levels of vigilance would lead to a hindrance on the business of the intermediary.

Furthermore, to hold that an intermediary, before posting any information on its computer resources is required to satisfy itself that something does not infringe the IP rights of any person, would amount to converting the intermediary into a body to determine whether there is any infringement of IP rights. An intermediary could not be expected to take on such an adjudicatory role.

The court therefore held that merely because an intermediary has been obliged under the IT Rules to remove infringing content on receipt of complaint, it cannot be read as being required to detect infringing content.

Disha Dewan is a patent attorney at R K Dewan. She can be contacted at: disha@rkdewanmail.com

 

R K Dewan, Disha Dewan , Online, infringement, Mahesh Gupta

WIPR