Trademark Enforcement In E-Market : Challenges In Identifying The Infringer And Holding Them Accountable

Introduction:

India has experienced a meteoric rise in recent years in both online marketplaces and e-commerce. E-commerce platforms have produced new kinds of purchasing experiences for customers by combining the forces of technology, competitive price offerings, exciting deals, and quick delivery. As a result, the number of online marketplaces created domestically or internationally has significantly increased in India. But as e-commerce platforms have grown, the threat of counterfeiting has grown significantly. The issue of counterfeiting not only compromises a brand’s reputation or brand value, but also puts consumer safety at risk by allowing the sale and uninformed purchase of sub-standard goods. These E-commerce platforms make it simple to access consumer goods from a computer or smart phone, but they also, by their very nature, make it simple for counterfeiters to market their counterfeit goods.

Businesses may find it challenging to enforce trademark rights in online marketplaces because it can be challenging to locate infringers and hold them accountable. In addition, well-known online stores like Amazon are frequently used as a platform for the sale of counterfeit goods, which has prompted concerns about their accountability and liability in trademark infringement cases. Effective trademark enforcement is essential in this situation for protecting the goodwill and financial interests of legitimate businesses. This research paper will explore the challenges involved in trademark enforcement in online marketplaces and examine the various legal and practical approaches that can be employed to combat trademark infringement in the digital age.

Blog:

There has been boom in the global economy and one of its major reason is the ease in the accessibility of the online marketplaces which is a direct result of widely used internet services. In the Indian economy online marketplaces like – Flipkart, Amazon, Myntra, etc has grown exponentially. This growth in the E-commerce market in our country has helped in the entire economy growth with its compound annual growth rate (CAGR) of over 53%. In the year 2017 the market value of the E-commerce was $38.5 billion and currently it has been rising rapidly as, it is expected to grow to $200 billion by 2026[1].

[Image Sources: Shutterstock]

Amid this growth, the issue of trademark infringement is faced by the trademark owners in online marketplaces. Online marketplaces provide the platform for the third party to engage in the activity of selling their goods/products, which gives rise to the unauthorized use of trademark which is one of the common forms of trademark infringement. For instance, the use of similar marks, logo, and symbol of a brand by an unauthorized third party which can create confusion in the minds of buyers. Another form of trademark infringement would be counterfeiting, where the third party manufacture, produce and sell the type of goods/products which are almost similar to the original trademark product.

Liability of Online Marketplace and third-party infringers in trademark infringement

In India, the Trademarks Act, 1999 and the Information Technology Act of 2000 largely regulates the liability of online marketplaces and third-party infringers in cases of trademark infringement. The following are the factors to take into account while analyzing an online marketplace’s and third-party infringer’s responsibility and liability for trademark infringement in India.

Liability of Online Marketplace

Under the Information Technology Act, online marketplaces like Amazon, Flipkart, and others are regarded as intermediaries[2]. Intermediaries are defined by the Information Technology Act’s Section 2(w)[3] as “entities that assist with online transactions and communication”. Under Section 79 of the Information Technology Act, intermediaries are generally protected from liability for content belonging to third parties, as long as they do not fulfill specific requirements. Also, Online marketplaces that do not actively engage in the sale of goods or manage product listings, rather they only offer an opportunity for sellers to list their goods, are regarded as intermediates and may be eligible for protection under the same Section.

The online marketplaces can be held liable only when the trademark owners take certain steps. As resonating the definition of the word “Sell” the online marketplaces act as an intermediate between the original sellers (trademark owners) and the buyers. The online marketplaces do not precisely title the products sold. Further, they don’t directly purchase the goods/products directly frojm the manufacturers or stipulated distributers.

Liability of the Third-party

As per the Trademarks Act, 1999, individuals who utilize another party’s trademark without their consent may face immediate legal consequences for trademark infringement. Trademark owners are entitled to take legal actions under the same against third-party, the infringers who use their trademark in a way that is likely to mislead or confuse the public. And in those situations, Third-party infringers can be held liable, and will have to pay penalties, including injunctions, damages, and legal fees, depends upon what the Court decided, depending on the facts of the case.

However, through various Judgements the Courts in India have reached to a conclusion that the online marketplaces can be held liable for the trademark infringement through their platforms, only when they have the actual knowledge of such trademark infringement. This liability has been the subject of several legal disputes in India. In Christian Louboutin SAS v. Nakul Bajaj & Ors.[4] In the given decision of High Court of Delhi, solution was put up that if there is any violation in online intermediaries then responsibilities will be applied.[5] This particular decision comprehensively explained about working of intermediary liability in regards to violation of trademarks under India laws. The defendant was “Darveys.com”, it was a “luxury brand marketplace”[6]. In this the plaintiff contended trademark violation against the defendant, by selling counterfeited goods. The defendant argued that the the goods sold were genuine and there was no infringement on his part as it was just a intermediary and was entitles to be protected by “Self Harbor” i.e the provision of Section 79 of IT Act, 2000[7], In the mentioned matter, High court of Delhi observed ‘Intermediary’ in accordance to Section 2(w) of IT Act and also considered intermediary positions in EU, the US and in India. Inthis the Court decided that the defendant was more than an Intermediary and had the complete control over the product sold.

The intermediaries can be disqualified from the safe harbor exemption if they fail to exercise “due diligence” with consonance of intellectual rights. Section 79(3)(a) of IT Act 2000 states that the failure of the same which includes abetting, aiding, inciting, promoting and conducting unlawful business would exempt them from any safeguarding rights. Further it is mandatory for the intermediaries to make it sellers upload the warranties and guarantees of the plaintiff and it should also make sure that any meta-tags that contains plaintiff’s mark should be removed.

In another landmark judgement of L’Oreal & Ors v. Brandworld & Ors.[8], the Delhi High court held that online marketplaces, including Amazon and Flipkart, can be held liable for trademark infringement if they fail to take appropriate action to stop the sale of counterfeited products on their platforms. The court held that online marketplaces have a duty to ensure that their platforms are not used for the sale of counterfeit products and that they must take proactive steps to prevent such sales.

Suggestions and Recommendations to the existing Indian Laws with respect to such Infringements

The growth of online marketplaces has made it easier for third-party sellers to infringe on trademarks, which can damage the reputation of the trademark owner. The Indian laws need to be updated to provide better protection to trademark owners in online marketplaces. Here are some suggestions and recommendations for improvement in the enforcement of protection of trademarks in online marketplaces in India.

Firstly, the basic step towards protecting trademarks in online marketplaces is to register them with the Trademark Registry. The registration of trademarks provides legal protection and remedies in case of infringement. The registration process needs to be simplified and made more accessible to small businesses and entrepreneurs who are unable to afford the high costs of trademark registration. Generally, the online marketplaces provide opportunities to many small scale businesses to operate on their platform, and these businesses may face such infringement issues, if they are not registered with their trademark.

Secondly, The Indian laws need to be updated to provide for online enforcement of trademarks. The current laws are primarily designed for offline infringement, and online infringement is not adequately addressed. The laws need to be updated to provide for online enforcement, such as the takedown of infringing content and blocking access to infringing websites. Recently, with new E-Commerce Protection rules of 2020, there has been some progress in the regulation of the activities of these E-Commerce websites[9].

Thirdly, on line of judgements by the US and European courts, The Indian courts have developed the concept of “intermediary liability” in cases of online infringement. This means that intermediaries, such as online marketplaces, can be held liable for the infringement committed by their users if they have knowledge of the infringing activity and fail to take down the infringing content. However, these laws are not clear and settled in India. The Indian laws need to be updated to provide clarity on intermediary liability and to ensure that online marketplaces take proactive measures to prevent trademark infringement on their platforms.

Lastly, the government needs to collaborate with the e-commerce industry to develop effective measures to prevent trademark infringement in online marketplaces. The industry can provide insights into the challenges faced by trademark owners and the methods used by infringers. The government can use this information to develop effective policies and laws to protect trademarks in online marketplaces.

Author:  Shruti Sinha,  A Student at NUSRL, Ranchi, in case of any queries please contact/write back to us at support@ipandlegalfilings.com or IP & Legal Filing

[1] India’s GDP Compund Annual Growth Rate (2022) Report, World Economics.

[2] Defines ‘Intermediaries’, Oxford Dictionary.

[3] Section 2(1)(ua)(w), The Information Technology Act, 2000.

[4] [Civil Suit No. 344/2018].

[5]Christian Louboutin SAS v. Nakul Bajaj &Ors, [Civil Suit No. 344/2018].

[6]Christian Louboutin SAS v Nakul Bajaj &Ors, [Civil Suit No. 344/2018].

[7] Section 79, IT Act, 2000, ibid., for Chapter XII (w.e.f. 27-10-2009).

[8] (CS (COMM) 980/2016.

[9] Draft Amendments to the Consumer Protection (E-Commerce) Rules, 2020.