Counterfeiting and a Need for Redressal Mechanism in the E-commerce Landscape

8th April, 2024 - 11:29 am Categories: News & Updates 0 Comments

Introduction

A person committing counterfeiting in the criminal law context has been defined under Section 2 (4) of the Bhartiya Nyaya Sanhita, 2023[1] as, a person who causes one thing to resemble another thing, intending by means of that resemblance to practice deception, or knowing it to be likely that deception will thereby be practiced. In the understanding of special legislations, falsifying of trademarks is mentioned under Section 103 of the Trademarks Act, 1999[2] that provides punishment between 6 months to 3 years and fine between Rs. 50,000 and Rs. 2 lakhs upon first offenders. Under Section 105 of the Trademarks Act, 1999[3] upon second or subsequent convictions enhanced penalty will be applicable imprisonment not less than 1 year but maximum 3 years as well as fine not less than Rs. 1 lakh but maximum Rs. 2 lakhs. Section 22 of the Designs Act, 2002[4] provides civil remedy for piracy of registered designs. In terms of civil remedies several options are available including Anton Pilar Order, John Doe Order and Mareva Injunction. In spite of these legislations the e-commerce landscape is filled with counterfeit sellers. The paper seeks to analyse the judicial trends both nationally and through the global lens.

Judicial Trends in India

In the case of Aero Club v. M/s. Sahara Belts[5], Justice Pratibha M. Singh had cautioned against dangers of counterfeiting having potential to ruin market for genuine goods and starkly diminish the value a brand holds in the eyes of consumers. The damage caused due to counterfeiting was subsequently also highlighted in the case of Time Warner Inc. v. Lokesh Srivastava & Anr[6] where both compensatory as well as punitive damages were awarded.

In the landmark case of Super Cassettes Industries Ltd. v. Myspace Inc[7]., the court upheld that internet intermediaries have the responsibility to take down infringing content upon written notice by the aggrieved party. The case of Christian Louboutin v. Nakul Bajaj[8] provided understanding on the interplay between safe harbor that is granted under Section 79 of the Information Technology Act, 2000[9] and liability upon infringement stating in case any e-commerce platform abets or induces the infringement then the e-commerce platform cannot claim safe harbor and will be held liable. In the lines of this principle, the recent case of Puma Se v. Indiamart Intermesh Ltd.[10] also upheld the liability of e-commerce platforms in case it is proven that they played a role in abetting or inducing the infringement in any way.

Judicial Trends Globally

Indian jurisprudence has followed a similar pattern with respect to other jurisdictions. In USA, the case of Tiffany v. eBay[11] was prominent in carving out the extent of liability that intermediaries have. It was argued that e-commerce platforms ought to take active steps towards ensuring counterfeit products are not present on the online market place. However, it was held that any form of liability arises upon notification of infringing content to the marketplace. It may be noted that the expectation of proactive measures would can diminish the non-intervention nature of an intermediary on another hand it may also come within ambit of due diligence that is required to be undertaken by intermediaries. The French Courts formed a layered approach to the issue differentiating between binary roles of e-commerce platforms firstly as mere intermediaries facilitating between two parties and secondly as an active participant when indulging in advertising of its own platform.[12]

In contrast the case of UPC Telekabel v. Constantin Film[13] underlined need of proactive measures by e-commerce platforms against counterfeit goods being listed by various sellers directing that a filtering system be put in place to remove listings involving infringing content without affecting legitimate offerings. The case of L’Oréal v. eBay[14] shed light on the limits towards responsibility of intermediaries holding that intermediaries may only be asked to undertake fair and proportionate measures.

Recommendations

The author suggests establishment of internal ombudsman to handle any notifications regarding infringing content. Currently, there is a vacuum in terms of readily available and systematic redressal mechanism for the aggrieved party to approach the e-commerce platforms. Though the platforms have integrated the non-infringement clauses in their policies for the sellers there is a need for efficient system in addressing the problem of counterfeiting goods.

A case study that gains immense relevance in the discussion is the system adopted by Chinese company Alibaba in dealing with infringing content on its marketplace. Alibaba developed an algorithm that ensures that more than 97% of infringing content is taken down from the platform as soon as it listed. It also focused on speedy mechanism to deal with notifications with over 95% of notifications processed within 24 hours.[15]

Author: HONEY ACHARYA, 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.

[1] Section 2 (4), Bhartiya Nyaya Sanhita, 2023.

[2] Section 103, Trademarks Act, 1999.

[3] Section 105, Trademarks Act, 1999.

[4] Section 22, Designs Act, 2000.

[5] Aero Club v. M/s. Sahara Belts, CS(COMM) 189/2019.

[6] Time Warner Inc. v. Lokesh Srivastava & Anr., [2006]131COMPCAS198(DELHI).

[7] Super Cassettes Industries Ltd. v. Myspace Inc., FAO(OS) 540/2011.

[8] Christian Louboutin v. Nakul Bajaj, CS (COMM) 344/2018.

[9] Section 79, the Information Technology Act, 2000.

[10] Puma Se v. Indiamart Intermesh Ltd., CS(COMM) 607/2021.

[11] Tiffany (NJ) Inc. v. eBay Inc., No. 08-3947 (2d Cir. 2010).

[12] L’Oréal v. eBay, TGI Paris May 13, 2009 (Fr.).

[13] Case C-314/12, UPC Telekabel Wien GmbH v. Constantin Film Verleih GmbH, Mar. 27, 2014 (EU).

[14] Ibid.

[15] Jungong Sun (2018) Intellectual property and e-commerce: Alibaba’s perspective, WIPO. Available at: https://www.wipo.int/wipo_magazine/en/2018/si/article_0006.html.