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March 4, 2024

Court Case Bulletin (CCB): Intermediaries Can Be Made Liable For Infringement By Using A Trade Mark In The Course Of Trade

Author: Sucharitha Banda

In the matter of Puma Se v. Indiamart Intermesh Ltd. [2024/DHC/20], a Single Judge (Justice C. Hari Shankar) of the High Court of Delhi, vide judgment dated January 03, 2024, while rejecting the ‘safe harbour’ benefits to an intermediary platform, held that lack of a verification mechanism while registering sellers on the platform amounts to aiding sale of counterfeit goods and infringement.

Exemptions to an intermediary’s liability are provided under Section 79 (2) of the Information Technology (IT) Act, 2000, wherein Section 79(2)(b) and (c) prescribes that “the intermediary does not (i) initiate the transmission, (ii) select the receiver of the transmission, and (iii) select or modify the information contained in the transmission” and “the intermediary observes due diligence while discharging his duties” respectively. Further, Section 79(3)(a) provides that the exemption does not apply if “the intermediary has conspired or abetted or aided or induced …in the commission of the unlawful act”. The issue was whether the exemption from liability is available to an intermediary platform who is not verifying the sellers while registering them.

Plaintiff contended that hidden use of the Plaintiff’s registered mark by the defendant amounts to infringement, especially when the Defendant is using the mark in the course of its trade and making gains out of such use. The Plaintiff further contented that by not verifying sellers, the Defendant platform is aiding and abetting infringement and passing off.

Defendant sought exemption under Section 79(2) of the IT Act, and contented that infringement takes place at the hands of the user selling counterfeit products and not the intermediary itself. Defendant submitted that providing a drop-down option of registered trademarks to the sellers for listing their goods is a backend operation and does not qualify as infringement of the marks provided in the drop-down.

The Court, while rejecting the defense, held that “allowing the prospective seller to register themselves without any prior verification, it can prima facie be said that IIL has aided commission of the unlawful act of counterfeiting, using its platform as a springboard for the purpose. Aiding is a step before abetting… providing of “Puma shoes” as a drop down option to the prospective seller prima facie aids the seller in his counterfeiting design” The Court further held that “mere incorporation, in its terms and conditions of use, or the requirement of an undertaking being required to be given by the prospective seller that he would not be infringing any intellectual property right of third party, is hardly due diligence.

Disclaimer: Views, opinions, interpretations are solely those of the author, not of the firm (ALG India Law Offices LLP) nor reflective thereof. Author submissions are not checked for plagiarism or any other aspect before being posted.

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