Marketplaces cannot seek refuge under Section 79 of the IT Act 2000, say experts
Online websites may now have to check the authenticity and trademark registration of the products they sell. This emerged in a recent case filed by Metro Shoes in the Bombay High Court against few online marketplaces run by companies including Reliance Retail, India Mart and Just Dial.
Metro Shoes, one of the oldest footwear brands in Mumbai, had approached the HC against footwear manufacturers who were selling their products on several websites with a brand name that resembled the ‘Metro’ trademark. The HC held that goods being sold by suppliers with a trade mark similar to ‘Metro’ were fake following which the Websites agreed to take them down. Also, the websites were made to donate to charity organisations as a remedial measure for their ignorance.
“The Metro Shoes case shows that the online market place or platforms can no longer always hide behind the veil of Section 79 of the Information Technology Act 2000, which states that intermediaries cannot be held liable for third party information, data or communication links. They will have to check authenticity of products as well as trademark registration or face strictures in future,” said Avesh Kayser, senior counsel for Metro Shoes.
Reliance Brands, which has a long-term licensing agreement with Nasdaq-listed footwear and accessories firm Steven Madden was using “Metro” brand as part of some products. After the case was filed in the Bombay HC, both Reliance Retail and Reliance Brands undertook to pay total cost of ₹10 lakh to Fellowship of the Physically Handicapped.
Similarly, Metro Shoes told the HC that Shoe Station and Foothold Shoes had infringed on its trademarks and were selling goods under the brand name ‘Metrox.’ The HC held the goods being sold by Shoe Station and Foothold Shoes were counterfeit following which the entities involved in selling such products online (through Just Dial and IndiaMart) agreed to pay ₹15 lakh to the Society for Rehabilitation of Crippled Children and remove the goods from their platform. .
In another case involving Christian Louboutin Sas Vs. Nakul Bajaj and others, the Delhi HC had recently clarified that an e-commerce platform cannot claim to be just an intermediary under Section 79 of the IT Act, if it has played an active role in enabling the violation.
In these cases, the High Courts observed that websites are precluded from the safe harbour offered by Section 79 as they identify, promote third parties to sell their products on their sites and therefore have full control over the products being sold on their platform, Kayser said.
If online retailers and marketplaces neglect to watch ‘due diligence’ concerning IPR, it could add up to ‘planning, supporting, abetting or inciting’ unlawful activities and hence they cannot seek refuge under Section 79, experts said.