Digital Dilemmas: Trademark Protection and Liability in India’s Online Market
Overview of Well-known Trade Marks:
Section 2(1)(zg) of the Trade Marks Act, 1999 defines “well known trade mark”, in relation to any goods or services as a mark which has become so to the substantial segment of the public which uses such goods or receives that the use of such mark in relation to other goods or services would be likely to be taken as indicating a connection in the course of trade or rendering of services between those goods or services and a person using the mark in relation to the first-mentioned goods or services.” These trade marks play a crucial role in brand protection, ensuring that consumers can identify the source of goods and services, thereby maintaining brand integrity and reputation.
Intersection of E-commerce Platforms and Intellectual Property Rights:
India's e-commerce landscape has undergone a remarkable transformation, driven by increased internet penetration and the rise of social e-commerce platforms such as Meesho, Shopsy etc. This growth is fueled by a notable shift in consumer preferences towards online shopping, creating immense opportunities for brands to engage directly with consumers through social media platforms . Social commerce platforms integrate shopping features within social networks, enhancing user engagement and leveraging influencer marketing and user-generated content to drive sales . However, this rapid expansion also brings challenges, particularly regarding trademark protection. Online marketplaces can become breeding grounds for counterfeit goods and trademark infringements, which undermine brand integrity and consumer trust. As the number of social media users in India approaches 862 million, brands must navigate the complexities of protecting their intellectual property rights in this fast-evolving digital marketplace.
E-Commerce Landscape and Information Technology Act, 2000
The IT Act serves as a landmark legal framework that propels and regulates the governance of intermediary liability in India, particularly as the e-commerce and social media sectors continue to expand at a rapid speed.
In order to understand the scope of the Intermediary liability, it is pertinent to understand what entails an ‘Intermediary’ under the IT Act. The IT Act defines ‘Intermediary/Intermediaries’ , as entities that facilitate the transmission of information or provide services related to user-generated content. This broad category includes various platforms such as telecom service providers, internet service providers, search engines, web-hosting services, online marketplaces, and social media networks. It is important to note that the determination of an ‘Intermediary’ is not a black/white point of legal determination but rather a grey area wherein the legal jurisprudence is still evolving.
Although, the IT Act outlines the legal liabilities of an Intermediary, the same also provides an exception to the broader categorization of what classifies as an act of ‘Intermediary’. Section 79 of the IT Act, 2000 provides an exception to the liability of an intermediary under the ‘Safe Harbor Provisions.’ These provisions protect intermediaries from liability for third-party content under certain conditions. Thus, the intermediaries are shielded from legal repercussions if they do not initiate the transmission of content, do not select the recipient of the transmission, do not modify the information contained in the transmission, and adhere to due diligence requirements set forth by the Central Government . This framework is designed to foster an open internet while balancing the need to protect Intellectual Property Rights.
To maintain the balance of scales, the Act stipulates the provision i.e., "Notice and Takedown" under this section. The said proviso requires intermediaries to act promptly to remove infringing material once they have actual knowledge of it. However, the interpretation of "Actual knowledge " while determining the “intermediary” liability has evolved through judicial scrutiny. Section 79(3)(b) of the Information Technology Act, 2000 stipulates that “upon receiving actual knowledge, or on being notified by the appropriate Government or its agency that any information, data or communication link residing in or connected to a computer resource controlled by the intermediary is being used to commit the unlawful act, the intermediary fails to expeditiously remove or disable access to that material on that resource without vitiating the evidence in any manner.” Thus, it is pertinent to establish the issuance of an ‘actual notice’ in order for the safe harbour provision to apply.
A takedown notice serves as a formal request directed at internet service providers (ISPs) or online platforms to remove content that infringes on the copyright of a creator or owner. This mechanism is crucial in protecting intellectual property rights in an era where digital content can be easily copied and disseminated.
Historically, India lacked a comprehensive framework akin to the Digital Millennium Copyright Act (DMCA) in the United States, which provides clear guidelines for takedown notices and establishes safe harbors for ISPs. However, due to increasing instances of Intellectual Property rights infringement, Indian law has adapted to include provisions that empower copyright holders to take swift action against unauthorized use of their works.
A valid takedown notice must contain several essential elements to be effective. These include:
- A description of the copyrighted work that has been infringed.
- Proof of ownership or exclusive rights to the work.
- Identification of the infringing content and its location on the intermediary’s platform.
- Contact information for the copyright owner or their representative.
- A statement affirming that the notice is made in good faith and that the information provided is accurate.
If any of these components are missing, intermediaries have the right to refuse compliance with the takedown request . Upon receiving a valid notice, intermediaries are required to act within 36 hours to remove or disable access to the infringing content and must take steps to prevent further access for a period of 21 days, unless a court order dictates otherwise.
Judicial interpretations have further clarified the responsibilities of intermediaries in relation to takedown notices. In ‘MySpace Inc. v. Super Cassettes Industries Ltd. ’, the Delhi High Court ruled that intermediaries must act promptly upon gaining actual knowledge of copyright infringement. The court emphasized that failure to comply with a takedown notice could result in liability for hosting infringing material. This case underscored the importance of self-regulation among online platforms and reinforced their obligation to respect copyright laws.
Recent court rulings suggest that intermediaries may be held liable if they fail to act upon receiving a court order to remove infringing content, thereby emphasizing the need for vigilance in monitoring user-generated material.
Challenges for and by E-Commerce Platforms:
E-commerce platforms primarily act as intermediaries by connecting buyers and sellers. In doing so, it is unavoidable to be confronted with legal and regulatory implications. While these platforms generally benefit from safe harbor protections, courts have increasingly scrutinized their roles when they appear to engage actively in transactions. This scrutiny arises from concerns that e-commerce platforms serve a "Gatekeeper" function and cannot entirely disclaim liability for the actions of vendors or service providers listed on their sites.
The prevalence of trademark infringement in e-commerce has become a pressing concern for brands globally, significantly impacting brand integrity and consumer trust. Recent studies indicate that approximately 20-30% of products sold on major e-commerce platforms may be counterfeit, highlighting the scale of the issue . This alarming trend underscores the urgent need for robust trademark protection strategies as businesses increasingly rely on digital marketplaces for growth.
The anonymity provided by online platforms allows unscrupulous sellers to create listings that mimic legitimate brands, resulting in consumer confusion and dilution of brand value. Major brands like Apple and Nike have faced significant challenges with counterfeit goods on platforms such as Amazon and Alibaba, prompting them to invest heavily in monitoring and enforcement efforts.
The legal landscape surrounding trademark protection in e-commerce is complex and evolving. E-commerce platforms often operate under safe harbor provisions that limit their liability for user-generated content, complicating enforcement actions against infringers. Courts are increasingly scrutinizing these platforms responsible for selling counterfeit products; reinforcing the obligation of e-commerce platforms to take proactive measures to confirm seller information and prevent the sale of infringing products.
Furthermore, businesses face increased costs associated with monitoring and enforcement efforts to protect their trademarks online. The necessity for specialized services or legal counsel adds financial strain, particularly when dealing with international infringers who may be difficult to identify or pursue legally due to jurisdictional challenges. Thus, as e-commerce continues to expand, the challenges associated with trademark infringement will likely grow more pronounced.
Legal Implications- A broader picture
Several landmark judicial precedents have significantly shaped the understanding and enforcement of well-known trade marks in India, emphasizing the evolving interpretation of intermediary liability, particularly in the context of e-commerce platforms. In the case of, ‘Sunder Parmanand Lalwani v. Caltex India Ltd. ’, the Bombay High Court established protection against deceptive similarity, reinforcing the idea that well-known trade marks must be safeguarded from misuse in unrelated sectors. This case is particularly relevant for intermediaries, as it highlights the need for vigilance in monitoring the use of trade marks on their platforms to prevent consumer confusion. Similarly, in ‘Rolex SA v. Alex Jewellery Pvt. Ltd. ’, the Delhi High Court underscored the significance of transborder reputation, ruling that a trademark's recognition in international markets could extend its protection within India. This precedent illustrates how e-commerce platforms must consider the global reputation of brands they host to mitigate liability risks associated with trademark infringement.
The ‘Whirlpool Corporation v. N.R. Dongre ’ case is a landmark judgment, molding the jurisprudence for the recognition of transborder reputation within India, acknowledging that extensive international advertising can create a well-known status even without local operations. This understanding is crucial for intermediaries, as it implies that they may be held accountable if they do not take action against vendors using well-known trade marks without authorization. Additionally, ‘Daimler Benz Aktiegesellschaft v. Hybo Hindustan ’ focused on injunctions based on well-known status, reinforcing the notion that courts will protect established brands from dilution or misuse across different product categories. Collectively, these cases illustrate how courts interpret the roles of intermediaries—whether active or passive—in trademark disputes and highlight the importance for e-commerce platforms to implement robust compliance mechanisms to navigate these legal complexities effectively while protecting intellectual property rights in an increasingly competitive digital marketplace.
The digital landscape presents numerous challenges for protecting well-known trade marks, particularly as e-commerce platforms and social media become central to commercial activity. One of the primary issues is the proliferation of counterfeit goods on these platforms, which undermines brand integrity and can lead to significant financial losses for trademark owners. As unauthorized sellers exploit the vast reach of e-commerce, they can easily distribute counterfeit products to a global audience, diluting the value of established trade marks and posing potential health and safety risks to consumers. Additionally, social media facilitates trademark infringement through unauthorized promotions and passing off, where individuals or entities misrepresent their goods or services as being affiliated with well-known brands. This unauthorized use can occur rapidly and without adequate oversight, making it challenging for trademark owners to monitor and enforce their rights effectively.
The case of ‘PUMA SE v. IndiaMART Intermesh Limited ’ revolved around trademark infringement and the responsibilities of e-commerce platforms in safeguarding intellectual property rights. The Delhi High Court addressed the issue after PUMA SE, a well-known sportswear brand, alleged that IndiaMART was facilitating the sale of counterfeit PUMA products by including the brand name in its dropdown menu for prospective sellers. This feature allowed sellers to list products under the PUMA brand without adequate verification, leading to claims that India MART was actively aiding and abetting trademark infringement. The Court examined several key issues, including whether the inclusion of PUMA’s trademark in the dropdown menu constituted "use" under Section 29 of the Trademarks Act, 1999, and whether India MART could claim safe harbor protection under Section 79 of the Information Technology Act, 2000. The Court determined that the dropdown menu's functionality did indeed represent a use of the trademark, as it visually indicated a connection between the sellers’ goods and PUMA. Furthermore, the Court observed that IndiaMART's role extended beyond merely providing a platform; it actively promoted the use of trademarks by suggesting options to sellers. This active involvement negated its claims for safe harbor protection, as it failed to exercise due diligence in verifying sellers and preventing counterfeit listings. Thus, the ruling established a clear precedent regarding the responsibilities of intermediaries in e-commerce and highlighted the necessity for such platforms to ensure effective implementation of proper mechanisms to prevent trademark infringement and protect intellectual property rights effectively.
In the case of ‘Akash Agarwal v. Flipkart Internet Private Limited ’ the Delhi High Court addressed significant issues regarding trademark infringement and the practice of "latching on" by e-commerce platforms. The plaintiff, Akash Agarwal, who operated under the mark ‘V TRADITION’ for women's clothing, sought injunctive relief against Flipkart and various third-party sellers for allegedly allowing unauthorized sellers to use his brand name and product images in their listings. The issue arose from Flipkart's feature that enables sellers to add popular products from other sellers to their own listings, effectively allowing them to "latch on" to established brands without consent. This practice led to third-party sellers misrepresenting their products as those of ‘V TRADITION,’ causing confusion among consumers. The Court found that this "latching on" practice constituted passing off, as it unfairly exploited the goodwill associated with Agarwal's brand. It emphasized that such actions could not be permitted without the brand owner's consent, as they undermine the integrity of trademark rights. Consequently, the Court ordered Flipkart to disable this feature for ‘V TRADITION’ and granted an injunction against both Flipkart and the identified third-party sellers. This ruling underscore the evolving landscape of intellectual property rights in e-commerce, highlighting the responsibility of platforms like Flipkart to prevent trademark infringement and protect brand owners from unfair competition. The decision reflects a growing judicial recognition of the complexities surrounding IP rights in digital marketplaces and reinforces the need for e-commerce platforms to adopt best practices to mitigate online infringement risks.
In the matter of, ‘Zed Lifestyle Pvt Ltd. v. Hardik Mukeshbhai Pansheriya and Ors ’, the crux of the dispute involved the adoption and the consequent act of passing off goods under a deceptively similar mark ‘BREADO’ by the defendants. The plaintiff’s products under the mark ‘BEARDO’ were also available on the e-commerce platform i.e., ‘Amazon’. The plaintiff, thus contended that e-commerce platforms should be held liable and thereby must be directed to remove the goods available under the infringing mark from its website. The High Court, taking into consideration the facts and circumstances of the case, and placing reliance on notable statutory provisions as discussed above, held that the Defendants' actions were misleading and detrimental to the reputation of the Plaintiffs' trademark. In furtherance, it directed the third-party e-commerce platforms such as Amazon to remove all listings associated with “BREADO” from its platform, reinforcing the obligation and liabilities of intermediaries to take responsibility for content uploaded on their sites. The Court further observed that the intermediaries must actively monitor their platforms to prevent unauthorized use of trademarks. The Court went on to reject Amazon’s contention i.e., that the defendant merely provided a venue for transactions and thus, should not be held accountable. The Court held that in order for the e-commerce platform to be recused of any liability and take the defence under Section 79 of the Act, it is important to establish that the platform did not in any way promote the infringing goods under the infringing mark. Thus, the instant case aptly highlights the intersection between intermediary liability and trademark protection in the digital age. As e-commerce continues to grow, platforms must navigate their responsibilities carefully to foster fair competition while protecting intellectual property rights. This ruling serves as a reminder that intermediaries play a critical role in safeguarding trademarks and must take proactive measures to prevent infringement on their platforms. This analysis draws upon various legal interpretations and precedents concerning intermediary liability and trademark law in India, particularly focusing on recent judicial decisions that shape this evolving landscape.
Thus, in view of the above, it is pertinent to undertake stringent and strategic trademark enforcement action against unknown or foreign infringers. This includes registering trade marks with appropriate authorities, diligently monitoring their use online, and taking swift action against infringements through cease-and-desist letters or takedown requests on e-commerce platforms and social media sites.
Strategies to safeguard Trade Marks in the digital landscape:
To effectively safeguard trade marks, especially well-known trade marks in the digital landscape, businesses can adopt several best practices that enhance brand management and protection. Proactive steps that can be undertaken by a business are:
- Implementation of a proactive monitoring system to detect potential infringements across various online platforms, including e-commerce sites and social media. By utilizing advanced tracking tools, companies can consistently monitor their brand presence and swiftly identify unauthorized use of their trade marks, logos, or content.
- Engaging in active enforcement strategies against counterfeiters is crucial; this includes sending cease-and-desist letters to infringers and submitting takedown requests on platforms hosting infringing content. Such actions not only protect the brand's integrity but also deter future violations.
- Leveraging legal frameworks effectively is essential for combating online infringements. Businesses should ensure that their trade marks are registered with appropriate authorities, as this legal backing strengthens their position in disputes and facilitates swift action against violators.
By implementing these strategies, businesses can better navigate the complexities of trademark protection in the digital marketplace, safeguarding their brand integrity while effectively addressing the challenges posed by online infringement.
Conclusion:
In conclusion, the digital landscape poses significant challenges for trademark protection, particularly for e-commerce platforms vulnerable to counterfeit goods and unauthorized use. To safeguard trade marks effectively, businesses must adopt a comprehensive strategy that includes proactive monitoring, active enforcement, and the integration of technology. Leveraging technologies like artificial intelligence for real-time monitoring and blockchain for secure ownership tracking can further enhance protection against counterfeiting. Moving forward, businesses should develop a comprehensive brand protection plan that integrates these strategies, engage with e-commerce platforms to combat counterfeiting collaboratively, regularly review their trademark portfolios, and foster partnerships with legal experts and industry stakeholders. By taking these proactive measures, companies can navigate the complexities of trademark protection in the digital marketplace, maintain consumer trust, and uphold their intellectual property rights effectively.
References:
August 07, 2024, India's e-lifestyle market to triple by 2028, reach $45 billion in value, Business Standard, https://www.business-standard.com/industry/news/india-s-e-lifestyle-market-to-triple-by-2028-reach-45-billion-in-value-124080700426_1.html.
ibid.
May 23, 2024, India Ecommerce Business and Investment Report 2024-2028 Featuring Amazon, Coles, Kmart, Myer, Woolworths, Expedia, Lux, Shebah, Uber, Webjet, Deliveroo, Doordash, Menulog, OpenTable, Globe Newswire. https://www.globenewswire.com/news-release/2024/05/23/2887199/28124/en/India-Ecommerce-Business-and-Investment-Report-2024-2028-Featuring-Amazon-Coles-Kmart-Myer-Woolworths-Expedia-Lux-Shebah-Uber-Webjet-Deliveroo-Doordash-Menulog-OpenTable.html
Section 2(w), Information Technology Act, 2000.
Aditi Verma Thakur And Anju Srinivasan, Safe Harbour Immunity For Internet Intermediaries And Ip Violations: Where We Stand Today And The Way Forward?, Journal Of Intellectual Property Studies;
May, 2020, Reform of the EU liability regime for online intermediaries, European Parliamentary Research Service.
https://www.europarl.europa.eu/RegData/etudes/IDAN/2020/649404/EPRS_IDA(2020)649404_EN.pdf.
Indranath Gupta & Lakshmi Srinivasan (2023): Evolving scope of intermediary liability in India, International Review of Law, Computers & Technology, DOI: 10.1080/13600869.2022.2164838
https://www.ipandlegalfilings.com/takedown-services-under-copyright-law/
Ibid
Ibid
FAO(OS) 540/2011, C.M. APPL.20174/2011, 13919 & 17996/2015
https://www.cbc.ca/news/business/marketplace-counterfeits-fakes-online-shopping-1.5470639
70 BOM LR 37.
(2009 (41) PTC 284 (Del)
(1996) 5 SCC 714
AIR 1994 DELHI 239
CS(COMM) 607/2021
CS(COMM) 492/2022
CS(COMM) 207/2021
That's interesting information. And even more interesting is that you can now sell your trademark on https://agent.biz/trademark-for-sale/