New Updates

We all know that biscuits and a hot cup of chai go hand in hand. Incidentally, these two items form the very crux of the present dispute. Today Tea Limited (Plaintiff) is engaged in the business of selling tea under the mark “TODAY” as against Today Foods Pvt. Ltd. (Defendant) who sells biscuits, also under the same mark. The Plaintiff filed a suit for infringement of their mark “TODAY” contending that the mark is well-known and usage of the same dates back to January 1994. The Plaintiff commenced its business under the name Broker Tea Company which was subsequently changed to Today Tea Limited in the year 2002. The Plaintiff is the registered proprietor of the said mark bearing application nos. 630093 and 1256057 under class 30 and has put the mark to continuous use since its year of adoption.

The Defendant claimed to have been selling glucose and crunch cream elaichi biscuits under the same mark since the year 1997. It was further contended by the Defendant that the size of their business is of a small scale nature that has been maliciously thwarted by the Plaintiff and also pleaded the cancellation of the Plaintiff’s registrations in respect of the mark “TODAY”.

Upon a perusal of the evidence placed before the Hon’ble Delhi High Court in the form of testimonies and documents, the Court was of the opinion that the evidences led by the Plaintiff were credible whereas the Defendant was unable to prove their usage of the mark. In order to decide whether the sale of biscuits by the Defendant would constitute passing off, the Court examined the nature of the goods dealt by both the parties to the dispute. It cannot be denied that tea and biscuits are allied goods, their nature similar to shoe-polish, tooth paste-tooth brush and so on. With that being said, the Plaintiff was able to establish their user claim through the submission of documentary proofs and is thus the rightful owner of the exclusive rights pertaining to the mark “TODAY”. The usage of an identical mark by the Defendant in the market would cause deception and confusion with regard to the origin of the products in the minds of the consumers since the products are very often consumed together. The consumers may also mistakenly deduce a connection between the Plaintiff and the Defendant. More often that not, even the supermarkets arrange and stack the products based on their allied nature in such a way that a gullible consumer cannot walk away without adding the products to the shopping cart. Since the likelihood of passing off seemed inevitable, the Court awarded damages to the Plaintiff along-with an order of injunction restraining the Defendant from using the mark “TODAY” in respect of biscuits.

Delhi is a city that is famously known for its food. Be it the Karim’s Kebabs, Khallan’s Lassi, Biriyani houses or Bhavans. You name it, the city has it all! A dispute arose among two food outlets in Paharganj that sell naan among other food items. The Plaintiff to the suit, Parveen Kumar Jain, claimed exclusive rights over the expression “Chur Chur Naan” as against the Defendants, Rajan Seth and Ors., who also use a similar expression for their food outlet. The question to be determined by the Delhi High Court was whether there can be any monopoly over the expressions “Chur Chur Naan” or “Paharganj ke Mashoor Amritsari Naan”. The Plaintiff has obtained registrations for the trade marks “Chur Chur Naan” and “Amritsari Chur Chur Naan” and sought an injunction against the Defendants from using the name “Paharganj Ke Chur Chur Naan” and “Amritsari Chur Chur Naan” in its outlet.

While the Plaintiff claimed exclusive rights over the said marks by virtue of registration, the Defendants contended that the marks have already been adopted by various other food outlets and is thus devoid of any distinctive character.

The Hon’ble High Court observed that the expressions “Chur Chur Naan” and “Amritsari Chur Chur Naan” are similar to other expressions such as “Kashmiri Dum Aloo”, “Mangalore Idli”, “Hyderabadi Biriyani”, “Amritsari Kulcha”, etc. that are used in common parlance by the general public. The word “Chur Chur” merely means ‘crushed’ and is thus incapable of acquiring distinctive character and as such no monopoly can exist over the expression. The Defendants were able to prove that there is a common practice in the trade for food outlets to use names such “Chandni Chowk Ke Mashoor, Dilli Ke Mashoor, Delhi Walo Ki Mashoor” etc.

On a perusal of the evidence submitted by the Defendants, a majority of the food outlets have adopted the expression “Chur Chur Naan” by adding prefixes that contributed to the element of distinctiveness such as “Sanjay Chur Chur Naan”, “Vijay Chur Chur Naan” and so on. Before dismissing the suit, the Defendants were directed to alter the names of their outlets to “Paharganj Seth Ke Mashoor Chur Chur Naan” and “Paharganj Seth Ke Mashoor Amritsari Naan” in order to avoid any confusion or deception in the minds of the public.

The famous Palani Panchamirtham receives a GI tag three years after a formal application was made in the year 2016 by the Executive Officer at the Arulmigu Dhandayuthapani Swamy temple. The Panchamirtham is a holy prasadham or devotional offering that is used to bathe idols (abhishekam) in Hindu temples and is later bottled and sold to the devotees. The dish is predominantly found and used in the Sabarimala Temple and the six abodes (Arupadai Veedu) of Lord Muruga/ Subramanya. The word “Panchamirtham” denotes the five amruthams/ amruts that form a significant part of the Hindu worship namely milk, curd, sugar, honey and ghee. The Palani Panchamirtham is a combination of five natural substances such as banana, jaggery, cow ghee, honey and cardamom. Dates and sugar candies are added for additional flavor. The Panchamirtham that is collected after the abhishekam is not only a nourishing food but can also be stored for a long period without refrigeration. The secret to its unique taste lies in the art of its preparation and the quality of the ingredients used. The dish is prepared without the addition of water or any artificial preservatives.

The Mizo shawl from Mizoram is considered to be the most colourful among the Mizo textiles. It is an essential possession for every Mizo lady and an important marriage outfit in the state, and is wrapped around the waist. It is also the most commonly used costume in Mizo festive dances and official ceremonies. The weavers insert the designs and motifs (a decorative image or design, especially a repeated one forming a pattern) by using supplementary yarns while weaving to create this beautiful and alluring textile. An official statement was issued by the Central Government indicating that two out of five Mizo puan (shawl) - Tawlhlohpuan and Mizo Puanchei, have been allotted the GI tag. Tawlhlohpuan is a medium to heavy, compactly woven, good quality fabric from Mizoram, known for warp yarns, warping, weaving & intricate designs that are made by hand. Tawlhloh, in Mizo language means ‘to stand firm or not to move backward’. Tawlhlohpuan, which holds high significance in the Mizo society, is produced throughout the state of Mizoram, Aizawl and Thenzawl town being the main centre of production. It is worn only by a very courageous warrior among the Mizo men as a symbol of their bravery.

Also known as Tirur Vettila, it is unique for its significantly high content of total chlorophyll and protein in fresh leaves. It is mainly cultivated in Tirur, Tanur, Tirurangadi, Kuttipuram, Malappuram and Vengara block panchayaths of Malappuram District, Kerala, and is valued both for its mild stimulant action and medicinal properties. Even though it’s commonly used for making pan masala for chewing, it has many medicinal, industrial and cultural usages and is considered as a remedy for bad breath and digestive disorders. When compared with other betel leafs, the antioxidant capacity is more in Tirur Betel leaf adding to its medicinal properties. Eugenol (oil of cloves) is the major essential oil which further contributes to its pungency.

Case Updates

Novartis filed a patent infringement suit against Natco Pharma for infringement of its granted patent “Novel Pyrimidine Compounds and Compositions as Protein Kinase Inhibitors” (Patent no. 276026) before the Hon’ble Delhi High Court. The said patent of Novartis claims a novel and inventive compound “Ceritinib”, a molecule belonging to the 2,4-diaminopyrimidines group, which is a drug for the treatment of non-small cell lung cancer.

The patent was filed in India through the Patent Cooperation Treaty (PCT) route and was granted in September 2015. Natco Pharma filed a post-grant opposition against the said patent within the statutory period under Section 25 (2) of the Patents Act, 1970, which is one year from the date of publication of the grant of patent. In the meantime, Natco Pharma obtained the drug license for its Ceritinib product marketed under the brand “NOXALK”, which was granted in January 2019, following which the commercial launch of the said product was done in March 2019.

The Order in respect of the opposition filed by Natco Pharma was reserved in April 2019, subsequent to which the present suit along with an application seeking interim injunction against the launch of Natco Pharma’s NOXALK was filed by Novartis. The Hon’ble Judge, while granting the interim injunction in favour of Novartis, ruled that pending the outcome of the post-grant opposition, the rights conferred by Section 48 of the Patents Act on the patentee remain unaltered. The Hon’ble Judge further opined that considering the fact that the alleged infringing product was a drug for treating a form of cancer, withholding sale of the already manufactured batch would not benefit patients suffering from the said disease. Therefore, the sale of the products already manufactured was allowed; however, Natco Pharma was restrained from further manufacturing of the said drug till the next date of hearing. The Patent Office was also requested to pass the order reserved in respect of the post-grant opposition before the next date of hearing but since such requisition was not fulfilled, during the next hearing, the Court directed the Patent Office to pass the order within one month.

The Patent Office passed its order in the post-grant opposition in August 2019, revoking the instant patent of Novartis on the ground of lacking novelty. Natco Pharma therefore preferred applications for dismissal of suit and vacation/ suspension of the interim injunction on the ground that once a patent is revoked, the suit for infringement of patent is not maintainable. Novartis contended that they had sought an appeal against the order of the Patent Office before the Intellectual Property Appellate Board (IPAB) immediately after passing of such order and that the same was listed before the IPAB on 21st August 2019. Novartis therefore requested the Hon’ble Court to not pass any orders before the hearing at IPAB.

The Hon’ble Judge, however, pointed out that the rights of a patentee are enforceable only until such time as the patent is valid and once it is revoked, the rights cease to exist. Therefore, the Hon’ble Judge ruled that patent infringement actions are maintainable only in respect of granted and live patents and not in revoked patents, by drawing a parallel to Sections 62(2) and 11A(7) of the Patents Act which state that no infringement action would lie in a lapsed patent (if renewal is not filed) and a published but pending patent (although damages can be sought from the date of publication after the patent is granted) respectively. Therefore, the interim order restraining Natco Pharma from manufacturing Ceritinib was suspended with Novartis being given the liberty to seek appropriate orders if a favourable order is passed at the IPAB in the appeal preferred by them.

TATA SIA Airlines Limited (“Plaintiff”), a Joint Venture between Tata Sons Private Limited and Singapore Airlines, operates a full-service airline under the trade mark “VISTARA”, which the Plaintiff has been using since 2014 in respect of airline services. The Plaintiff has also been using the mark “VISTARA” on various merchandises, uniforms, name tags, badges and other accessories which are worn by the airline’s staff, all such merchandises, uniforms and accessories being used and distributed in a strictly controlled manner, regulated by the Ground Station Head.

The Defendants, M/s. Pilot18 Aviation Book Store and its proprietor Mr. Anand Keerthy, operate an aviation studies portal “www.pilot18.com” on which was offered various badges, name tags and other accessories including mugs, baggage tags, etc. bearing the mark “VISTARA” with an identical logo as that of the Plaintiff’s registered trademark. The said goods of the Defendants were also available on e-commerce platforms.

The Plaintiff acquired knowledge of the sale of the impugned products in February 2019 and thereafter immediately filed the present suit for trademark infringement, seeking permanent injunction restraining the Defendants from using an identical mark to the Plaintiff’s registered trademark “VISTARA” and selling counterfeit merchandise. On further enquiry and investigation, the Plaintiff came to know that the Defendants not only sold products encompassing its proprietary trademarks, but also falsely claimed that they were supplying the “VISTARA” branded products to the Plaintiff itself. However, the Defendants took a plea that they had never sold any products bearing the mark “VISTARA”.

In March 2019, the Hon’ble Court, after passing an interim injunction restraining the Defendants from manufacturing, selling, offering for sale, or dealing in any manner whatsoever with the mark “VISTARA” and/or any mark similar or identical to the said mark, appointed a Local Commissioner to investigate the said matter and duly submit a report on the findings. The Local Commissioner visited the premises of the Defendant and found a large number of products bearing the mark ‘VISTARA’. Thereafter, the Local Commissioner submitted an inventory of all products which exceeded 300 in number and included products such as tie clips, cufflinks, bag tags, stickers, etc. In pursuance of the investigation, the Local Commissioner found that the Defendants were not only selling counterfeit products of the Plaintiff’s airlines, but also counterfeits of other airlines such as Jet Airways, SpiceJet and Air India.

The Hon’ble Judge observed that the sale of merchandise with the airlines’ names not only violated the trademark rights of the respective parties, but also poses a serious threat to security as unauthorised persons may try to seek entry into airports on the basis of wearing the said counterfeit badges, labels, uniforms, etc., bearing the name of the airlines. The Hon’ble Court further observed that the incorrect statement made by the Defendants that they had never dealt with products bearing the trade mark “VISTARA”, in their written statement, constituted perjury before the Court as it was a misrepresentation to the Court.

Therefore, based on the findings, the Hon’ble Court passed an order of permanent injunction restraining the Defendants from manufacturing, selling, offering for sale and/ or dealing with products bearing the mark “VISTARA” and directed them to pay a sum of Rs. 2 Lakhs within a period of 1 month, to the Plaintiff.

The Court further observed that the mark “VISTARA” is quite popular in India, is distinctive, has acquired a unique status and also enjoys enormous goodwill and reputation in the airline, travel and tourism industry, so much so that the use of the mark even in respect of unrelated services would create confusion and deception. The Court thus declared that “VISTARA” deserves to be declared as a ‘well-known mark’.

The Plaintiff, Yash Raj Films Pvt. Ltd., is an internationally reputed company engaged in the production, direction and marketing of films. The Defendants are the producer, director and distributor of the unauthorised Telugu remake of Band Baaja Baaraat (hereinafter “Jabardasth”), respectively.

In December 2010, the Plaintiff released its movie “Band Baaja Baaraat” (in Hindi) across 629 screens in India and 114 screens abroad, the story line of the said film being the hero and heroine start their own wedding planning company, fall in love, part due to differences, and finally reunite to succeed in their business and life.

By virtue of conception and original expression, the Plaintiff is the owner of the copyright subsisting in its film including in its independent components such as the storyline, dialogues, theme, concept, plot, script, music, lyrics, character sketches, etc. and is entitled to copyright protection of the same under Section 14 of the Copyright Act, 1957.

Since the said movie was a colossal hit and amassed a total of around INR 25 crores in India and abroad, the Plaintiff decided to remake the film in the regional languages of Tamil and Telugu in 2011, and as abundant precaution, issued a public notice in Tamil and Telugu that the Plaintiff is the exclusive owner of the copyright subsisting in the movie Band Baaja Baaraat and that it has not sold the remake rights in the said movie to anyone. The Plaintiff subsequently begun work on the remakes and incurred an initial expenditure of INR 1 crore as payment to artistes.

Through market sources, in December 2011, it was brought to the Plaintiff’s attention that the Defendants intended to remake Band Baaja Baaraat in Telugu, subsequent to which the Plaintiff immediately issued legal notices to the producer of Jabardasth, on three different occasions, to forthwith cease any/ all work on the unauthorised remake of its proprietary cinematograph film Band Baaja Baaraat. The Plaintiff, in its legal notices also requested for a copy of the impugned script in order to ascertain similarities but not once did the Defendants respond, despite being in receipt of the notices. Nevertheless, the Defendants released the impugned film Jabardasth across various screens in India, including Delhi.

On watching the impugned film, the Plaintiff confirmed that the Defendants’ film was a blatant copy of the Plaintiff’s film. The similarities between both films were substantial and material in terms of theme, concept, plot, character sketches, story, script form and expression etc. which clearly amounted to copyright infringement. Reviews of the film Jabardasth further validated and reinforced the fact the Defendants’ film was a blatant copy of the Plaintiff’s film Band Baaja Baaraat. The Plaintiff’s rights were further violated by the fact that the producer unlawfully sold the rights to release a dubbed version of the impugned film in Tamil, which was scheduled to release in April 2013.

The Plaintiff not only proved the originality of concept, theme, script, music, etc. of its film Band Baaja Baaraat by duly producing relevant documentary evidences before the Hon’ble Court, but also proved the unmistakable similarities between the rival films, thereby making a clear case of copyright infringement.

The claims of the Plaintiff as well as the said documentary evidences submitted had gone unrebutted by the Defendant. However, the Defendant’s counsel raised the question of maintainability of the suit, contending that the Delhi High Court had no jurisdiction to entertain this case as the impugned film was conceived, written and directed in Hyderabad. The Hon’ble High Court, however, dismissed the aforesaid and asserted its authority by rationale, stating that since the impugned film was released across India, including Delhi, it had jurisdiction to try the suit.

The Hon’ble High Court laid emphasis on the decision made in MRF limited v. Metro Tyres Limited wherein it was held that a film is recognised as being greater than the sum of its parts and copyright subsists in a 'cinematograph film' as a work independent of underlying works that come together to constitute it. The Hon’ble Court, therefore applied the test of comparing ‘the substance, the foundation, the kernel’ of the two films to determine if the impugned film was by and large a copy of the original film and whether an average viewer would get an unmistakable impression that the impugned film was a copy of the original. By applying the aforesaid test of comparison, the Hon’ble Court was of the view that the Defendants have blatantly copied the fundamental, essential and distinctive features as well as forms and expression of the film Band Baaja Baaraat and consequently, have infringed the Plaintiff's copyright in the said film. Therefore, the Plaintiff was granted the relief of permanent injunction, debarring and restraining the Defendant from dubbing and/ or releasing the unauthorised Telegu remake Jabardasth.

The Plaintiff, Japanese Automobile giant, Suzuki, filed a suit at the High Court of Delhi for infringement of their trade mark/ trade name “SUZUKI” against Suzuki India, the defendant to the instant dispute. The mark “SUZUKI” was originally adopted and used by the Plaintiff in the year 1909 in Japan, when it was trading as Suzuki Loom Works, which was later incorporated as a company in the year 1920 with the word “SUZUKI” being the prominent feature of its corporate and trade name. The corporate name of the Plaintiff was further amended twice, to finally take its present form, “Suzuki Motor Corporation”.

The Plaintiff is the lawful proprietor of the mark “SUZUKI” in 169 countries across the world, including India wherein the trademark was first registered in 1972. Owing to the continuous use of the mark “SUZUKI” by the Plaintiff ever since its inception and the widespread publicity, the said mark has become exclusively associated with the Plaintiff globally.

The Plaintiff entered India in the year 1982 through a joint venture agreement with Maruti Udyog Limited. The Plaintiff licensed its technology as well as its proprietary mark “SUZUKI” to the joint venture company “Maruti Suzuki India Limited (MSIL)” pursuant to which the iconic “Maruti 800” car was introduced in the year 1983 revolutionising the Indian automobile sector.

Around the same time surrounding the Plaintiff’s entry into the Indian market, the Defendant adopted the mark “SUZUKI” as a part of its trade name, in respect of investment & finance services, in the year 1982. The Plaintiff contended that the defendant’s adoption of the mark “SUZUKI” was clearly with the dishonest and malafide intention of encashing upon the global goodwill and reputation of the Plaintiff and pass off and mislead the public into believing that there is a nexus between itself and the Plaintiff. It was further the contention of the Plaintiff that the word “SUZUKI” was its founder’s family name and there was no valid reason/ satisfactory explanation for the Defendant, an Indian entity, to have adopted a Japanese surname.

The Defendant contended that it had earned substantial goodwill through honest, concurrent and uninterrupted use since 1982. The Defendant further claimed that an uncondonable delay of 25 years on part of the Plaintiff in filing the instant suit not only amounted to acquiescence, but also showed the Plaintiff’s malafide intention and therefore, has to be construed against the Plaintiff. The Defendant also took the defence that the Plaintiff was restricted only to the automobiles category and had no connection with the Defendant’s line of business and therefore, cannot claim monopoly over other classes of goods. Another defence taken by the Defendant was that the suit was not maintainable as the Court did not have territorial jurisdiction owing to the fact that the Defendant did not have an office in Delhi. However, the Defendant only gave a general denial of the Plaintiff’s contentions and did not specifically deny each contention. The Hon’ble Court, in its judgement, observed that the Defendant had not given any reasonable explanation towards its adoption of the word “SUZUKI” as a part of its trade name considering the fact that the Defendant had no ties or association with the Plaintiff and the word was entirely of Japanese origin. The oral submission of the Defendant’s Managing Director that its founder’s friend was a Japanese with the surname Suzuki did not hold much weightage before the Court as the Court opined that it was not pleaded so in the Written Statement, clearly establishing that such explanation was merely an after-thought, thereby proving the Defendant’s malafide intention. The Defendant’s malafide intention was further established by the fact that the Managing Director of the Defendant admitted to the Court on oath that “if a consumer deals with the Defendant, he may wrongly think that he is dealing with the Japanese company”.

Moreover, placing reliance on various advertisements and articles submitted by the Plaintiff evidencing its bonafide and widespread usage of the mark “SUZUKI”, the Court opined that the Defendant’s denial that it was not even aware of the Plaintiff’s well-known mark before it adopted the same was unbelievable and therefore rejected. It was held that the Defendant was deemed to have constructive notice of the Plaintiff’s statutory and exclusive rights over the trade mark “SUZUKI” as the Plaintiff’s trademark registration which dates back to the year 1972 is a matter of public record.

The Court further ruled that when the malafide nature behind the Defendant’s usage of the mark has been established, a mere delay in the institution of this suit is insufficient to defeat the grant of an order of injunction, considering the fact that this is a case of continuing tort, and therefore a fresh period of limitation begins to run every moment of time during which the breach continues. The Court also added that in order to avail the defence of a concurrent user, the adoption of the mark in question needs to be honest.

The Hon’ble Court also noted that the Defendant had made multiple false claims before the Court, including inter alia denying being aware of the Plaintiff’s mark, falsely stating that the Defendant did not have an office at Delhi and false pleas requesting pass overs. As raising false claims before the Court is a punishable offence under Section 209 of the Indian Penal Code (IPC), the Court was of a prima facie view that the case warrants a prosecution under Section 209 of the IPC. However, in the interests of justice, the Court granted three weeks time for the Defendant to file an unconditional apology failing which it has to bear the entire costs of the Plaintiff incurred on this litigation.

The Court also noted that in the absence of specific denial, the averments made in the plaint are deemed to have been admitted as provided under Order VIII Rule 5 of the Code of Civil Procedure. The Court therefore stated that it was of the view that the vague/ evasive denial of the Defendant in its Written Statement is sufficient to pass a decree against it.

Therefore, based on the above findings of the Court, the Court awarded permanent injunction against the Defendant.

The High Court of Delhi on July 8, 2019 answered the long and pending question revolving around the liability of an e-commerce platform by piercing through the protection granted by the ‘safe harbor’ provisions under the Information Technology Act, 2000.

A bunch of seven suits filed by the Plaintiffs (M/s Amway India Enterprises, M/s Modicare Ltd. & M/s Oriflame India Pvt. Ltd.) against the Defendants (1 Mg Technologies Pvt. Ltd., Amazon Seller Services Pvt. Ltd., Flipkart Internet Pvt. Ltd.), were combined and heard together. The Court ruled in favour of the claims raised by the Plaintiffs by restraining various e-commerce portals from supplying the products of the Plaintiffs on their platform by unauthorized sellers.

The Dispute

The Plaintiffs contended that their original products were being sourced through open markets via unauthorised dealers due to weak links in the supply chain system andthe products once sourced, are later tampered with and made available for sale on e-commerce platforms.

The Plaintiffs also alleged that their products are sold for cheaper/discounted prices on e-commerce portals bearing their names which ultimately results in tremendous financial losses as well as tarnishing of their hard earned name and reputation. Furthermore, the products offered for sale prove to be of substandard quality containing minimal information pertaining to the seller’s contact details that would otherwise prove to be useful in order to get grievances and feedbacks addressed.

Issues

The Court narrowed down the dispute into four issues, namely:

i) Whether the Direct Selling Guidelines, 2016 are valid and binding on the Defendants and if so, to what extent?
ii) Whether the sale of the Plaintiffs' products on e-commerce platforms violates the Plaintiffs' trademark rights or constitutes misrepresentation, passing off and results in dilution and tarnishes the goodwill and reputation of the Plaintiffs' brands?
iii) Whether e-commerce platforms are "Intermediaries" and are entitled to protection under the “safe harbor” provided in Section 79 of the Information Technology Act and the Intermediary Guidelines of 2011?
iv) Whether e-commerce platforms such as Amazon, Snapdeal, Flipkart, 1MG and Healthkart are guilty of tortious interference with the contractual relationship of the Plaintiffs with their distributors/ direct sellers?

What is a Direct Selling Entity?

Before diving into the Hon’ble High Court’s analysis, the concept of a Direct Selling Entity (DSE) needs to be understood. A DSE builds a network of independent sales representatives who use their personal network or contacts to sell the products as opposed to regular sales through retail outlets. An entity’s products are made available for sale either through their authorized representatives or their website. These representatives are not in the nature of an “employee” but will receive a commission on their sales.

The Direct Selling Guidelines (DSG), 2016 have been issued by the Ministry of Consumer Affairs, Food & Public Distribution as guiding principles for State Governments to regulate the business of DSE and Multi-Level Marketing (MLM) and to strengthen the existing regulating mechanism on DSEs and MLMs in order to protect the legitimate interests of the consumers. These guidelines contain basic definitions, obligations and conditions between the DSE and Direct Seller.

Court’s Findings

1. DSGs are more than “advisory” in nature
Reliance was placed on Clause 7(6) of the DSG of 2016 wherein the products belonging to a DSE cannot be sold on an e-commerce platform without the authorisation of the concerned DSE. These guidelines aim to fully regulate the conduct of the business of the Direct Sellers who are bound by them. The wordings of the said clause makes one thing clear, it applies to any person who sells or offers for sale. Therefore, all the sellers, including the sellers on e-commerce platforms, will be brought under the ambit of clause 7(6). The guidelines have been issued and duly authenticated through a notification in the Gazette. It was accordingly held that the DGS of 2016 were held to be binding on e-commerce platforms and the sellers on the said platforms.

2. Section 30(4) of the Trade Marks Act, 1999
A question arose as to whether the Plaintiffs can control or seek to regulate the sale of their respective products on e-commerce platforms and whether the Defendants have a right under Section 30 of the Trade Marks Act to continue selling the Plaintiff’s products. The Plaintiffs in each of the suits are the owners of their respective trade marks namely – Amway, Modicare and Oriflame. The usage and control over the products bearing the said marks would exclusively vest with the respective owners, in accordance with law.

Section 30(4) permits a claimant to bring an action for infringement against a re-seller even if such a re-sale is in respect of a genuine product sold directly from the claimant’s distributor provided the product has been tampered with or changed after being made available in the market.

Although a claimant may have been in receipt of a commercial gain after the first point of sale, the claimant’s interests continues to vest with the product in cases when it was being delivered to the ultimate consumer in a condition that would impair its goodwill. This applies in instances of removal of bar codes, re-packing, re-labelling and any other act that seeks to tamper with the integrity of the original product thus inviting the applicability of the provision enumerated under Section 30(4).

3. “Safe Harbor” provisions
The concept of an Intermediary, as the term itself denotes, refers to a person or an entity which is in between two other persons. An Intermediary ought to be acting as a bridge in between the said two persons as a passive platform in merely bringing the two people together. In order for an e-commerce platform to avail the “safe harbor” provisions enshrined under Section 79 of the Information Technology Act, 2000, it must merely be hosting/ listing third party information or serve as a communicating link alone. The said exemption will fail to apply if the e-commerce portal acts as an active participant between two persons. The question regarding the manner in which the platforms are engaging themselves as active participants while providing value-added services will be adjudicated during trial.

4. Breach of contractual obligations
The Hon’ble Court also held the e-commerce portals to be guilty of tortious negligence with regard to their contractual obligations since the e-commerce portals took shelter by referring to themselves as “Intermediaries” and refused to take down the infringing products in spite of being intimated of the DSG.

Platforms such as Amazon, Flipkart and Snapdeal carry out a substantial level of sales through huge investments in logistics and supply chain networks, third party service providers, delivery personnel, warehousing, logistical support, to name a few. It was opined that the platforms had a conscious duty in having knowledge of the sellers operating on their platforms. Therefore, they were not held to be merely passive, non-interfering platforms but portals that provide a large number of value-added services to their consumers and end users. It was further held that the manner in which e-commerce platforms operate, makes it extremely convenient and easy for distributors to merely procure the products from the Plaintiffs and defeat the purpose of the contractual obligations by selling in the grey market to unidentified persons, who may make the products available for sale on e-commerce portals without ensuring the necessary quality control standards.

Therefore, the Plaintiffs were entitled to interim reliefs of temporary injunction restraining the Defendants from displaying, advertising, offering for sale, selling, facilitating, and repackaging any of the Plaintiff’s products on their websites and mobile applications, except of those sellers who produce written permission/ consent of the Plaintiffs for listing of their products on the Defendants’ platform/ mobile application.