L’Oreal v. Brandworld

Samiksha UniyalCase Summary

Liability of an intermediary under Section 79 in trademark infringement

L’Oreal v. Brandworld
(2018) 254 DLT 433
In the High Court of Delhi
CS (COMM) 980/2016
Before Justice Pratibha M Singh
Decided on November 12, 2018

Relevancy of the case: Liability of an intermediary under Section 79 in trademark infringement

Statutes and Provisions Involved

  • The Information Technology Act, 2000 (Section 2(1)(w), 79, 81)
  • The Code of Civil Procedure, 1908 (Order XXXIX)

Relevant Facts of the Case

  • The defendant is involved in the unauthorised sale of L’Oreal products through an online marketplace. The plaintiff purchased the products from this platform and found them counterfeit.
  • The plaintiff seeks an injunction against the sale of L’Oreal products and the use of the L’Oreal trademark on the intermediary’s website (ShopClues.com). The court had granted the interim injunction before.

Prominent Arguments by the Advocates

  • The plaintiff’s counsel submitted that the intermediary should not get protection under Section 79 of the Information Technology Act, 2000. It promoted the sale of counterfeit products by creating a category on the site named “replica”. The intermediary failed in showing due diligence required under Section 79(2)(c) of the Information Technology Act, 2000.
  • The defendant’s counsel submitted that the intermediary only provides a technological interface between sellers and consumers. Further, the website has a take-down policy. It initiates the action of delisting the alleged materials on receiving any notice of infringement. The website also discloses the names of parties uploading infringing materials.

Opinion of the Bench

  • As per Section 2(1)(w) of the Information Technology Act, 2000, all online marketplaces are intermediaries. The law provides some safe-harbour provisions for them to promote business. To take benefit of these provisions, the intermediary must show due diligence and abide by the 2011 Intermediary Guidelines. Participation in the unlawful acts makes the intermediary an active participant and liable to be held responsible.
  • The IT (Intermediary Guidelines) Rules, 2011 requires the intermediaries to comply with the Trademark Act, 1999. Further, there is no conflict between the Information Technology Act, 2000 and the Trademark Act, 1999. Therefore, the overriding effect of the Information Technology Act, 2000 does not come into operation.
  • ShopClues does not follow the take-down policy framed as per applicable Indian laws. ShopClues will not get the protection under Section 79.
  • The court directed ShopClues to take down the replica window. Further, the court also directed the intermediary to take steps like entering into contracts with sellers and disclosing their details on the website to ensure the genuineness of products.
  • The bench directed ShopClues to comply with the IT (Intermediary Guidelines) Rules, 2011 and initiate the listing down of the infringing materials from the website after notifying the plaintiff if the seller is not able to produce any evidence in favour of the genuineness of the product.

Final Decision

  • The intermediary is held responsible.
  • Disposed of suit and all interlocutory applications.