Skullcandy Inc vs Shri Shyam Telecom & Ors
In the High Court of Delhi
CS(Comm) 979/2016 & I.A. 24578/2014
Before Justice Prathiba 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(w), 79)
• The Code of Civil Procedure, 1908 (Order XXXIX)

Relevant Facts of the Case

• The plaintiff has filed a suit seeking injunction against the use of their trademark SKULLCANDY. Further, the plaintiff has submitted that Skullcandy products are available for sale on the defendant’s website at shopclues.com.
• They placed an order and found that the products were of inferior quality and hence, counterfeit.
• The plaintiff has previously obtained an ex-parte ad interim injunction against the website as well as the sellers.
• The sellers have resolved the matter with the plaintiff. However, the suit is still pending against the website.

Prominent Arguments by the Advocates

• The plaintiff’s counsel submitted that the defendant cannot claim protection under Section 79. The counsel submitted that this website is well-known for selling counterfeiting and lookalike activities. The defendant websites have not undertaken any due diligence requirements.
• The defenant’s counsel submitted that their role is limited to being an intermediary. They only provide a platform for the sellers and buyers to sell and purchase the products.

Opinion of the Bench

• The website has failed to undertake any due diligence exercises. Hence, it cannot claim protection under Section 79.
• Recurring sales of counterfeit products, creating a dedicated category for replicated products, and not stopping the sale of counterfeit products show that the website is more than an intermediary. Therefore, protections under Section 79 will not be available.

Final Decision

• The website must obtain a certificate and seek a guarantee from its sellers that the products are genuine. It must take down the replica section on the website.
• It must notify the plaintiff before offering Skullcandy products on its platform. In addition, it should also obtain confirmation from the plaintiff.
• The court further disposed all interlocutory applications.