Fundamentals of IT LawIP Enforcement

Liability of Intermediaries on E-Commerce Sites

The Information Technology Act, 2000 [hereinafter, the “IT Act”] and Information Technology (Intermediaries Guidelines) Rules, 2011 [hereinafter the “Rules”] govern the role and function of intermediaries. Section 79 of the IT Act provides that an intermediary is not liable for any third-party content hosted/made available through such intermediary when:

  1. The contravention is done without its knowledge, or
  2. The intermediary observes due diligence and abides by other guidelines as prescribed.

The Intermediary Rules of 2011 provide for a diligence framework to be followed by intermediaries in order to avail of the exemption under Section 79 of the IT Act. Numerous procedures have been recommended which need to be adhered to by an intermediary, such as:

  1. The need to inform the users of the computer resource not to transmit any information that, inter-alia is harmful, obscene or defamatory. Further, it cannot infringe any patent, trademark, copyright or other proprietary rights.
  2. The intermediary is compelled to “act” within thirty six hours and where applicable, work with user or owner of such information to disable such information that is in contravention of such Rules regarding not posting of the above mentioned prohibited matter.
  3. The intermediary will have to strictly follow the provisions of “the Act” or any other laws for the time being in force.

The Court of Justice of the European Union (Grand Chamber), in the case of Google France SARL, Google Inc. v. Louis Vuitton Malletier SA & Ors. [hereinafter, ‘Google France’], one of the point noted with respect to intermediaries was that “it is necessary to examine whether the role played by that service provider is neutral, in the sense that its conduct is merely technical, automatic and passive, pointing to a lack of knowledge or control of the data which it stores.”

The Google France case has laid out certain principles on the liability of intermediaries and the Chrisitan Louboutin case, which was decided by the Hon’ble High Court of Delhi makes a reference to these. Below are some useful excerpts from the judgment:

  1. Exemptions from liability of intermediaries are limited to the technical process of operating and giving access to a communication network. Such an exemption is needed for the purposes of making the transmission more efficient.
  2. The activity of the intermediary is merely technical, automatic and passive – meaning thereby that the intermediary does not have any knowledge or control over the information which is transmitted or stored.
  3. The intermediary gets the benefit of the exemption for being a “mere conduit” and for “caching”, when it is not involved in the information which is transmitted/translated.
  4. If any service provider deliberately collaborates with the recipient of a service, the exemption no longer applies.
  5. In order for the service provider to continue to enjoy the exemption, upon obtaining knowledge of any illegal activity, the service provider has to remove or disable access to the information.
  6. In order to constitute a mere conduit, the service provider should not initiate the transmission, select the receiver of the transmission, or select or modify the information contained in the transmission.
  7. The storage of the information has to be automatic, intermediate and transient.
  8. The provider should not obtain any data based on the use of the information.
  9. For claiming exemption from damages, the service provider should not have any knowledge of the illegal activity and upon acquiring knowledge, should expeditiously remove or disable the information.
  10. Service providers do not have a general obligation to monitor the information which is transmitted or stored.

The Court in the Louboutin case, did give the following directions to the defendant on the activities of running the website as an intermediary so as to:

  • disclose the complete details of all its sellers, their addresses and contact details on its website
  • obtain a certificate from its sellers that the goods are genuine
  • If the sellers are not located in India, prior to uploading a product bearing the plaintiff’s marks, it shall notify the plaintiff and obtain concurrence before offering the said products for sale on its platform
  • If the sellers are located in India, it shall enter into a proper agreement, under which it shall obtain guarantee as to authenticity and genuinity of the products as also provide for consequences of violation of the same
  • Upon being notified by the plaintiff of any counterfeit product being sold on its platform, it shall notify the seller and if the seller is unable to provide any evidence that the product is genuine, it shall take down the said listing and notify the plaintiff of the same, as per the Intermediary Guidelines 2011
  • It shall also seek a guarantee from the sellers that the product has not been impaired in any manner and that all the warranties and guarantees of the plaintiff are applicable and shall be honoured by the seller. Products of any sellers who are unable to provide such a guarantee would not be, shall not be offered on the defendant’s platform
  • All meta-tags consisting of the plaintiff’s marks shall be removed with immediate effect.

List of cases for Reference:

  1. Christian Louboutin SAS v. Nakul Bajaj and Ors., CS (COMM) 344/2018
  2. Luxottica Group S.P.A. & Anr. v. Mify Solutions Pvt. Ltd. & Ors., CS (COMM) 453/2016
  3. Skullcandy, Inc. v. Shri Shyam Telecom & Ors., CS(COMM) 979/2016
  4. L’Oreal v. Brandworld & Anr., CS(COMM) 980/2016
  5. Google France SARL, Google Inc. v. Louis Vuitton Malletier SA & Ors, C-236/08, DoJ- 23.03.2010
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Nikhil Naren

An ardent lover of Intellectual Property and Information Technology Laws.

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