Case Brief on Christian Louboutin SAS vs Nakul Bajaj & Others

Facts:

The Plaintiffs (Christian Louboutin), manufacturer of luxury shoes well known for their red soles filed a
trademark infringement suit against an e-commerce website www.darveys.com (Defendants). The Plaintiffs had
also obtained trademark registration for the word mark, device mark CHRISTIAN LOUBOUTIN and also for
their red sole mark in India. The Plaintiffs claimed that their products were sold only through an authorized
network of exclusive distributors.

The Defendants were selling various luxury products on their website including the Plaintiff’s products by
claiming that they were 100% authentic. The Plaintiffs alleged that apart from selling and offering counterfeit
products on the Defendants website, the image of the founder of the Plaintiff and the names Christian and
Louboutin were used as meta tags. Further, the Defendants’ website gave an impression that it was in some
manner sponsored, affiliated and approved for sale of variety of luxury products bearing the mark Christian
Louboutin and this resulted in infringement of trademark rights and violation of personality rights of Mr.
Christian Louboutin.

On perusal of the pleadings the Hon’ble Court observed that no factual issues arose in the determination of the
case as the Defendants had not disputed the proprietary rights of the Plaintiff over their brand Christian
Louboutin. The only defence put forth by the Defendants was the safe harbour provision under Section 79 of the
Information Technology Act, 2000 that they were mere intermediary who enabled booking of products from
any of the 287 boutiques/sellers across the globe using their online platform. The Defendants contended that the
products sold through their website was genuine, however, they were not providing after sales warranty or
services.

Issue:

The only aspect to be decided was whether the Defendants’ use of the Plaintiffs’ mark, logo was justified under
Section 79 of the Information Act, 2000 or not.

Judgement:

The Hon’ble Court perused the Defendants’ website and observed that customers were required to pay a
membership fee in order to shop from the Defendants’ website and the said website also provided an
authenticity guarantee to return twice the money if the products turned out to be fake or not of expected quality.
Furthermore, in the terms and conditions, the Defendants claimed that they facilitated the purchase of original
products and the prices of the products were maintained and changed at the discretion of the Defendants.
Quality checks of the products were carried out by a third-party team who examined the precise details of the
products that were shipped to the customers. The invoices generated were those of the website (defendant)
company.
In order to determine whether an online marketplace or e-commerce website is an intermediary, the Hon’ble
Court elaborately examined the nature of services (provided a detailed list of 26 possible services that could be
performed by intermediary) that would fall within the ambit of service contemplated in the definition of
intermediary. Accordingly, entities that performed tasks such as identification of the seller, providing transport
for seller, employing delivery personnel for delivering the product, accepting cash for sale etc and the measures
taken by the online platforms to ensure that unlawful acts were not committed by the sellers were taken into
consideration for determining the role of the online marketplace. Considering the services played by the
Defendant in the case, the Hon’ble Court was convinced that the Defendant exercised complete control over
their sale of products and they were much more than just an intermediary.

The Hon’ble Court further noted that the e-commerce website and online marketplaces were required to operate
with caution if they wished to enjoy the immunity provided to the intermediaries under Section 79 of the IT Act.
When an e-commerce website is involved in or conducts its business in such a manner which would see
presence of large number of elements (services and measures taken by sellers referred above), it could cross the
line from being an intermediary to active participant. In such cases, online marketplace could be liable for
infringement in view of its active participation. The conduct of intermediaries in failing to observe due
diligence with respect to IPR could amount to conspiring or abetting, aiding or inducing unlawful conduct and
may lose the exemption to which intermediaries are entitled. When an e-commerce company claims exemption
under Section 79 of IT Act, it ought to ensure that it does not have active participation in the selling process.
The presence of any elements which indicates active participation could deprive intermediaries of the exception.

Findings:

Finally, the Hon’ble Court ascertained whether there was any falsification of Plaintiff’s trademark under Section
2(2)(c), 101 and 102 of the Trademarks Act, 1999. These provisions were being looked at to ascertain what
constituted conspiring, abetting, aiding, or inducing, the commission of an unlawful act, in the context of
trademarks rights. The Hon’ble Court concluded that the use of Plaintiffs’ mark in respect of genuine goods
would not be infringement and in respect of counterfeit goods, it could constitute infringement. Thus, any online
marketplace or e-commerce website which allows storing of counterfeit goods would be falsifying the mark.

In view of the above, the Hon’ble Court noted that the Defendant was not entitled to protection under Section 79
of the Information Technology Act. Further, the use of the Plaintiffs’ mark, the name and photograph of the
founder without permission and the sale of products without ensuring genuineness constituted violation of the
Plaintiffs rights. Pertaining to the contention of meta tagging, the Court held that Defendants’ use of the meta
tagging would constitute infringement as upheld by the Delhi Court in another case (Kapil Wadhawa v.
Samsung Electronics[v]).

In the above circumstance, the suit was decreed directing the Defendant to disclose the details of all its sellers,
their addressee, contact details on the website, and prior to uploading a product bearing Plaintiffs’ mark,
Defendant was required to obtain concurrence before offering for sale on its platform.
It is apparent that the legislative intent is to protect genuine intermediaries and it cannot be extended to those
persons who are not intermediaries and are an active participants in the unlawful act.