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Intellectual Property Rights


TRADEMARK TANGLES IN E-COMMERCE: WHEN PLATFORMS BECOME PARTY TO INFRINGEMENT

March 1, 2025

*Ms. Khyati Jain

INTRODUCTION:

The e-commerce platforms and social media channels play a central role in facilitating global trade in the current digital economy wherein it has transformed how goods are bought, sold, and promoted. However, this rise in the digital economy has brought with it a higher level of intellectual property violations, mainly related to trademark infringements involving counterfeit and deceptively similar products. Since there are countless third-party sellers operating on online marketplaces in India, the role of intermediaries in dealing with infringement matters is now vital in the legal field. This article looks at how the law regarding intermediary liability for trademark violations has changed, reviews the statutory privileges under the Information Technology Act, 2000 and investigates the impact of recent judicial decisions om brand owners and digital platforms.

A CASE OF COUNTERFEIT PRODUCTS ON SOCIAL MEDIA:

Recently, while browsing Instagram, there was a content creator/beauty influencer reviewing an identical copy of a signature lip balm/treatment sold by a very renowned international beauty brand (hereinafter referred to as ‘ABC’), which was being sold on one of the e-commerce websites (hereinafter referred to as ‘XYZ’). The original product retails for around ₹1,500, while this counterfeit version was priced at just ₹300, at a fraction of the original's price. This wasn't just a similar product, but what seemed like a clear case of trademark and trade dress infringement, with the duplicate mimicking that brand’s distinctive branding elements.

TRADEMARK LAW AND CONSUMER CONFUSION:

It was evident, even at first glance, that there was a clear case of trademark infringement under Section 29 of the Trade Marks Act, 1999. This provision specifically prohibits the unauthorized use of marks that are identical or deceptively similar to a registered trademark, including similarities in packaging, which are likely to cause confusion or deception among consumers.

With more and more influencers being seen purchasing the infringing product and reviewing/promoting the same, this situation raises critical questions about trademark protection in digital marketplaces. The blatant imitation right down to the packaging raised an important question:  Will the e-commerce websites, the social media apps like Instagram be liable for such trademark infringement, and if yes, then to what extent and under what circumstances?

ROLE OF INTERMEDIARIES IN FACILITATING E-COMMERCE:

India has rapidly emerged as a hub for e-commerce websites and online platforms that allow third-party sellers to offer a wide range of goods and services. These products span across various categories and include items from both small local brands and well-known international names. It is often observed that certain brands regardless of their size adopt brand names or use packaging and designs that are deceptively similar or identical to those of established brands. While such third-party sellers may be held accountable for trademark infringement, misuse of brand identity and passing off, extending liability to intermediaries i.e., the platforms facilitating the sale of these products could significantly hinder the functioning and viability of such platforms.

The intersection of intellectual property rights (IPR) and intermediary liability in India has been a contentious issue, particularly with the rise of e-commerce platforms and digital marketplaces.

JUDICIAL LENS:

The Hon’ble Delhi High Court has dealt with this issue multiple times, most recently in Lifestyle Equities Cv & Anr. vs Amazon Technologies, Inc. The primary issue was whether Amazon could be held responsible for trademark infringement carried out by third-party sellers on its e-commerce platform. The matter of trademark infringement was analysed on the basis that the Plaintiffs owned a valid and well-recognized trademark, and the sale of counterfeit goods displaying a deceptively similar mark was likely to cause confusion among consumers, ultimately harming the brand’s reputation and goodwill.

The Court found that Amazon could not escape responsibility for trademark infringement by merely claiming to be an intermediary, even while it had a rigorous stance on the matter of platform liability. This was due to the fact that it had not responded appropriately to the plaintiffs' complaints regarding the selling of fake goods.

Amazon and other e-commerce sites cannot be held automatically accountable for every incident of infringement by third-party sellers, the Court said, but it also underlined that these sites cannot continue to act as passive middlemen. The Information Technology Act of 2000 and relevant copyright laws in India require online marketplaces to take reasonable precautions against illegal activity, including the sale of fake goods.

Depending on how the intermediaries handled complaints from third-party sellers regarding the infringement of their products by other sellers on the platform, the Hon'ble Delhi High Court has taken a similar stance regarding intermediary liability in a number of other cases.

One such case being Samridhi Enterprises v. Flipkart Internet Private Limited & Ors, in this case of third-party intellectual property infringements, the Hon'ble Delhi High Court clarified the treatment of intermediaries such as Flipkart under Indian law. The decision outlines the obligations of IP owners in upholding their rights and restates the legal safeguards afforded to intermediaries under the Information Technology Act, 2000 (IT Act) and the IT (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021.

Intermediaries have safe harbour protection under Section 79 of the IT Act, which protects them from liability for content submitted by third parties as long as they follow specific guidelines. These include avoiding altering or starting the transmission of content, according to due diligence regulations, and responding to takedown requests as soon as they become aware of actual infringement (usually by court or government orders). These responsibilities are further clarified by the IT Rules, 2021, which mandate that intermediaries delete infringing content within 36 hours of receiving a legitimate complaint, provide grievance redressal procedures, and post explicit terms of service that forbid IP infringement. However, intermediaries are not obligated to proactively monitor user-generated content, which prevents them from being held liable for infringements they are unaware of.

In Samridhi Enterprises (supra), the Delhi High Court reinforced these principles by ruling that Flipkart, as an intermediary, could not be held directly liable for trademark infringement by third-party sellers unless it had actual knowledge of the violation and failed to take action. The court emphasized that intermediaries are not expected to police their platforms actively but must respond appropriately when notified of infringements.

What distinguishes the aforementioned cases from one another is the Court’s assessment of the degree and adequacy of the action taken by the respective platforms in response to complaints lodged by third-party sellers regarding infringement by other sellers.

The judgment has significant implications for both IP owners and intermediaries. For brands and rights holders, it underscores the importance of sending clear, legally valid takedown notices to platforms when infringements occur. If intermediaries fail to act, IP owners may seek judicial or administrative intervention to enforce compliance. On the other hand, intermediaries like e-commerce platforms and social media sites must ensure they have robust grievance mechanisms in place and respond promptly to valid complaints to retain their safe harbour protections.

CONCLUSION:

Concluding on the matter involving the infringement of ABC’s lip balm/treatment, it is clear that ABC’s brand rights are being violated by the unauthorized use of its distinctive packaging and marks. Given the widespread promotion and sales of counterfeit lip tints of the brand ABC on the website of XYZ, the platform can no longer credibly claim ignorance of the infringement. The website could face heightened liability if it fails to take swift action especially since the counterfeit product has gained significant visibility, making it implausible for it to argue lack of actual knowledge under Section 79 of the IT Act. If proven that XYZ neglected takedown requests or profited from these sales (akin to Lifestyle v. Amazon), it risks injunctions, hefty damages, and even criminal penalties under Section 103 of the Trade Marks Act, 199. The case underscores that intermediaries cannot turn a blind eye to rampant trademark infringement—once alerted, inaction becomes complicity.

REFERENCES:

  1. Samridhi Enters. v. Flipkart Internet Pvt. Ltd., CS(COMM) 63/2023
  2. Lifestyle Equities C.V. v. Amazon Techs., Inc., CS(COMM) 443/2020
  3. The Trade Marks Act, No. 47 of 1999, § 29, Acts of Parliament, 1999 (India).
  4. The Information Technology Act, No. 21 of 2000, Acts of Parliament, 2000 (India).
  5. Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, G.S.R. 139(E), Gazette of India, Feb. 25, 2021 (India).
  6. The Information Technology Act, No. 21 of 2000, § 79, Acts of Parliament, 2000 (India).
  7. The Trade Marks Act, No. 47 of 1999, § 103, Acts of Parliament, 1999 (India).

Author:
* Khyati Jain, Advocate
For Anumita Verma & Co. Advocates & IPR Attorneys

Disclaimer: The opinions expressed in the article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of the Alliance Centre for Intellectual Property Rights (ACIPR) and the Centre does not assume any responsibility or liability for the same.