CHRISTIAN LOUBOUTIN SAS Vs NAKUL BAJAJ1

Single Judge of the Delhi High Court

November 02nd, 2018

Vide order dated November 02nd , 2018 a Single Judge of the Delhi High Court, confirmed an
interim injunction in favour of the Plaintiff. The matter was pertaining to the suit filed by the
plaintiff, Christian Louboutin for infringement of their trademark. They had alleged that the
defendants sold counterfeit products on their website with the meta-tags of the plaintiff’s
brand name. Interim injunction was granted to the plaintiff vide order dated September 26th,
2014. The defendants seeked exemption from liability under Section 79 of the Information
Technology Act, 2011 claiming to be an intermediary. The Court decided the case and
clarified the meaning and liability of an intermediary, in favour of the plaintiffs.

I. Facts

The plaintiff company is the designer of high end luxury products and has acquired enormous
repute and goodwill in the fashion industry. The Defendants operate a website
www.darveys.com, that sold luxury products to customers.

The said suit had been filed with respect to luxury shoes manufactured by the plaintiff
company under the name “Christian Louboutin” and having a distinct “red sole” which was
also registered as a trademark under the Trademark Act, 1999. The plaintiff had alleged that
the defendants sold impaired/counterfeit products. Moreover, the defendant used “Christian”
and “Louboutin” as meta-tags to attract customers to the website. The plaintiff stated that the
Website gave an overall look that it was in approved or sponsored or has been affiliated with
the plaintiff’s products. Therefore, according to them, display of their products amounts to
infringement of their famous trademark (the ‘red sole’ trademark) and therefore, it also leads
to dissolution of the status of a luxury item denoted to the products. The Court had previously
granted interim relief to the plaintiff company vide order dated September 26th, 2014.

Defendant contested to these claims by stating that the website acted as an ‘intermediary’
between the sellers and the customers, as the sale of these products is merely to book orders
on behalf of the sellers of the products that are displayed on their online platform, even the
invoices are raised directly from the seller to the consumer, without the intervention of the

1
CS (COMM) 344/2018; order dated November 02nd, 2018, passed by Single Judge of the Delhi High Court
 website. They claimed protection under Section 79 of the Information Technology Act, 2000
which provided for exemption of liability of intermediaries unless they have actively abetted
to the offence or had knowledge of the offence being committed.

II. The following issues were formulated by the Court :

1. Whether the defendants’ use of the plaintiff’s mark, logos and image is protected
under the exemption provided in Section 79 of the Information Technology Act,
2000?
2. Whether the plaintiff is entitled to relief, and if yes, in what terms should the relief be
granted?
III. Decision

The Court went on to examine the meaning of ‘intermediary’ under the Information
Technology Act, 2000 and on various counts found that the defendant had provided the ‘seal
of authencity’ on its website regarding the products sold and had commissioned checks on its
supplies, facilitated purchases and sourced products from the third parties. To determine
precise meaning of an intermediary and difference of it from an ‘active participant’ in the
transaction, the Court laid down certain factors which basically stated that firstly, the
marketplace could engage in a variety of tasks which were listed by the Court, ranging from
identification of the products, packaging, providing discounts among others. Secondly, to
ensure that sellers are not engaged in illegal conduct in the process of selling the products to
the consumers. The Court also referred to the IT(Intermediaries Guidelines) Rules, 2011
made under Section 79(3)(b) of the Trademark Act, which required the intermediary to carry
out due diligence including the terms of use that third party content should violate intellectual
property rights.

In consideration of these factors, the Court concluded that the defendant was more than an
intermediary as it identifies, enabled and promoted the sellers having total control over the
products sold. It was emphasised that if a large number of elements are present, then the
marketplace would cross the line from an intermediary to an ‘active participant’. The court
held that ‘any active participation’ by an online marketplace would not be protected under the
‘safe harbour’ provision in Section 79.

Further, the Court examined whether there has in fact been an infringement by the defendant.
With reference to Section 2(2), 101 and 102 of the Trademark Act, the court examined the
meanings of using, applying and falsifying a mark respectively. It observed that with respect
 to applying and falsifying a particular mark, if applied to a counterfeit product, may
constitute infringement. The trademark owner would lose its huge customer base especially
in the case of luxury products. The trademark owner's brand equity would get diluted. This
would in turn be ‘conspiring, aiding, abetting or inducing’ an unlawful act contemplated in
Section 79(3)(b) and would in turn displace any safe harbour available to the online
marketplace.

In short, the Court concluded on basis of the aforementioned observations and factors that,
Firstly, that the role played by the defendant’s website was not of an intermediary but that of
an ‘active participant’ and under Section 79 could not be exempted from liability. Secondly,
the act of using the trademark of the plaintiff on counterfeit products would constitute
infringement as well as abetting to an unlawful act of falsifying the mark.

IV. Relief

The Court ordered the website to remove all meta-tags containing the plaintiff’s mark and
also ordered the defendants to notify the plaintiff’s if any counterfeit or any product
suspected to be genuine is sold before uploading. As it was submitted on behalf of defendant
that no product of the plaintiff was in fact sold on its platform, no damages were awarded to
the plaintiff.