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IN THE HIGH COURT OF DELHI AT NEW DELHI
RAJIV SAHAI ENDLAW, J.
KENT RO SYSTEMS LTD & ANR. – Plaintiff
Versus
AMIT KOTAK & ORS. – Defendant
CS(COMM) 1655 of 2016 & IA No.15914 of 2016
Decided On : 18-01-2017
Intermediary Obligations - Designs Act - 2000 - Summary of Acts and Sections: Designs Act, 2000 - Sections 19, 22(1)(c); Information Technology Act, 2000 - Section 79, Section 79(3); Information Technology (Intermediaries Guidelines) Rules, 2011 - Rule 3(1), Rule 3(2)(d), Rule 3(3), Rule 3(4), Rule 3(5), Rule 3(6), Rule 3(7), Rule 3(8), Rule 3(11) - The court discussed the obligations of intermediaries under the Designs Act and the Information Technology Act, particularly focusing on the due diligence requirements and the liability exemptions for intermediaries. The court analyzed the plaintiffs' contentions regarding the obligations of the defendant No.2 eBay as an intermediary and the interpretation of the IT Rules. The court also considered relevant case law and international standards in its decision.
Fact of the Case:
The plaintiffs, manufacturers of water purifiers, sought protection under the Designs Act, 2000 for their registered designs. They alleged that the defendant No.1's water purifiers infringed their designs and were being sold through the defendant No.2 eBay's e-commerce platform. The plaintiffs requested the court to direct the defendant No.2 to remove infringing products and provide account of profits made.
Finding of the Court:
The court analyzed the plaintiffs' contentions regarding the obligations of the defendant No.2 eBay as an intermediary and the interpretation of the IT Rules. The court also considered relevant case law and international standards in its decision. The court found that the IT Rules only required the intermediary to remove/disable infringing content upon receipt of a complaint and did not impose a duty to proactively screen all hosted content for infringement. The court held that requiring such screening would be an unreasonable interference with the rights of the intermediary to carry on its business. The suit against the defendant No.2 was disposed of, binding the defendant No.2 to its statements and the directions issued in the order.
Issues: The main issue revolved around the obligations of the defendant No.2 eBay as an intermediary under the Designs Act, 2000 and the Information Technology Act, 2000, particularly regarding the screening of hosted content for infringement of intellectual property rights.
Ratio Decidendi: The court's decision was based on the interpretation of the IT Rules and relevant provisions of the Designs Act and the Information Technology Act. The court found that the IT Rules only required the intermediary to remove/disable infringing content upon receipt of a complaint and did not impose a duty to proactively screen all hosted content for infringement. The court held that requiring such screening would be an unreasonable interference with the rights of the intermediary to carry on its business.
Final Decision: The suit against the defendant No.2 was disposed of, binding the defendant No.2 to its statements and the directions issued in the order, leaving the parties to bear their own costs.
1. Though the report of service is awaited but the counsel for the plaintiffs has filed affidavit of service of both the defendants.
2. One gentleman disclosing himself to be Mr. Amit Shabhulal Kotak appears and the counsel for the plaintiffs states that she identifies him as defendant No.1. The said Mr. Amit Shabhulal Kotak has also handed over his Driving Licence and a self attested photocopy of the same be kept by the Court Master on the file.
3. The defendant No.1 states that he has no objection to the suit, insofar as for the relief of permanent injunction, being decreed against him subject to the plaintiffs giving up their claim for damages and accounts.
4. The counsel for the plaintiffs is agreeable thereto.
5. I have ensured by speaking to Mr. Amit Shabhulal Kotak in vernacular language that he understands the consequences.
6. Accordingly, a decree is passed in favour of the plaintiff and against the defendant No.1 in terms of prayer paragraph 51(a), (b) & (c) of the plaint, leaving the plaintiffs and the defendant No.1 to bear their own costs.
7. Decree sheet be drawn up.
8. The counsel for the defendant No.2 eBay India Private Limited (eBay) also appears. The defendant No.2 has also filed documents.
9. The plaintiffs (and of which plaintiff No.2 Mr. Mahesh Gupta is the Chairman and Managing Director of the plaintiff No.1) have instituted this suit pleading (i) that it is a manufacturer of water purifiers and has sought protection by obtaining design registrations under the Designs Act, 2000 in respect of the aesthetic appearance of its water purifier systems; (ii) that the products covered by the plaintiffs registered designs are being marketed and sold by the plaintiffs; (iii) that making, using or sale of any water purifier using the shape and design as registered by the plaintiffs constitutes piracy under the Designs Act; (iv) that the plaintiffs have a huge presence in the online market place with e-commerce websites including the defendant No.2; (v) that the defendant No.2 eBay is an e-commerce platform/portal through which sellers of various products showcase, sell their products and carrying on business; (vi) that the defendant No.2 eBay is also responsible for addressing the grievances of sellers including the claims of infringement through the website; (vii) that the defendant No.2 eBay acts as an ‘intermediary’, facilitating the transaction between a seller and buyers of various goods; (viii) that the defendant No.1 is a manufacturer and/or trader of water purifier systems whose shape, look and appearance are deceptively similar and infringe the water purifiers of the plaintiffs for which the plaintiffs have been granted registrations; (ix) that the defendant No.1 sells its goods to various customers through the website of the defendant No.2; (x) that the action of the defendant No.2 eBay of permitting the defendant No.1 to advertise, offer for sale and sell its water purifiers through the portal of the defendant No.2 amounts to infringement of the plaintiffs rights under Section 19 of the Designs Act; (xi) that as per the guidelines formulated under the Information Technology Act, 2000 (IT Act), intermediaries such as the defendant No.2 are expected to observe certain due diligence while discharging their duties including an obligation to inform users not to host, display, upload, modify, publish, transmit, update or share information that infringes the intellectual property rights of any party as well as to take steps to avoid sale of such infringing products; (xii) that when one brings to the attention of the intermediary such violations, the intermediary is required to take down all such offending content; (xiii) that the plaintiffs drew the attention of the defendant No.2 eBay to the infringement by the defendant No.1 as well as by the defendant No.2; (xiv) that the plaintiff also brought to the notice of the defendant No.2 eBay that several others who were similarly offering for sale and selling wat
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