What legal remedies are available for e-commerce sellers who fall victim to IP theft or piracy?

The recent conflicts between numerous e-commerce platforms and various IP rights holders, particularly in India, have brought to light problems experienced by trademark and copyright holders and customers. Numerous incidents have come to light demonstrating trademark infringement and counterfeiting by dishonest vendors, endangering consumers and damaging the reputation of established brands. Although some e-commerce platforms, such as Amazon, have transparent takedown, privacy, and intellectual property (IP) policies, others do not, and as a result, everyone is now suffering the consequences. 
Sometimes, platforms will issue bills in the service provider's name, but they will keep the money they receive. Additionally, several online marketplaces offer users a platform to contribute information for later distribution. Take auction websites, for example, where one user uploads pictures of his wares and tags them with a price, and another user merely agrees to buy it from the stated seller. The receipt, storage, or transfer of such a record of that product through the website would be considered. The question of whether the operators of these platforms can still be regarded as middlemen in these circumstances is, therefore, always up for debate.

What are the applicable laws for regulating such intermediaries in India? 

The Information Technology Act, 2000 (the IT Act) was amended in 2008 to include provisions relating to intermediary liability. Section 2(1)(w) of the IT Act defines an "intermediary" as any person who receives, stores, or transmits an electronic record on behalf of another person or renders any service concerning that record. The main rule governing intermediary liability is in Section 79 of the IT Act, which states that an intermediary is not responsible for any third-party information made available or hosted by them if their role is limited to facilitating access. They did not initiate, select, or modify the transmission. Therefore, any seller running the business online, on any e-commerce or social media platform, should know the rights available under the said provision. Some people have referred to these laws in the context of e-commerce as a legal "subsidy" given to e-commerce businesses, enabling them to build up quickly with only minimal costs and legal compliance.

Being a seller on Ecommerce, what are the probable risks one may face? 

  • The "uncontrolled" sale of fake goods- It is standard practice for the goods sold by different vendors on e-commerce platforms to be original items produced by the right holders and obtained from the open market through illegal ways or leaks in the claimant's supply chains. 
  • IP infringement - Internet intermediaries have recently been named parties in several cases involving intellectual property infringement, including offensive material posted by third parties. The sale of fake goods on these platforms immediately infringes on the property rights of the companies that own the intellectual property for those goods. For instance, these platforms feature and sell fake shoes that bear the registered trademark of the well-known XYZ brand. Ultimately, this leads to deception and harms the registered IP owner's reputation.

Recently, there has been an upsurge in IP violations, especially for businesses expanding online; even if they have established big names, the infringers impose a financial threat and risk on goodwill. Some of the mention-worthy cases are:

  • Bulgari Spa vs Samaira Jewels Pvt. Ltd.  
    The Delhi High Court prohibited six Delhi jewellery stores from mentioning the registered designs and word marks on any websites or locations, whether online or offline, on April 10, 2023.  Plaintiff "BULGARI" claimed that the defendants, jewellery stores in New Delhi, are creating and marketing fake jewels while imitating its registered designs and confusingly similar word marks. 
  • Casio vs. Riddhi Siddhi Retail Ventures  
    The musical keyboard, which is confusingly like the plaintiff's registered design, cannot be manufactured, advertised, or sold, according to an interlocutory decision issued by the Delhi High Court in favour of the Plaintiff, Casio.

The Plaintiff, Casio, is a well-known company that manufactures a variety of goods, with musical keyboards being one of the important ones.

For a business owner, who is giving his heart and soul to establish a name in the industry, they must take certain precautions, such as trademark registration, copyright registration and the compliances related to it. So, if there is an infringement which is hampering them financially and causing harm to their reputation, they can take a legal action.​
What are the available remedies for a seller on e-commerce if the IP rights are infringed? 

For any growing seller, we at Trademarkclick try to give a hand to manage unexpected disputes, and if there is an IP infringement, the below-mentioned procedure is followed: 
Step 1: Investigation  
It's crucial to compile all the facts and evidence first. Trademarkclick can assist you by providing a lead so you can find the counterfeit goods and notify the relevant management. Typically, this would be a lead. Therefore, a thorough investigation is required to gather pertinent information to support legal action, such as specifics about the offender, the location of the items' manufacturing facilities, etc. ​
Step 2: Cease and Desist Notice   
Subsequently, it is standard procedure to send a cease-and-desist notice to the e-commerce platform, requesting that it remove the fake goods from stock and permanently revoke the seller's authorisation granted by the platform. Legal action is only if the platform does not respond to or acknowledge the request. However, most of the time, the platforms use the IT Act 2000's loopholes to avoid responding to the cease-and-desist notification, leaving the user with little choice but to file a lawsuit. 
Step 3: Injunction petition 
An injunction is a legal remedy that a court of law can issue to forbid a party from committing or continuing a wrongdoing that has already started. A person or organisation that disobeys an injunction issued by a court may be subject to criminal, civil, or other sanctions and contempt of court charges. ​
Step 4: Damages 
Appropriate punitive damages may be requested to compensate for the irreparable loss and harm to the brand caused by the defendant's actions in selling counterfeit goods branded with the plaintiff's trademarks. 

The current framework requires that e-commerce platforms act in cases of IP violations after receiving actual knowledge from the IP holders. Still, a frequent counterargument claims that these platforms should be required to appoint an investigation body to conduct a preliminary check of the infringing material uploaded on their platforms. Since almost all intermediaries employ technology to keep an eye on internet data, they can keep an eye on and, to a limited extent, analyse the information supplied to their resources.