On July 8, 2019, the Delhi High Court passed an order that had major implications for online intermediaries who served as e-commerce platforms. The Court held that e-commerce platforms were required to observe due diligence as per the Intermediary Guidelines, 2011; not to abet, conspire and aid or induce the commission of a violation of intellectual property; and to also immediately remove and disable access to the infringing material on being notified. The Court held that the question of actual knowledge of infringement would be a matter of trial and further failure to adhere to their own policies would make the e-commerce platforms liable.
The case arose after Amway India Enterprises Ltd., one of India’s largest direct selling companies, filed suits against the defendant e-commerce companies to restrain them from selling, offering for sale and advertising the plaintiff’s branded products without its consent/authorization. The question before the Court was whether the defendant platforms were entitled to protection under Section 79 of the Information Technology Act, 2000 and the Intermediary Guidelines of 2011.
The Court ruled in favour of the plaintiffs and held that Amazon and Flipkart were actively involved in the sale process which disqualified them of benefiting from the exemption from liability for IPR violations under Section 79 of the Information Technology Act. Further, the Court also held that the intermediaries had stepped into the shoes of the seller itself, setting its own retail prices, discounts, return/refunds policies etc. and had thus violated the Direct Selling Guidelines, 2016 issued by the Central Government.