E-commerce Websites not bound to keep a check on products for IP infringement before advertising on their website

A. Case Law I –  E-commerce websites are not bound to keep a check on products for IP infringement before advertising on their website

I. Parties:

Plaintiff: Kent RO System (Water purifier manufacturer)
Defendant: Mr. Amit Kotak of E-Commerce platform- E-bay

Citation: CS (COMM) 1655/2016 & IA No. 15914/2016

Court: Delhi High Court

II. Facts of the case:

The plaintiffs-manufacturer of water purifiers sought protection by obtaining design registrations under the Designs Act, 2000 in respect of the aesthetic appearance of its water purifier systems stated that products covered by the plaintiffs registered designs are being marketed and sold by the defendant through e-commerce platform-Ebay constituting piracy under the Designs Act, 2000 and alleged that Ebay’s action of permitting the defendant to advertise, offer for sale and sell its products too amounts to infringement of the plaintiffs rights under Section 19 of the Designs Act.

The plaintiffs sought relief against Ebay to take down, remove, delist all products infringing the registered designs of the plaintiffs and issue of prohibitory injunction from allowing products infringing the registered designs of the plaintiffs being offered for sale and sold from their portal. Plaintiffs contended that Ebay being an intermediary had a duty to do due diligence in order to ensure that before posting any information on its computer resources, it is important to satisfy itself that the same does not infringe the intellectual property rights of any person. Ebay averred referring to Section 79 of the IT Act, 2000 which states that an intermediary shall not be liable for any third party information, data, or communication link made available or hosted by him.

III. Judgement:

The Court accepted this contention observing that asking the intermediary e-commerce websites to screen the products they advertise for infringement of IPR would amount to an unreasonable interference with the rights of the intermediary to carry on its business. The Court held that the intention of the Legislature has been to require the intermediaries to be vigilant and to only declare to all its users its policy and advise them not to host any infringing information on the website of the intermediary and on receipt of complaint remove the same within 36 hours whereas no requirement of keeping a check upon the nature of products being advertised has been posed by the Legislature and did not pass any such directions to Ebay as sought by the plaintiffs.

B. Case Law II – Competition Act, 2002 – publication of legal notices in newspapers – OP charging higher fees than other newspapers – whether abuse of dominance

I. Parties:

Plaintiff: Rakesh Sanghi
Defendant: Bennett, Coleman & Company Ltd & ANR

II. Facts of the Case

As per the information, the Informant is a lawyer practicing in the city of Hyderabad. It is stated that the Informant is required to publish notices on behalf of his clients for certain purposes such as transactions of land/ real estate, cautioning prospective purchasers against buying disputed properties etc.

It is averred that the Informant wanted to publish a caution notice in the Hyderabad edition of the newspapers published by the OPS. The rates charged by the OPs was around Rs.1,00,000/-. The Informant has averred that the rate quoted by the OPs for the said advertisement is much higher than the rates for similar advertisement in other newspapers circulated in Hyderabad and Secunderabad.

As per the information, OP 1 is charging two different rates for commercial and non-commercial advertisements in its newspaper. It is stated that for commercial advertisements, it is charging more as compared to non-commercial advertisements. The Informant has averred that OP 1 has converted his legal notice, which falls under non-commercial advertisement, into a commercial advertisement as merely the name of a Private Limited Company has been mentioned in the said legal notice.

Decision: Complaint dismissed.

III. Reasons for dismissal:

The Commission has perused the information and the materials available on record. It is observed that the Informant is aggrieved by the conduct of OPs of quoting exorbitant rates for advertising legal/ public notices in their newspapers in the twin cities of Hyderabad and Secunderabad in the State of Telangana. The Commission notes that the Informant is an Advocate practicing in the Courts of Hyderabad and on instruction of his clients, he publishes public/ legal notices in the newspapers of the OPs in order to give them wide publicity. Thus, the provision of services relating to publication of advertisements including public/ legal notices etc. in newspapers may be considered as the relevant product market in this case. With regard to the relevant geographic market, the Commission observes that the geographic area of Hyderabad and Secunderabad may be considered as the relevant geographic market in this case. It is so because the Informant had proposed to publish the said notice in the newspapers in the geographical area of Hyderabad and Secunderabad. Accordingly, ‘the provision of services related to publication of advertisements including public/ legal notices etc. in the newspapers in Hyderabad and Secunderabad’ may be considered as the relevant market in this case. With regard to dominance, the Commission observes that in the twin cities of Hyderabad and Secunderabad, the major Telugu daily newspapers such as Eenadu, Sakshi, Vaartha, Andhrajyothi, Surya, Prajasakti, Andhrabhoomi, Andhra Prabha and Namaste Telangana; the major English daily newspapers such as The Times of India, The Hindu, The Deccan Chronicle, Business Standard and The Economic Times; the major Urdu daily newspapers such as The Siasat Daily, The Munsif Daily, The Etemaad and Rahnuma-i Decca; and the Hindi daily The Daily Milap are in circulation. Besides, there are a number of local newspapers also in circulation in the aforesaid relevant geographical market. Therefore, the presence of a large number of other English newspapers and regional dailies in Hyderabad and Secunderabad prevents the OPs from exercising any kind of market power independent of market forces and the presence of such large number of other newspapers in the aforesaid market also provides more choices to the Informant which are substitutable in nature. Therefore, the Commission is of the view that neither OP 1 nor OP 2 possess the market power to act independently of competitive forces in the relevant market as defined supra or to affect its competitors or consumers or the relevant market in its favour. Therefore, neither OP 1 nor OP 2 is found to be dominant in the relevant market. In the absence of dominance of OP 1 or OP 2 in the relevant market, the question of abuse of dominance by them in terms of Section 4 of the Act does not arise. In the light of the above analysis, the Commission finds that no case of contravention of the provisions of Section 4 of the Act is made out against any of the OPs in the instant matter. Accordingly, the matter is closed under the provisions of Section 26(2) of the Act.

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