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YONKER SKATES PVT LTD v. I - BOTS & ANR

Delhi High Court

Jan 15, 2018

Judgment

CaseIQ

Smart Summary (Beta)

Factual and Procedural Background

This opinion relates to a decree dated 11th December 2017 passed in favour of the plaintiff, YONKER SKATES PVT LTD, against two defendants: I-BOTS (Defendant No.1) and Flipkart Internet Pvt. Ltd. (Defendant No.2). The decree granted a permanent injunction restraining infringement of the plaintiff’s trademark "YONKER" and passing off by Defendant No.1, and a permanent injunction against Defendant No.2 restraining it from selling or allowing the sale of skates bearing the "YONKER" trademark on its portal. Additionally, Defendant No.2 was mandatorily directed to furnish the plaintiff with particulars of persons selling such skates on its portal within one month. Defendant No.2 filed an application under Section 151 CPC seeking modification of this order.

Legal Issues Presented

Whether the decree dated 11th December 2017 against Defendant No.2, an intermediary under the IT Act, should be modified to accommodate the safe harbour provisions under Section 79 of the Information Technology Act, 2000.
Whether Defendant No.2, as an intermediary, is liable for third-party sale of infringing goods on its portal or only obligated to act upon notification by the plaintiff.
Whether Defendant No.2 can be directed to implement proactive measures such as "auto block" to prevent listing of infringing goods without prior notification.
The extent and nature of Defendant No.2’s obligation to disclose particulars of sellers infringing the plaintiff’s trademark on its portal.

Arguments of the Parties

Defendant No.2's Arguments

Defendant No.2 qualifies as an "intermediary" under Section 2(1)(w) of the Information Technology Act, 2000.
Section 79 of the IT Act grants safe harbour protection to intermediaries from liability for third-party information or data hosted by them.
The intermediary’s obligation is limited to exercising due diligence as per Rule 3 of the Information Technology (Intermediary Guidelines) Rules, 2011.
Defendant No.2 enforces an embargo on users uploading content without rights and provides mechanisms for content owners to notify infringing content.
The existing decree defeats the safe harbour provisions by imposing liability on Defendant No.2 for third-party sales.
It is impractical for Defendant No.2 to control listings proactively; instead, the plaintiff should notify Defendant No.2 of infringing URLs, after which Defendant No.2 will remove the listings within 48 hours.
Reliance was placed on the court’s prior judgment in Kent RO Systems Ltd. v. Amit Kotak (2017) and paras 117-118 of Shreya Singhal v. Union of India AIR 2015 SC 1523, supporting limited intermediary liability and due diligence obligations.
Defendant No.2 contended that "auto block" mechanisms are not mandated by the IT Act or related regulations.

Plaintiff's Arguments

The plaintiff argued that once a complaint is lodged with an intermediary about an infringing product, the intermediary must verify whether other listings also infringe intellectual property rights before hosting them.
The plaintiff’s position was that intermediaries should devise mechanisms to prevent hosting infringing products proactively, not merely react to notifications.
Reference was made to the Kent RO Systems Ltd. case where the plaintiff sought proactive verification by the intermediary before hosting products.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Kent RO Systems Ltd. v. Amit Kotak (2017) 240 DLT 3	Intermediary liability and obligations to remove infringing content upon notification; limits on proactive blocking obligations.	The court relied on this precedent to maintain that the intermediary’s liability is limited and that proactive "auto block" is not mandated under the IT Act.
Shreya Singhal v. Union of India AIR 2015 SC 1523	Interpretation of intermediary liability under Section 79 of the IT Act and due diligence requirements.	Paras 117 and 118 were cited to support the limited scope of intermediary obligations and safe harbour protections.
Sabu Mathew George v. Union of India (2018) 3 SCC 229	Doctrine of "auto block" and the constitution of an expert body to detect legal violations on platforms.	The court considered this case but found no legal or technological development to extend similar directions to Defendant No.2.

Court's Reasoning and Analysis

The court examined the nature of Defendant No.2 as an intermediary protected under Section 79 of the IT Act and the limited due diligence obligations prescribed by the Information Technology (Intermediary Guidelines) Rules, 2011. The decree dated 11th December 2017 was passed in the presence of Defendant No.2’s counsel without objection, effectively rendering it a consent order. The court questioned the entitlement of Defendant No.2 to seek modification but accepted the explanation that prior counsel was not fully aware of the legal position.

The court analyzed the parties’ submissions, noting the plaintiff’s argument for proactive blocking of infringing listings and the defendant’s reliance on existing safe harbour provisions limiting its liability to action upon notification. The court referred to its earlier ruling in Kent RO Systems Ltd. and the Supreme Court’s decision in Shreya Singhal, which did not mandate proactive blocking by intermediaries.

Although the court acknowledged the principle from Sabu Mathew George regarding "auto block" mechanisms, it found no current legal or technological basis to extend such a requirement to Defendant No.2. Consequently, the court stood by its prior position that intermediaries are not obligated to proactively verify or block infringing goods before notification.

On this basis, the court modified the decree to require Defendant No.2 to act upon specific intimation from the plaintiff by stopping sales of infringing goods within a reasonable time and to furnish particulars of sellers within one month.

Holding and Implications

The application for modification of the decree dated 11th December 2017 is disposed of with the following modification:

Defendant No.2, Flipkart Internet Pvt. Ltd., is mandatorily directed to, upon receipt of intimation from the plaintiff regarding the sale of skates bearing the "YONKER" trademark on its portal, stop such sales in accordance with law. Additionally, Defendant No.2 must furnish to the plaintiff, within one month from the date of this order, all particulars in its power and possession of the persons selling such skates on its portal.

The decision clarifies that intermediaries are not required to proactively block infringing content absent notification, thereby upholding the safe harbour protections under the IT Act. No new precedent altering intermediary liability was established; the ruling reaffirms the existing legal framework balancing trademark protection and intermediary immunity.

Show all summary ...

$~32 * IN THE HIGH COURT OF DELHI AT NEW DELHI

+ CS(COMM) 683/2016 YONKER SKATES PVT LTD ..... Plaintiff Through: Mr. D.K. Yadav, Adv. Versus

I - BOTS & ANR ..... Defendants Through: Mr. Abhishek Malhotra & Mr. Utkarsh, Advs. for D-2.

CORAM:

HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

O R D E R

% 15.01.2018 IA No.603/2018 (of the defendant no.2 under Section 151 CPC for th

modification of order dated 11 December, 2017)

1. Vide order dated 11^thDecember, 2017, a decree was passed in favour of plaintiff and (i) against the defendant no.1 I-BOTS, of permanent injunction restraining infringement of trade mark and passing off and of recovery of damages and costs, and, (ii) against the defendant no.2 Flipkart Internet Pvt. Ltd., of permanent injunction restraining the defendant no.2 from selling the skates or allowing sale on its portal of skates for the purpose of sports with the trade mark „YONKER", and, (iii) of mandatory injunction directing the defendant no.2 to, within one month therefrom, furnish to the plaintiff all the particulars in its power and possession of the person/s selling the skates under the name „YONKER" on its portal.

2. The defendant no.2 seeks modification of the aforesaid order pleading

(a) that the defendant no.2 falls within the definition of „intermediary" under Section 2(1)(w) of the Information Technology Act, 2000 (IT Act); (b) that Section 79 of the IT Act exempts an intermediary from any liability for any third party information, data or communication link made available or hosted by it; (c) that the limited obligation imposed on an intermediary is to exercise due diligence in terms of Rule 3 of Information Technology (Intermediary Guidelines) Rules, 2011; (d) that the defendant no.2 imposes an embargo on its users from uploading content in which they do not possess the relevant rights and at the same time gives content owners the option of notifying the defendant no.2 in the event it is found by the user that any content hosted on the website is without licence or of infringing nature; (e) that the decree for permanent injunction against the defendant no.2 has the effect of defeating the „safe harbour" provisions of Section 79 of the IT Act. Modification of the order dated 11^thDecember, 2017 is sought to the effect that upon the plaintiff notifying the defendant no.2 of specific URL(s) where goods under the mark „YONKER" of the plaintiff are being sold / made available, the defendant no.2, within 48 hours thereof will remove the list of the goods under the mark „YONKER".

3. The counsel for the plaintiff appears on advance notice and

considering the nature of the application, need to call for reply thereon is not felt and the counsels have been heard.

4. The counsel for the applicant / defendant no.2 has argued, (i) that it is not possible for the defendant no.2 to control listing on its portal of goods i.e. skates for the purpose of sports with the trade mark „YONKER" and it should be the plaintiff who should be vigilant and if finds anyone selling goods under the mark „YONKER" on the portal of the defendant no.2, should notify the defendant no.2 of the same and whereupon the defendant no.2 will prohibit transactions in respect of the said goods. Reliance is placed on my judgment in Kent RO Systems Ltd. Vs. Amit Kotak (2017)

240 DLT 3 and on paras no.117 and 118 of Shreya Singhal Vs. Union of India AIR 2015 SC 1523.

5. The order dated 11^thDecember, 2017 was made in the presence of the counsel for the applicant / defendant no.2. The only contention of the applicant / defendant no.2 on 11^thDecember, 2017 was that the defendant no.2, as an intermediary, could not be made liable for any damages. Rather, it was stated that the applicant / defendant no.2 was willing to abide by the orders of the Court including of disclosing to the plaintiff the particulars of the persons selling the impugned goods on the portal of the applicant /

defendant no.2. Moreover, the decree as passed on 11^thDecember, 2017 against the defendant no.2 was passed in the presence of the counsel for the defendant no.2 and without any objection from him to the order / decree being passed. I have thus enquired from the counsel for the applicant / defendant no.2, whether not the order dated 11^thDecember, 2017 is in the nature of a consent order insofar as against the applicant / defendant no.2 and what is the entitlement of the applicant / defendant no.2 to seek modification thereof.

6. The only explanation of the counsel for the applicant / defendant no.2 is that a junior colleague from his office who was not fully aware of the legal position had appeared on 11^thDecember, 2017.

7. The contention of the counsel for the plaintiff in Kent RO Systems Ltd. supra was that once a complaint is lodged with an intermediary (eBay India Pvt. Ltd. in that case) with respect to the offending product of one of the sellers / retailers, the intermediary on its own, before hosting a product of any other seller / retailer, should verify whether the same also infringes the rights of the plaintiff and that an intermediary is required to device a mechanism to, before hosting any product for sale on its system / website, verify whether the same infringes the intellectual property rights of any

other person.

8. The aforesaid contention was not accepted and the suit, insofar as against eBay India Pvt. Ltd., was disposed of by binding the defendant no.2 eBay India Pvt. Ltd. to its statement that it will immediately on receipt of complaint from the plaintiff, remove the offending products from its website / portal. However as a post script to the judgment, mention was made of

Sabu Mathew George Vs. Union of India (2018) 3 SCC 229 referring to the principle / doctrine of "auto block" and directing Google India, Microsoft Corporation (I) Pvt. Ltd. and Yahoo India to constitute an „In House Expert Body" to detect violation, on their respective platforms, of the provisions of The Pre-conception and Pre-natal Diagnostic Techniques (Prohibition of Sex Selection) Act, 1994.

9. I have in furtherance to above enquired from the counsel for the applicant / defendant no.2 as to why it is not possible for the applicant / defendant no.2, as an intermediary, to also introduce „auto block" on its platform so as to block uploading of skates for the purpose of sports under the name „YONKER" or under any other name or mark deceptively similar thereto.

10. The counsel for the applicant / defendant no.2 again referred to the

elaborate reasons given by me in Kent RO Systems Ltd. supra to contend that the same is not envisaged by the IT Act and the Regulations made thereunder. It was further contended that to the same effect are paras no.117 and 118 of Shreya Singhal supra.

11. Though I have delayed the release of this order being of the opinion that if a direction as issued by the Supreme Court in the case of Sabu Mathew George supra can be issued, so can such a direction be issued to applicant / defendant no.2 also but my further research has not disclosed any other development in law or in technology on the said aspect till now and thus it is deemed appropriate to stand by what was held by me in Kent RO Systems Ltd. supra.

12. Accordingly, the application is disposed of by modifying the decree dated 11^thDecember, 2017, insofar as against applicant / defendant no.2 Flipkart Internet Pvt. Ltd., as under:

"against the defendant no.2 Flipkart Internet Pvt. Ltd., of mandatory injunction directing the defendant no.2 to from time to time, on receipt of intimation from the plaintiff, of the defendants or anyone else selling skates for the purpose of sports on the portal of the defendant no.2 with the trade mark

„YONKER", in accordance with law, stop such sales and of mandatory injunction directing the defendant no.2 to, within one month of today, furnish to the plaintiff all the particulars in its power and possession of the person/s selling the skates for the purpose of sports under the name „YONKER" on its portal"

13. The application is disposed of.

RAJIV SAHAI ENDLAW, J

JANUARY 15, 2018

„gsr"..

(Corrected & released on 30^th May, 2018)