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2020 (1) TMI 1631
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....hal, Aditi Menon, Ketal Paul, Tushar Bhushan, Amartya Bhushan, Ayush Samaddar, Advocates, Parag P. Tripathi, Sr. Advocate, Saikrishna Rajagopal, Sidharth Chopra, Sneha Jain, Savni Dutt, Devvrat Joshi, Surabhi Pande, Nilofar Absar, Abhiti Vaccher, Vivek Ayyagari, Priya Adlakha, Tulip De, Ashish Sharma, Ruhee Passi and Tejas Chabra, Advocates JUDGMENT Dr. S. Muralidhar, J. 1. These are six appeals directed against the same impugned common judgment dated 8th July, 2019 passed by the learned Single Judge in interlocutory applications filed in the corresponding suits by the Respondents in these appeals. By the said judgment, the learned Single Judge has injuncted the Appellants from selling the goods of the Respondents, who claim to be Direct Selling Entities ('DSEs') in terms of the Model Framework for Guidelines on Direct Selling dated 26th October, 2016 i.e. Direct Selling Guidelines ('DSGs'), on the Appellants' e-commerce platforms. 2. Three of the present appeals i.e. FAO (OS) 133/2019, 134/2019 and 135/2019 are by Amazon Seller Services Private Limited ('Amazon') against Amway India Enterprises Private Limited ('Amway'), Oriflame India Priva....
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.... on 3rd August, 1995. On 4th August, 2004, GoI granted approval to Amway to set up its own manufacturing facilities for manufacture of personal care and cosmetic products and to also import fragrances, shampoos, lotions, body firming gels, scrubs etc. This was made subject to the conditions which inter-alia were that Amway would not undertake domestic retail trading in any form and that the imports would be in accordance with the prevailing Export-Import ('EXIM') policy. Amway obtained a licence from the Food Safety and Standards Authority of India (FSSAI) in terms of Food Safety and Standards Act, 2006 ('FSS Act') and the Food Safety and Standards Regulation, 2011 ('FSS Regulation'). 8. Amway Corporation is stated to be a member of the World Federation of Direct Selling Associations ('WFDSA') and is stated to operate in more than 100 countries and territories worldwide. Explaining the DSBM, Amway states that such a model offers an "unparalleled opportunity" to Indian customers "to own and operate their own business by enrolling themselves as a Direct Seller" with Amway and sell its "high-quality consumer products on a principal-to-principal basis u....
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....o. 3) another seller on Amazon's platform and stated to be an "affiliate/associate company of Amazon", and Amazon (Defendant No. 4), was that Amway cannot sell its products through channels of e-commerce/online portals or mobile apps. According to Amway, sale of its products through any e-commerce or online portal in the absence of a written contract with Amway, is unauthorised both in terms of its "Code of Ethics" as well as clause 7 (6) of the DSGs. Amway claims that it has not provided any written consent to any of its Direct Sellers to undertake or solicit sale, or offer its products through third party e-commerce websites/mobile apps. Amway is unable to guarantee the authenticity and quality of such products which are purchased from unauthorised sources and its product refund policy does not apply to such unauthorised purchases. 13. Amway claims that it received complaints from its Direct Sellers that Amway products were being sold on various e-commerce/online portals or mobile apps and wholesale and retail shops illegally at unwarranted discounts resulting in a decline in the sales of the Amway's Direct Sellers. The further allegation was that such unauthorised selle....
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....stand was contrary to Amazon's "exclusion policy" that did not allow on its online portal the sale of products by a person in the following situations: "who is not (a) the "authorized reseller" (as designated by the manufacturer or distributor; or (b) where the manufacturer's standard warranty is not being provided to the consumer; or (c) where the product is placed on the market without the consent of the relevant brand or trademark owner." 18. Amway sent another notice dated 6th November, 2017 to Amazon refuting the averments made by Amazon in their reply dated 11th October, 2017. Amway contended that Amazon was "actively involved" in the sale of its products and was "providing services such as helping sellers manage their accounts, increase visibility, discoverability and sale of products, listing of products etc". According to Amway, Amazon was also publishing advertisements in the print media offering Amway products on its online portal. 19. Amway states that Amazon and its affiliates were not acting merely as "intermediaries", but were actively involved in the sale of Amway products. This averment is in the context of Amazon contending that it falls within the def....
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....oyees or any one claiming under them, directly or indirectly, from in any manner purchasing, possessing, selling, distributing, offering for sale, advertising/displaying Plaintiffs 'Amway products' from its website www.amazon.in and mobile application "Amazon Online Shopping" or any other platform, without the prior written consent of the Plaintiff." 24. The further incidental prayer was for a direction to the Defendants to "disclose the details of the distributors/dealers/Direct-Sellers of the Plaintiff from whom they are procuring the 'Amway products' or any other person or entity involved in such unauthorised transaction of 'Amway products'". The final prayer in the plaint was for a decree of damages in the sum of Rs. 2,00,01,000/- together with interest at 18% per annum thereon from the date of filing of the suit till its realisation apart from unquantified punitive damages. 25. At the first hearing of the suit i.e. CS (OS) 480/2018 on 26th September, 2018, the learned Single Judge passed an order granting an interim injunction restraining the Defendant Nos. 1 to 3 not to offer for sale any of the products in the Amway range either through the website ....
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....he DSGs, claiming that the said guidelines have the force of law. 31. At this stage of the case, Ms. Maninder Acharya, learned Additional Solicitor General of India ('ASG') appeared and submitted that the Direct Selling Guidelines "have to be followed though they are advisory in nature". According to the ASG, guidelines of such nature had been issued "by various Ministries and have binding effect under Article 77 of the Constitution." It was noted by the learned Single Judge in the order dated 14th February, 2019 that an affidavit would be filed in that regard. An interim injunction of similar nature was issued. It may be noted here that Oriflame too claims that it is a DSE which is bound by the DSGs and that the sale of its products on Amazon's online platform without its consent, would be in violation of Clause 7 (6) of the DSGs. 32. The third appeal by Amazon, i.e. FAO (OS) 135/2019, arises from CS (OS) 75/2019 filed by Modicare which also claims to be a DSE governed by the DSGs. This suit was filed against Amazon (Defendant No. 1) and two other sellers on Amazon's platform i.e. Laxmi Enterprises (Defendant No. 2) and Modicare DP Store (Defendant No. 3). On 5th....
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....ich, i.e. CS (OS) 410/2018, 453/2018, 480/2018, 531/2018 and 550/2018, were filed by Amway and one each, CS (OS) 75/2019 and 91/2019, were filed by Modicare and Oriflame respectively. 37. It also requires to be noted here that Union of India was not made a party in any of the suits. However, when the Oriflame Suit CS (OS) 91/2019 was first listed on 13th February, 2019, the learned Single Judge issued notice to the learned ASG in order to elicit the stand of Union of India in respect of the legality and validity of the DSGs, and listed the matter for the following day i.e. 14th February, 2019 on which date an order was passed which has been referred to hereinbefore. The impugned judgment reflects that apart from all other counsel for the private parties, the learned ASG was also heard by the learned Single Judge. 38. In para 142 of the impugned judgment the learned Single Judge formulated the following four issues for determination: "i) Whether the Direct Selling Guidelines, 2016 are valid and binding on the Defendants and if so, to what extent? ii) Whether the sale of the Plaintiffs' products on e-commerce platforms violates the Plaintiffs' trademark rights or consti....
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....by a Gazette notification were binding on e-commerce platforms and sellers on such platforms. It was held that the online platforms were aware that they were bound to enforce the said guidelines which reflected the current public policy and that the online platforms had "deliberately chosen to only set up the alleged illegality and non-binding nature of these guidelines only by way of defence." 41. In coming to the above conclusion the learned Single Judge referred to the decisions in Bijoe Emmanuel v. State of Kerala (1986) 3 SCC 615 hereafter (Bijoe Emmanuel'), Union of India v. Naveen Jindal (2004) 2 SCC 510, Gulf Goans Hotels Company Limited v. Union of India (2014) 10 SCC 673, Delhi International Airport Limited v. International Lease Finance Corporation (2015) 8 SCC 446, New Delhi Municipal Council v. Tanvi Trading and Credit Private Limited (2008) 8 SCC 765, Union of India v. Moolchand Khairati Ram Trust AIR 2018 SC 5426, U Unichoyi v. State of Kerala AIR 1962 SC 12; Indian Drugs & Pharmaceuticals Limited v. Punjab Drugs Manufacturers Association (1999) 6 SCC 247 and Dalmia Cement (Bharat) Limited v. Union of India (1996) 10 SCC 104 and the decision of this Court in Zal....
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....cts and that such products were repackaged and re-sealed by the online market places. Since the source of the goods sold on the online market places were not easily determinable, they were not lawfully acquired in terms of Section 30 (3) of the TM Act. 46. The learned Single Judge noted the contention of the Defendants that the suits were not based on violation of trade mark rights and observed that "While it may be true that the plaints are not structured like a traditional trademark plaint would be, the same does not mean that the Plaintiffs do not complain of violations of trademark rights." It was further observed that: "The allegations in the plaint are clearly based on provisions akin to misrepresentation in the context of passing off and dilution, as also violation of trademark rights as stipulated and protected under Section 29 of the Trade Marks Act, 1999. Moreover, the defence of Section 30 has been set up by the Defendants only because they are aware that if the said defence fails, the use of the Plaintiffs' marks results in infringement." 47. In arriving at the above conclusion the learned Single Judge discussed and distinguished the decision of the Division Ben....
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....ks clearly constitutes 'use' under Section 2 (2)(c) of the TM Act, 1999 which is the reason why the platforms obtain licenses for the marks from the sellers and warranties that they are authorised and that the products are genuine. These licences are themselves FAKE because the so-called licensors are not the owners of the marks nor do they have any permission to licence the marks. What is not owned cannot be licensed. Sellers have no rights if owners have not given consent." 51. The learned Single Judge further held that: "The platforms are also indulging in conduct falling under Section 29(6) of the Trade Marks Act as they are affixing the marks on the products, packaging the same and putting the same in the market for sale. Amazon is specifically using the Plaintiffs' mark Amway in advertising, without actual knowledge that the said products being sold on its platform are genuine or not and whether they are tampered with or not." 52. Reference was made by learned Single Judge to the decision of the Division Bench of this Court in Baker Hughes Limited v. Hiroo Khushalani (1998) 74 DLT 715, the decision of the European Court of Justice in Case C-16/03 (Peak h....
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....ediary Guidelines. 2011. Non-compliance with the Platforms' own policies would take them out of the ambit of the safe harbour." 56. On the last issue, i.e. issue (iv) regarding tortious interference with contractual relations, the learned Single Judge observed inter alia that: "The companies and entities, which run e-commerce platforms, have a greater obligation to maintain the sanctity of contracts, owing to the sheer magnitude and size of their operations. When an e-commerce platform is notified of existing contracts and violation of the same on its platform, the least that the platform would have to do would be to ensure that it is not a party, which encourages or induces a breach. The manner, in which e-commerce platforms operate, makes it extremely convenient and easy for ABOs/distributors/direct sellers to merely procure the products from the Plaintiffs and defeat the purpose of the contractual obligations by selling in the grey market to unidentified persons, who may, thereafter, put them in the e-commerce stream, without any quality controls. In this manner, such ABOs/distributors/sellers may sell outdated products, expired products, damaged products and hide behind ....
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....g tampered with by removal of the codes, removal of the inner seal. Thinners and glues are being used to remove the codes and the products are being re-sealed, may be even under unhygienic conditions. In some cases, expired products are being given new manufacturing dates. Such tampering and impairment is, clearly, violative of the Plaintiffs' statutory and common law rights." 61. On the policies of the online platforms, it was observed by learned Single Judge as under: "All the platforms have their own policies, which broadly state that they respect the Intellectual Property Rights of trademark owners and that upon any grievance being raised, they are willing to take down. The Policies of all the platforms clearly are simply 'Paper policies' which are clearly not being adhered to as the facts of these cases go to show. They are a mere lip-service to the Intermediary Guidelines of 2011. None of the platforms are insisting on any of the sellers obtaining consent of the Plaintiffs for sale of their products on the e-commerce platforms, where their own policies require them to do so. Unless and until, the sellers are authorized by the Plaintiff, they cannot be allowed t....
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.... was Defendant No. 4 in CS (OS) 480/2018, Defendant No. 1 in CS (OS) 75/2019 and Defendant No. 6 in CS (OS) 91/2019 has filed three appeals; Cloudtail, which was Defendant No. 3 in CS (OS) 480/2018 and Defendant No. 2 in CS (OS) 91/2019 has filed its two appeals, and Snapdeal, which was Defendant No. 9 in CS (OS) 453/2018 has filed the 6th Appeal. The remaining Defendants in the above seven suits have not challenged the impugned judgment of the learned Single Judge. They have also not appeared in the present appeals wherever they have been impleaded. 65. While admitting the appeals on 25th July, 2019 this Court permitted the parties to file their respective written submissions and listed the interim applications in the appeals for hearing on 17th February, 2020. Thereafter applications for advancing of the date of hearing were filed. These applications were allowed on 30th September, 2019 and the applications for interim relief were listed for hearing on 9th October, 2019. Thereafter these appeals were heard finally on 9th and 15th October, 2019, 5th November and 14th November, 2019, 14th December, 20th December and 21st December, 2019. 66. This Court has heard the submissions of....
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....nt of interim reliefs would be the issues in the suits themselves. For instance, corresponding to the first issue whether the DSGs are in the nature of binding law there is no prayer in the suits themselves. It is doubtful, therefore, whether such an issue could have been framed in the suits. Likewise, in the absence of any prayer declaring that online platforms like Amazon, Snapdeal and Cloudtail are not "intermediaries" within the meaning of the IT Act, it is unlikely that such an issue could be framed in the suits. 67.5. There was also no question raised in relation to the constitutional validity of the DSGs either in the plaints or in the written statements and affidavits filed by the Appellants/Defendants in their suits and applications under Order XXXIX, Rules 1 and 2 of the Code of Civil Procedure, 1908 ('CPC'). It is, therefore, surprising that the learned Single Judge has extensively examined the question of the constitutional validity of the DSGs. 67.6. The learned Single Judge appears to have taken into account the submissions of the Union of India, when it was not even a party to any of the suits. These are suits governed by the CPC. The procedure adopted by t....
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....tand of the Appellants/Defendants, as noted by the learned Single Judge, is that "the DSGs are not law and they are merely advisory in nature". The learned Single Judge notes the further submission that according to the Defendants, the DSGs were "merely a model framework for State Governments and Union Territories to come out with an actual legal mechanism to enforce the same" and that "they are not binding in nature". It is in the next sentence that the learned Single Judge appears to have committed an error while noting that the Appellants/Defendants had urged that the DSGs "are not law under Article 13 of the Constitution as they impinged upon the Fundamental Rights of the platforms and the sellers of the platforms guaranteed under Article 19 (1) (g) of the Constitution". 71. It has been repeatedly urged before this Court that this was not the contention of the Defendants. In particular, it is the case of the Amazon that they did not in fact challenge the constitutional validity of the DSGs. Their submission was that these were mere guidelines which could not be characterized as 'law' and cannot, therefore, regulate the exercise of the fundamental rights guaranteed by A....
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.... that the DSGs were not meant to be treated as law themselves, much less binding law. It was only to be a model framework and "advisory" in nature. It was for the State Governments to adopt it into law. Therefore, Clause 7 (6) of these 'model guidelines' is also purely advisory. 76. The learned Single Judge in the impugned judgment has noticed the background to the formulation of the guidelines, but crucially overlooked the fact that these were not in the form of "executive instructions" at all. A careful reading of the notification reveals that the guidelines have been issued by the DoCA. Its power to frame such guidelines can be traced back to the Consumer Protection Act, 1986 ('CPA'). The mere fact that the FSSAI may have written to e-commerce platforms to comply with the guidelines would not make them law. 77. Any doubt in this regard now stands dispelled by the communication dated 11th November, 2019 issued by the DoCA in the Ministry of Consumer Affairs under the subject "Rules to be notified under the Consumer Protection Act, 2019-Comments from the stakeholders on draft rules-Reg". This has come as a result of the CPA, 2019, which was published in the offic....
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....and in particular Rule 8 (6) thereof violated, as contended by the Appellants/Defendants, Section 30 of the TM Act or Section 79 of the IT Act. At the stage at which it was before the learned Single Judge, these questions were moot and purely hypothetical. 82. Significantly, had the learned Single Judge addressed the issue whether the DSGs did in fact have the character of law, there would have been no need to go into the further issue of whether they violated any fundamental rights. The route adopted by the learned Single Judge was to first examine the second question, viz., whether the DSGs violated any fundamental right, and having answered that in the negative, to conclude that they are accordingly valid and binding 'law'. 83. The learned Single Judge relied on the decision in Ram Jawaya Kapoor (supra) to conclude that instances of exercise of executive power, where there was no violation of fundamental rights, "even if not traceable to a statute", cannot be questioned. The facts that the Supreme Court was confronted with in that case were that publishers of the text books raised a challenge to certain executive instructions issued by the State Government. The State G....
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....hey were submitted for approval of the-Government. In 1950 the State Government published text books in certain subjects, and in other subjects the State Government approved text-books submitted by publishers and authors. In 1952 a notification was issued by the Government inviting only "authors and others" to submit text-books for approval by the Government. Under agreements with the authors and others the copyright in the text-books vested-absolutely in the State and the authors and others received royalty on the sale of those textbooks. The petitioners a firm carrying on the business of preparing, printing, publishing and selling text books then moved this Court under Art. 32 of the Constitution praying for writs of mandamus directing the Punjab Government to withdraw the notifications of 1950 and 1952 on the ground that they contravened the fundamental rights of the petitioners guarantee under the Constitution. It was held by this Court that the action of the Government did not amount to infraction of the guarantee under Art. 19(1)(g) of the Constitution, since no fundamental rights of the petitioners were violated by the notifications and the acts of the executive Government d....
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.... the Central Government could not have, in the absence of any statutory provision directed creation of any quota and that too after closure of the scheme. In that process, the Supreme Court held that "guidelines per se do not partake the character of a statute" and that "such guidelines in absence of statutory backdrop are advisory in nature". The Court referred to its earlier decision in Narender Kumar Maheshwari v Union of India (1979) 3 SCC 489, where it was held as under: "107. This is because guidelines, by their very nature, do not fall into the category of legislation, direct, subordinate or ancillary. They have only an advisory role to play and non-adherence to or deviation from them is necessarily and implicitly permissible if the circumstances of any particular fact or law situation warrants the same. Judicial control takes over only where the deviation either involves arbitrariness or discrimination or is so fundamental as to undermine a basic public purpose which the guidelines and the statute under which they are issued are intended to achieve." 88. In G.J. Fernandez v. State of Mysore AIR 1967 SC 1753 the Supreme Court held that the rules in the Mysore Public Works....
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....e of powers to evict genuine tenants from public premises under the control of the public sector undertakings/financial institutions" by a gazetted resolution dated 30th May, 2002, had the force of "statutory rules". Answering the question in negative, the Supreme Court held as under: "6. If any executive instructions are to have the force of statutory rules, it must be shown that they were issued either under the authority conferred on the Central Government or a State Government or other authority by some Statute or the Constitution. Guidelines or executive instructions which are not statutory in character, are not 'laws', and compliance thereof cannot be enforced through courts. Even if there has been any violation or breach of such non-statutory guidelines, it will not confer any right on any member of the public, to seek a direction in a court of law, for compliance with such guidelines. An order validly made in accordance with a statute (as in this case, the Public Premises Act), cannot be interfered with, even if there has been any transgression of any guidelines, except where it is arbitrary or malafide or in violation of any statutory provision. These are well se....
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....ppellants/Defendants that a fundamental error has been committed by the learned Single Judge in noting in the opening line of para 175 that "the Plaintiffs are owners of their respective trademarks and there is no dispute regarding the ownership". It must be observed at the outset, that in none of the plaints, have the Plaintiffs asserted or even mentioned anything about trademark registration. There was no occasion for the Plaintiffs to assert ownership of such trademarks. In fact, there is no such pleading to that effect at all. How the learned Single Judge could have come to such a conclusion and, that too, in a categorical manner, in the absence of any pleadings, is a mystery. 96. As the learned Single Judge rightly notes, the suits were not suits for infringement of trademarks, or even for that matter, passing off. Even as this has been acknowledged in the impugned judgment, the learned Single Judge proceeds to examine whether there has been an infringement of the trademarks. This is entirely outside the purview of the pleadings in the suits and such a venture in this regard ought not to have been undertaken by the learned Single Judge. 97. In any event, according to the App....
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....s. Prione is a joint venture between M/s. Catamaran Ventures and Amazon Asia Pacific and Amazon Eurasia. Cloudtail states that it does not have any shareholding, interest or directors from Amazon or Amazon Asia Pacific or Amazon Eurasia, controlling and managing its affairs. The board of Cloudtail is said to comprise of three directors, two of which are nominees of M/s. Catamaran Ventures and one is the MD-CEO i.e. an employee of Cloudtail. 101. In any event, these are matters of evidence. There could not have been a presumption that Cloudtail and Amazon are one and the same entity and that the obligations of the Cloudtail would bind Amazon and vice versa. There is merit in the contention of Amazon that by permitting private entities like Amway to restrict downstream distribution of genuine goods, by enforcing contractual stipulations against third parties, the judgment of the learned Single Judge recognizes a monopoly that can be exercised in perpetuity. There is also force in the contention that this runs contrary to the legal position explained in Kapil Wadhwa v. Samsung Electronics (supra). At this stage, the Court would like to discuss at some length the said decision, as it ....
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....he learned Single Judge held in favour of SECL and SIEPL by holding that the TM Act involved the national exhaustion principle. The action brought by SECL and SIEPL before the Court was one of infringement of trademark and not for passing off. 102.6. The Division Bench identified the issue as one of "parallel imports/grey market goods". It was held that Section 30 operated as an exception to Section 29. Under Section 30 (2) (b) of the TM Act, if a trademark was registered, subject to any conditions of limitations, the use of that trademark in relation to the goods to be sold or traded in any place and in relation to the goods to be exported to any market, would not constitute an infringement. It was held that once the goods have been lawfully acquired, if they are put into market and further sold, there would be no infringement of the trademark irrespective of the fact that whether such a market is an international market or a domestic market. 102.7. The Division Bench disagreed with the conclusion reached by the learned Single Judge, in the context of Section 29 (6) of the TM Act, that if a trademark is registered in one country, then the goods bearing the said registered tradem....
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....it would no longer be the same goods. But, sub-section 4 of Section 30 is not restricted to only when the conditions of the goods has been changed or impaired after they have been put on the market. The section embraces all legitimate reasons to oppose further dealings in the goods. Thus, changing condition or impairment is only a specie of the genus legitimate reasons, which genus embraces other species as well. What are these species? (i) Difference in services and warranties as held in the decisions reported as 423 F. 3d 1037(2005) SKF USA v International Trade Commission & Ors.; 35 USPQ2d 1053 (1995) Fender Musical Instruments Corp. v. Unlimited Music Center Inc.; 589 F. Supp. 1163 (1984) Osawa & Co. v. B&H Photo. (ii) Difference in advertising and promotional efforts as held in the decisions reported as 70 F. Supp 2d 1057 Pepsi Co Inc v Reyes; 589 F. Supp. 1163 (1984) Osawa & Co. v. B&H Photo. (iii) Differences in packaging as held in the decision reported as 753 F. Supp. 1240 (1991) Ferrero USA v. Ozak Trading. (iv) Differences in quality control, pricing and presentation as held in the decision reported as 982 F. 2d 633 (1992) Societe Des Produits Nestle v. Casa Helv....
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....ortation. But, this can be taken care of by passing suitable directions requiring the appellants to prominently display in their shop that the Samsung/SAMSUNG printers sold by them are imported by the appellants and that after sales services and warranties are not guaranteed nor are they provided under the authority and control of the respondents and that the appellants do so at their own end and with their own efforts. This would obviate any consumer dissatisfaction adversely affecting the reputation of the respondents, and thus if this is done, the respondents can claim no legitimate reasons to oppose further dealing in Samsung/SAMSUNG products in India. 74. As regards the appellants meta-tagging their websites with those of the respondents, the learned Single Judge has correctly injuncted the appellants from so doing, which injunction we affirm. The argument by the appellants that how else would the appellants know about the working of the particular product hardly impresses us for the reason the appellants can design their website in a manner where they are able, on their own strength, without any meta-tagging, to display the relevant information." 102.12. The above passages....
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....id Amway products and found that one of those did not contain the unique code. The package which did not contain the unique code was resealed. The learned Single Judge has, in the impugned judgment, set out in the body of the judgment the photographs taken by the LC with the caption "images showing removal of seals and repackaging at Amazon warehouse." 106. What the LC has not indicated is whether prior to the LC opening the sealed packages, he found the packages to have been otherwise tampered with. If it was the LC who opened the seal of the packages, then clearly till such time they remained sealed. It could not therefore be said that it was Amazon or Amazon's representatives which opened those sealed packages. Only two products are referred to by the LC, one of which did not have the bar code. Who removed these bar codes is still in question. If the seller who sold the product to Amazon had itself removed it, clearly then Amazon could not be blamed for tampering with the bar code. 107. From this one example, it is difficult to understand how the learned Single Judge could have concluded that Amazon was tampering with the products of Amway. This was too sweeping a conclusi....
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....e no laptops, files, desktops or any other office related products to inspect. There was no particular warehouse that could be associated with Cloudtail in and around the premises. How this report could then form the basis for inferring that there had been tampering of goods by Cloudtail or Amazon is beyond imagination. 112. The broad conclusions reached by the learned Single Judge tend to obfuscate the factual distinctions between the cases involving the different online platforms. For instance, both in the first and the fourth reports of the LCs, no Amway products were found on Cloudtail's premises. Similarly, the learned Single Judge has failed to appreciate Snapdeal's submissions that unlike Amazon, it does not even engage in large-scale 'fulfilment' of orders, and consequently has very few storage and transportation facilities and barely comes into contact with the products sold on its platform. These submissions are at least prima facie supported by the LC's Report dated 27th September, 2019 in FAO (OS) 157/2019, to which the learned Single Judge has made no reference at all. No LC was appointed in Oriflame's suit. The facts revealed in the LCs report....
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....th Section 30 (4) of the TM Act, or that the sale of the Plaintiffs' products on e-commerce platforms violates their trademark rights, constitutes misrepresentation and passing off, and results in the dilution and tarnishing of the goodwill and reputation of the Plaintiffs' brand. These findings are outside the purview and scope of pleadings in the suits and unsustainable in law. Are the Appellants intermediaries? 117. Turning now to the third issue as to whether Amazon, Cloudtail and Snapdeal were in fact intermediaries within the meaning of Section 79 read with 2 (1) (w) of the IT Act, the learned Single Judge has extensively examined the incidental services provided by these platforms in the form of packaging and entering into fresh warranties. This aspect has already been discussed at length in the decision in Kapil Wadhwa v. Samsung Electronics Co. Ltd. (supra) wherein it was held that the mere fact that there could be a change in the condition of the warranty of a certain product would not attract Section 30 (4) of the TM Act, and equally would not deprive the intermediaries from the option of invoking Section 79 of the IT Act in their defence. 118. The learned Sin....
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....der Section 79 (1) of the IT Act from liability applies when the intermediaries fulfil the criteria laid down in either Section 79 (2) (a) or Section 79 (2) (b), and Section 79 (2) (c) of the IT Act. Where the intermediary merely provides access, it has to comply with Section 79 (2) (a), whereas in instances where it provides services in addition to access, it has to comply with Section 79 (2) (b) of the IT Act. 121. In Amazon's case, as indeed in Cloudtail's and Snapdeal's, since they provide services in addition to access, they have to show compliance with Section 79 (2) (b) of the IT Act. In other words, they have to show that they (i) do not initiate the transmission (ii) do not select the receiver of the transmission and (iii) do not select or modify the information contained in the transmission. The case of these Defendants is as follows. Where there is a potential customer who is accessing the site, so long as it is he who clicks the button, it is the customer who is initiating the transmission. Amazon, Snapdeal or Cloudtail do not 'select' the receiver of the transmission, which is the buyer. They do not modify the information contained in the transmiss....
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....ce. In holding that Amazon is in fact not an intermediary, the learned Single Judge has obviated the need for any evidence to be led in the matter. 124. During the course of arguments before this Court, the Respondents/Plaintiffs were not at all clear as to whether, according to them, Amazon was in fact an intermediary or not. In any event, the alternative arguments, claiming that Amazon is not an intermediary, appear to be riddled with inconsistencies. If, in fact, Amazon is not an intermediary, the question of Amazon having to comply with Section 79 (2) of the IT Act would not arise at all. Clearly, the Respondents seem to be unsure as to what their stand ought to be. As a result, the burden of proof has shifted unfairly onto the Defendants to show that they have complied with the requirements of Section 79 of the IT Act, when in fact the Plaintiffs have to first show that there had been a violation of any of their rights due to the Defendants' activities before the "affirmative defence" of Section 79 could be sought to be invoked. Therefore, Section 79 of the IT Act has been, contrary to the judgment in Myspace Inc. v. Super Cassettes Industries Ltd. (supra), sought to be e....
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....o refuse listing of a product where, for instance, it originates from a country that does not follow international exhaustion. Amazon seeks to point out that this does not apply to India where the principle of international exhaustion is in fact followed. It is contended that Clause 17 cannot be interpreted to empower Amway to seek restrictions on the sale of its products on Amazon's online platform. 128. The Supreme Court in Shreya Singhal (supra) held, inter alia, that the obligation of an intermediary to remove content under Section 79 (3) (b) of the IT Act arises only if there is a Court order or a notification from a government agency on the grounds mentioned under Article 19 (2) of the Constitution. Amazon points out that it did not receive any such Court order from Amway in support of its allegations. The letter of the FSSAI dated 9th April, 2018 was not a notification by an appropriate government agency and did not conform to the grounds enumerated in Article 19 (2) of the Constitution. 129. Therefore, on the third issue also, this Court is unable to concur with the learned Single Judge that Amazon, Snapdeal and Cloudtail would have to meet the diligence requirement, ....