HC holds Shopclues.com guilty for selling Counterfeit Products on its Website. Read Judgment

14 Nov 2018

November 14,2018:

Recently on 12^th November, 2018, Justice Pratibha M. Singh of Delhi HC passed landmark judgments in case Skullcandy Inc. v. Shri Shyam telecom & Ors. and L’Oreal v. Brandworld & Ors. against sale of counterfeit goods online.

Brief facts

The suits were filed before the Hon’ble Delhi High Court by Skullcandy and L’Oreal for sale of counterfeit products on the website www.shopclues.com by numerous sellers. The Hon’ble court granted Ex-Parte Ad-Interim Injunction orders in both the suit in 2014 restraining the website www.shopclues.com and other sellers from conducting any sale of counterfeit goods. The Hon’ble court after considering the facts and circumstances and after lengthy arguments delivered the final judgment on 12^th November, 2018.

Shopclues is a known violator of Trademark Right Holders

Shopclues in the present matters claimed the benefit of being an intermediary under Section 79 of Information Technology Act, 2000 wherein it stated that the website www.shopclues.com is simply a platform for sellers to conduct sale of goods therein and has no role in conducting sale. However, the plaintiff successfully proved before the court that the involvement of Shopclues is not restricted to only providing a platform but active involvement was evident. The court took away the benefit of being an intermediary and termed Shopclues involvement to be that of a primary violator on the following considerations:

The websites guarantee that “all the product are 100% genuine” (which they are not actually)
Shopclues is a repeat offender and numerous complaints have been made against it.
Despite several infringement action, no precautionary steps taken by Shopclues.
On the website there is a separate category for “replicas” on which on the face of it, it denotes the product to be lookalike or a copy of the original.
The replica page encourages sellers to sell counterfeit goods constituting to be an act of aiding and abetting of violation of Intellectual property.

The court repetitively referred to the finding made in the case of Christain Louboutin SAS v. Nakul Baja & Ors. dated 2^nd November, 2018 which was recently passed by the Hon’ble judge Pratibha M. Singh itself wherein the court delved into defining and discussing in detail Section 79 of Information Technology Act, 2000 and laying down a ground breaking judgment against websites conducting sale of counterfeits online and claiming protection of being an intermediary.

Court Directions

The Hon’ble court took a strict stand against the impugned activity of the website www.shopclues.com directing them to disclose all details of all the sellers to the Plaintiff. The court on a positive note, directed Shopclues, to obtain a certificate from the sellers that the goods sold are genuine and whenever a product is provided to be listed on the website, the plaintiff be notified about the same and be listed on the website only on the plaintiff’s concurrence. The court further directed to take down the “replica” widow from its website all together.