E-commerce platforms restrained from enabling sale of products of ‘direct selling’ companies without their consent

M/s Amway India Enterprises Pvt. Ltd., M/s Modicare Ltd. and M/s Oriflame India Pvt. Ltd. (plaintiffs) filed a batch of seven suits against various e-commerce platforms, such as Flipkart, Amazon etc. and sellers on the said platforms (defendants) for restraining the defendants from selling their products on these platforms without the consent of the plaintiffs. The plaintiffs contended that its original products were being purchased from open market by unauthorized means or via leakages in the plaintiff’s supply chains, and then being sold on e-commerce platforms at cheaper prices and in tampered and impaired state. It was also contended that the e-commerce platforms did not give information about the real sellers of these products which made it difficult for consumers to resolve their disputes causing reputational harm to the plaintiffs. In the present case, the Delhi High Court held that a case was made under Section 30(4) of the Trade Marks Act, 1999 and the defendants would be liable for trademark infringement as even if the re-sale was of a genuine product purchased directly from the plaintiff’s distribution network, the product was being changed or impaired after the first sale as the seal was being tampered and the return and refund policy of the plaintiff was not being passed on to the customers. The Court also found that the defendants were in violation of the Direct Selling Guidelines, 2016, as they were selling the original products on e-commerce platforms without the consent of the plaintiffs. It was also observed that e-commerce platforms were not passive non-interfering platforms but provided value added services to both the consumers and the users. Thus, e-commerce platforms to be protected under the safe harbour provision under Section 79 of the Information Technology Act, 2000, would have to comply with the requirement of carrying out due diligence.