INTERIM RELIEF FOR AMAZON: DIVISION BENCH OF DELHI HIGH COURT STAYS AWARD OF DAMAGES IN THE SUIT FILED BY LIFESTYLE

In an interesting turn of events in the appeal titled Amazon Technologies Inc. v. Lifestyle Equities CV and Another, the Hon’ble Division Bench of the Delhi High Court, granted a stay on the operation of judgment and decree dated 25 February 2025 (“impugned judgement”) passed by the Ld. Single Judge whereby Amazon Technologies Inc. (“Amazon”) was directed to pay ₹ 336,02,87,000/- (US$38.78 million approx.), apart from costs of ₹ 3,23,10,966.60/- (US$375,398 approx.) in a suit filed by Lifestyle Equities CV and Lifestyle Licensing BV (collectively referred to as “Lifestyle”).

The Hon’ble Division Bench also took a departure from the general principle that no complete stay of money decrees should be granted by the Court, and followed the Supreme Court ruling in Malwa Strips Pvt Ltd v Jyoti Ltd (2009) 2 SCC 426, that, if the Court is, in a rare case, inclined to grant stay of operation of a money decree, cogent and adequate reasons need to be assigned.

With the suit decreed against Defendant No.2 and Defendant No.3 deleted from the array of parties, the impugned judgement decreed the suit against Amazon for ₹ 336,02,87,000/-, apart from costs of ₹ 3,23,10,966.60. Aggrieved by the Impugned Judgement, Amazon preferred an appeal against the Hon’ble Division Bench, Delhi High Court for setting aside the impugned judgement. In the Appeal proceedings, Amazon also sought interim relief to stay the operation of the impugned judgement until final disposal of the Appeal.

CASE SET UP BY AMAZON IN APPEAL  

1. No Infringement by Amazon and case against Amazon was presumptive: 

As per the plaint instituted by Lifestyle before the Ld. Single Judge, it was the SYMBOL mark of Amazon which was used and retailed by Cloudtail through ASSPL. Amazon was the owner of the brand SYMBOL, which was duly registered under the Trade Marks Act, and had licensed the use of the SYMBOL mark to Cloudtail. On the basis of the said licence, Cloudtail was retailing goods, bearing the SYMBOL mark, through ASSPL. If the goods bore any other mark, the responsibility for affixing that mark could not be laid on the shoulders of Amazon. The agreement between Amazon and Cloudtail was expressly restricted to use of the SYMBOL mark. It was asserted that far from levying any specific allegations against Amazon, it was an admitted position that Lifestyle was not even aware of the relationship between Amazon and Cloudtail and the plaint clearly provided that Amazon was neither the owner of the mark, nor was the manufacturer of the apparel sold by Cloudtail over the website of ASSPL on which the said mark was affixed. Nor was there anything to indicate that Amazon had ever authorised Cloudtail to affix the said mark. The license agreement dated 23 December 2015 between Amazon and Cloudtail was only with respect to the SYMBOL mark and had nothing to do with the infringing mark.

2. Apparent errors in the Impugned Judgement:

· The evidence of Lifestyle’s witnesses did not touch on the liability or responsibility of Amazon for the alleged infringement of Lifestyle’s trade mark and that without amendment of the plaint, the Ld. Single Judge was in manifest error to hold Amazon complicit in the alleged infringement of Lifestyle’s registered trade mark.

· It was argued that a reading of the impugned judgment reveals that it has confused the mark SYMBOL, of which Amazon was the proprietor, and the use of which had been licensed by Amazon to Cloudtail by the License Agreement dated 23 December 2015, with the allegedly infringing mark, with which mark Amazon had no concern.

· On 2 March 2023, Cloudtail clearly owned its entire responsibility for the damages payable to Lifestyle and had submitted, categorically, that “the decision to use the impugned device mark was solely that of Cloudtail and Amazon has no liability in the matter”. It was argued that this fact has been entirely ignored in the Impugned Judgement.

· It was argued that the Ld. Single Judge made a fundamentally erroneous assumption in recording that “Defendant No. 1 is claimed to be the owner of the infringing logo/mark which is known by the name ‘SYMBOL” when  Lifestyle never sought to contend that the infringing logo was known by the name SYMBOL.

· The finding of Ld. Single Judge that all Defendants operate as a single commercial entity is outside the pleadings and no such case is set up by Lifestyle.

· Quantification of damages cannot be left on speculation in the absence of pleadings.

3. Damages cannot be enhanced without amendment and opportunity to Amazon to rebut: 

Amazon argued that quantum of damages could not have been enhanced after completion of trial and by way of written submissions as enhancing claimed damages to over ₹ 336 crores is substantive change to the nature of claim and the pleadings ought to have been amended as the court is bound by pleadings. Moreover, admittedly, no opportunity to Amazon to meet claim for enhanced damages was provided as the written submissions were never served on Amazon which is in gross violation of principles of natural justice.

4. Misguided reliance on License Agreement between Amazon and Cloudtail:

The Agreement dated 23 December 2015 between Amazon and Cloudtail only licensed, to Cloudtail, the right to use the SYMBOL trade mark, and did not authorize Cloudtail to infringe any trade mark, including the device mark of Lifestyle.

5.    Amazon never served with summons: 

It was argued that no court summons in the suit were ever served on Amazon by any mode including email. That apart, as Amazon was located in the US, service on Amazon had to be in compliance with the Hague Convention which was never done.

CASE SET UP BY LIFESTYLE IN APPEAL

In a nutshell, Lifestyle argued that there are sufficient pleadings in the plaint that provide sufficient foundation for basing a claim for damages against Amazon. It was argued that Cloudtail:

· clearly distanced itself from the aspect of infringement or use of the infringing mark;

· asserted that it was merely a retailer of goods on ASSPL’s website and that Amazon, Cloudtail and ASSPL were separately legal entities and that Cloudtail had no concern with the operation of Amazon or ASSPL;

· denied adopting the infringing mark.

It was argued that in view of assertions made by ASSPL in its affidavit, it was confirmed that Amazon and ASSPL were group companies and thus, the findings of Ld. Single Judge that all three Defendants are closely related to or interlinked with each other and as such have sought to project that they are independent of each other, clearly with an intent to avoid fastening of liability is merited. Lifestyle also argued that Amazon’s complete absence of any defence was deliberate and conscious and that as such the counsel who appeared on behalf of Cloudtail on September 05, 2022 also claimed to be appearing on behalf of Amazon.

Reliance was placed on screen shots of various T-shirts to argue that the infringing logo figured on the same T-shirts as the brand “SYMBOL” of Amazon and thus, Amazon could not distance itself from the liability in the matter. In order to link Amazon with the infringing logo, it was submitted that the manufacturer of the product bearing the infringing mark was identified as “SYMBOL” with the same ASIN number as was reflected in invoice whereunder the T-shirt was sold by Cloudtail. In the affidavit of admission/denial filed by Cloudtail, it had specifically stated that the screenshots reflecting the products to have been manufactured by “SYMBOL”, bearing the aforesaid ASIN number, did not pertain to it.

With respect to excess of the damages claimed, it was argued that mesne profits do not require specifically to have been pleaded in quantified terms and that as such entitlement of Lifestyle to damages had been proved by way of witness and when such evidence is seen in light of the averments made in the Plaint, there is no requirement for separate pleadings before finally awarding damages as quantified by the Ld. Single Judge. Lifestyle also objected to Amazon’s prayer for grant of unconditional stay of operation of the Impugned Judgement as Amazon is located in the US, which is not a reciprocating country with India and that, therefore, it would be formidably difficult for Lifestyle to have the impugned decree executed, for which it would have to file a separate suit and which may effectively render the decree unexecutable. It was also argued that while examining the merits of the appellant Amazon’s prayer for unconditional stay, the conduct of Amazon has to be borne in mind. It was argued that despite having been served with the papers in the suit, Amazon did not deem it necessary to appear and contest the matter and that Amazon does not dispute its having actual knowledge of the suit and its pendency.

COURT’S REASONING AND ORDER

The Hon’ble Court admitted the appeal and stayed the operation of the Impugned Judgement with the below findings/reasoning:

1. The Learned Single Judge has awarded, to Lifestyle and against Amazon, damages of ₹ 336,02,87,000/-without even the whisper of a pleading, claiming the said amount.

   
   

2. There is no specific finding of any role of Amazon in the alleged infringement in the affixation of logo mark on the apparel sold by Cloudtail on ASSPL’s online platform and the findings are largely generalised in nature, concentrating on the phenomenon of e-infringement and reflect a view that, if Amazon desired, it could infringe, rather than that it did infringe.

3. The Ld. Single Judge has observed that Amazon was identifying itself as an intermediary and this is a prima facie erroneous finding as at no point of time has Amazon claimed to be an intermediary.

4. It is difficult to understand how the ownership, by Amazon, of the brand ‘Symbol’ is of any relevance as the mark ‘Symbol’ is, quite clearly, not infringing in nature. This even the Plaint in the suit did not assert. 

5. Even if it were to be assumed that Amazon had agreed, through Counsel who appeared on behalf of Cloudtail, to suffer reasonable damages, that statement, if at all, was made at the stage when the damages claimed by Lifestyle were of ₹ 2,00,05,000/–. In the face of this claim, it would be preposterous to hold that the order dated 5 September 2022 amounts to an admission, by Amazon, to suffer damages of ₹ 336,02,87,000/-. Before awarding such damages, therefore, it was incumbent on the Ld. Single Judge to render specific findings of infringement, or at least of complicity in the infringing activities, by Amazon.

6. The Ld. Single Judge completely misread the Licensing Agreement dated 23 December 2015. The Licensing Agreement dated 23 December 2015 was restricted to the ‘SYMBOL’ mark, owned by Amazon. Amazon had, by the agreement, licensed, to Cloudtail, the right to use the mark ‘SYMBOL’. The agreement does nothing beyond this. By no stretch of imagination could Licensing Agreement be read as authorising Cloudtail to affix, on the apparel sold by it, the allegedly infringing mark. In fact, the Licensing Agreement makes no reference to the said mark at all, obviously because Amazon had no concern with the said mark. If, therefore, Cloudtail did affix the mark on the apparel sold by it, it certainly did not do so by virtue of any authorisation or permission granted by the Licensing Agreement dated 23 December 2015. In fact, the Licensing Agreement contained a specific clause proscribing any infringement, by Cloudtail, of the trademark of any third party, and indemnified Amazon in that regard.

7. Amazon was not the manufacturer of the apparel on which the infringing mark was used. It had never licensed, to Cloudtail, the right to use the infringing mark, with which, in fact, it had no concern. In fact, Cloudtail itself conceded, before the Court on 2 March 2023, that the decision to use the infringing mark on the apparel sold by was not of Amazon, but of Cloudtail itself. Unfortunately, the Ld. Single Judge has entirely overlooked this concession, regarding which no objection or reservation was ever expressed by Lifestyle, either before the Court on 2 March 2023 or at any point thereafter. In view thereof, it is plainly obvious that the affixation, on the apparel sold by Cloudtail, of the infringing logo, could not incriminate Amazon in any manner, merely because the same apparel also happened to carry the ‘SYMBOL’ mark, the use of which had been licensed by Amazon to Cloudtail.

   
   

8. The plaint, filed by Lifestyle, does not allege, even indirectly, that Amazon, Cloudtail and ASSPL constituted a “cohesive commercial entity”. A finding that 3 companies, which are independent corporate ventures, constitute a cohesive commercial entity, cannot be returned without any pleading to that effect.

   
   

9. There are no other findings, in the impugned judgment, against Amazon. Even if it were to be presumed, merely for the sake of argument, that Amazon took a conscious decision not to participate in the suit proceedings, that cannot justify mulcting it with damages of ₹ 336,02,87,000/-.

   
   

10. This is a case, one of awarding of damages of ₹ 336,02,87,000/-, without any sustainable finding of infringement, or of complicity in infringement, against Amazon.

    
    

11. Damages of ₹ 4,78,484/- already having been awarded against Cloudtail, no separate damages of ₹ 336,02,87,000/- could have been awarded against Amazon.

    
    

12. In holding that Amazon had not appeared despite service and, therefore, proceeding against Amazon ex-parte, the Ld. Single Judge materially erred in law and on facts. This, by itself, is a lapse serious enough to vitiate all proceedings in the suit after 20 April 2022, at least insofar as Amazon is concerned. It also, therefore, suffices, even by itself and independent of all other considerations, as enough to justify entertainment of the present appeal without requiring any deposit of the decretal amount to be made by Amazon.

    
    

13. Considerable substance is found in the submissions of the Appellant that all these developments took place at a time when the damage claimed by Lifestyle were only to the tune of ₹ 2,00,05,000/-. Enhancement of these damages are necessarily to be proceeded by an amendment of the plaint, of which Amazon had to be put on due notice. This was never done. In fact, the written submissions filed by Lifestyle, which enhanced the damages, earlier computed at ₹ 2,00,05,000/– to ₹ 3780 crores, were also not served on the Appellant Amazon. In accepting the enhancement of the claim for damages, the Ld. Single Judge has not acted strictly in accordance with the law.

    
    

14. The considerations outlined herein above make out, an exceptional case, in which it would be a complete travesty of justice to require the Appellant Amazon to deposit, or secure, any part of the amount decreed by the impugned judgment, in order to maintain its appeal.

CONCLUSION

The present decision of the Division Bench underscores the importance of fair trial; adherence to principles of natural justice; proof of infringement or complicity in infringement; and clear, complete and accurate pleadings to substantiate the nature of claims made in infringement suits. Besides, the decision also culls out some very interesting legal propositions that are reproduced below:

· The basis for the claim for damages are, at all costs, to be contained in the pleadings of the Plaintiff. It cannot be reserved for evidence. It is a legal truism that evidence cannot traverse the pleadings.

· A trademark licensor’s control and oversight, as well as liability, had to be restricted to the licensed mark. It could not extend to every branding decision of the licensee, even with respect to marks with which the licensor had no concern and which had never been licensed by the licensor to the licensee.

· A licence by one party to another, to do a particular act, cannot render the first party liable for every infringing or illegal act committed by the second, in the absence of any material to indicate that the commission of the illegal infringing act was also authorised by the license.

· It is plain and elementary that law does not require a defendant to enter appearance in a suit, unless summons in the suit are served on it. The Commercial Courts Act, 2015 contains strict provisions in that regard. No amount of service, on the defendant, of the papers relating to the suit, by the plaintiff, absent actual summons issued by the suit, can compel a defendant, in law, to enter appearance. The law does not permit a defendant to be proceeded ex-parte, even before summons in the suit are served on it.

· Proof of infringement or complicity in infringement is paramount.

· If the Court is, in a rare case, inclined to grant stay of operation of a money decree, cogent reasons justifying the decision must be forthcoming and the power is required to be exercised with great cause and circumspection.

While the present decision is an interim order and subject to final disposal of the appeal, it would be interesting to see how the proceedings move forward and if the Hon’ble Division Bench would eventually remand the matter back to the Ld. Single Judge for fresh consideration and trial, at least insofar as Amazon is concerned, or would be compelled to reverse its prima facie findings.