Puma's 'Purr-suit' of Justice: Indiamart's Digital 'Paw-sition'

Introduction

The High Court of Delhi, in its significant judgment in Indiamart Intermesh Limited v. PUMA SE^[1], meticulously navigated the complex intersection of trademark infringement and intermediary liability in the digital marketplace. This appellate proceeding involved Indiamart Intermesh Limited (the Appellant), a prominent B2B online listing platform, and PUMA SE (the Respondent), the global sportswear giant. The core of the controversy revolved around PUMA's allegations of widespread availability of counterfeit products bearing its trademarks on Indiamart's platform, and consequently, Indiamart's responsibility and the scope of its safe harbour protection under the Information Technology Act, 2000 (IT Act). The Single Judge had initially found that Indiamart's platform features, particularly a drop-down menu offering "PUMA" as a brand option, constituted trademark infringement and that Indiamart was an "active participant" in the infringement, thus losing its safe harbour. The Court was tasked with resolving these rival contentions, particularly concerning the interpretation of "actual knowledge," whether Indiamart's platform features amounted to "use" of the trademark, the applicability of Section 30 of the Trademark Act, 1999, and the crucial issue of repeat infringers, thereby providing vital clarity on the evolving landscape of intermediary obligations in India.

Factual Background

PUMA SE initiated a suit alleging widespread trademark infringement, claiming that counterfeit products bearing its well-known "PUMA" marks were being offered for sale by third-party sellers on Indiamart's B2B platform. PUMA sought a permanent injunction, restraining Indiamart from using, facilitating, or offering the "PUMA" mark as a brand suggestion, keyword, or search term, and from facilitating the sale of infringing goods. PUMA also contended that Indiamart's business model, which included providing a drop-down menu with brand names like "PUMA" for sellers to categorize their products, amounted to active participation in the infringement. The Single Judge had earlier found that Indiamart's actions, particularly offering "PUMA" as an option in the drop-down menu during seller registration, constituted "use" of the trademark under Section 29 of the Trade Marks Act, 1999, and amounted to trademark infringement. Furthermore, the Single Judge concluded that Indiamart was not a passive intermediary but an "active participant," thereby disqualifying it from safe harbour protection under Section 79(1) of the IT Act, specifically under Section 79(3)(a) (aiding and abetting) due to a perceived failure of due diligence. Consequently, the Single Judge had restrained Indiamart from providing the "PUMA" mark option in its drop-down menu and directed the removal of infringing listings. Indiamart appealed this decision to the Division Bench of the Delhi High Court.

Issues Before the Court

The Appellate Court was primarily tasked with re-evaluating the Single Judge's findings and interpreting the scope of intermediary liability. The pivotal issues for adjudication included:

●      Interpretation of "Use" and Infringement under Section 29 of the Trademark Act: Whether Indiamart's provision of a drop-down menu with brand names (like "PUMA") to assist sellers in categorizing their products constituted "use" of the trademark by the intermediary that amounted to infringement.

●      Applicability of Section 30 of the Trademark Act: Whether Indiamart's actions fell within the limitations on the effect of a registered trademark as provided under Section 30 of the Trademark Act, particularly regarding honest practices or descriptive use.

●      Interpretation of "Aiding and Abetting" under Section 79(3)(a) IT Act: Whether Indiamart's provision of such platform features amounted to "conspiring, abetting, aiding, or inducing" trademark infringement, thereby disqualifying it from safe harbour protection.

●      The "Reasonable Efforts" and Repeat Infringer Obligation: What constitutes "reasonable efforts" and "due diligence" for an intermediary, especially concerning the re-listing of infringing content by sellers whose listings have previously been taken down.

Decision

The Delhi High Court's Division Bench, in a comprehensive judgment, largely overturned the Single Judge's findings, providing significant clarity on intermediary liability and trademark use:

●      On "Use" and Infringement (Section 29 of the Trademark Act): The Court explicitly rejected the Single Judge's finding that Indiamart's provision of a brand selection option in its drop-down menu constituted "use" of the trademark by Indiamart that amounted to infringement under Section 29. The Division Bench clarified that providing brand names in a drop-down list to standardize listings and avoid misspellings is a functional interface design. It distinguished this from the actual "use" of the trademark by the seller in relation to their goods. The Court held that merely including a registered trademark in a drop-down menu for classification purposes did not amount to "use" by the intermediary that would constitute infringement under Section 29.

●      On Applicability of Section 30 of the Trademark Act: The Division Bench's finding that Indiamart's actions were a "functional interface design" and did not constitute infringing "use" aligns with the spirit of Section 30. Specifically, Section 30(2)(a) of the Trademark Act, 1999, states that a registered trademark is not infringed where "the use in relation to goods or services indicates the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of services or other characteristics of goods or services." The Appellate Court's decision to allow the drop-down menu, provided due diligence is met, implicitly supports that such a functional use, when not intended to mislead or infringe, falls within the limitations on trademark rights, as it serves to describe the characteristics or kind of goods being listed.

●      On Aiding and Abetting (Section 79(3)(a) IT Act): The Court unequivocally rejected the Single Judge's prima facie finding that Indiamart's provision of a brand selection option in its drop-down menu constituted aiding and abetting infringement. It held that such a feature does not, by itself, indicate an intent to encourage or induce infringement. The Court found the Single Judge's conclusion on this point unsustainable.

●      On "Reasonable Efforts" and Repeat Infringers: The Court emphasized Indiamart's obligation to make reasonable efforts as part of its due diligence under Section 79(3)(a) of the IT Act. While it did not impose a general proactive monitoring duty, the appellate court made a significant prima facie observation regarding repeat infringers, which directly addresses Puma's grievance. It explicitly stated that the failure to prevent the same seller from re-listing the same infringing products under their own name and particulars after a takedown would prima facie indicate negligence or complicity on Indiamart's part. This would lead to the loss of safe harbour under Section 79(3)(a). The Court acknowledged that detecting fraudulent re-listings under entirely new names or particulars might be technologically infeasible and thus not expected as part of due diligence, thereby setting a practical boundary for Indiamart's responsibility.

Conclusion

The Delhi High Court's judgment delivers pivotal clarity on intermediary liability and trademark use in India. The Court overturned the Single Judge's restraint on Indiamart's platform functionality, explicitly ruling that features like brand drop-down menus do not constitute infringing "use" by the intermediary, aligning this with the spirit of Section 30(2)(a) of the Trademark Act. It reaffirmed the "notice and takedown" standard for IP infringement, clarifying that specific notices from rights holders are sufficient to trigger intermediary action, without requiring a court order for such cases. Crucially, the judgment introduced specific accountability for repeat infringers, holding that intermediaries must prevent known offenders from re-listing identical content under their existing identities, a key point of contention in the case. This landmark decision reflects a pragmatic and balanced approach, safeguarding intellectual property rights while fostering a thriving digital economy, and offers invaluable guidance for online platforms and brand owners alike.

^[1] FAO(OS)(COMM) 6/2024