Introduction
The IT Boom of the early 2000s has transformed the retail experience for consumers by making products available at a click of a button. The rise of e-commerce platforms such as Amazon, Walmart and indigenous giants like Flipkart, Tata Digital, JioMart, and Nykaa has made products and services within the globe’s reach. However, online shopping has become a threat to intellectual property rights (IPR) and licensing. These websites have become safe haven for counterfeit goods and trademark infringements allowing infringers to flourish in absence of a regulatory framework.
E-infringement differs significantly from its traditional form because of its digital nature allowing businesses to pass genuine goods as knockoffs. The copyrighted content of unauthorised entities flourishes on the internet making enforcement considerably challenging. A recent judgment by the Delhi High Court (DHC), issued a permanent injunction against Amazon for infringing the trademark of luxury lifestyle brand, Beverly Hills Polo Club, highlighted the concept of e-infringement. The court while ordering a $39 million as damages also underscored the urgent need for a regulatory framework to address the complexities of e-infringement, given its multi-layered challenges.
The Growing Threat of E-Infringement
Despite advancements in trademark protection, issues such as counterfeit products, cybersquatting, unauthorized keyword advertising, online imitation continue to pose significant challenges eroding consumer trust and damaging brand integrity. In recent years, there has been a surge in counterfeit products, mainly on online platforms, resulting in a new type of violation- ‘e-infringement’. A recent survey of MSU’s College of Communication Arts and Sciences found that about 7 in 10 people were deceived into buying counterfeit products on online platforms at least once in the past year. The unauthorized sale of counterfeit goods products violates important part of IPR, such as trademarks, copyrights, and patents. Digital marketplaces have made it conducive for counterfeiters to sell fake goods by using the names of reputed brands. They mislead consumers using tactics such as fake seller profiles and misleading descriptions and use hidden links to avoid detection.
Enforcement of IPR in India becomes extremely difficult due to lack of regulation and complexities involved. The Intellectual property laws in India provide for civil and criminal remedies but digital enforcement mechanisms lack in addressing this burning issue. Primarily, these laws remain mute when it comes to website- blocking injunctions prompting the Indian courts to apply principles and tests of determining liability of e-commerce platforms as determined by foreign precedents. Moreover, jurisdictional challenges arises when enforcement becomes difficult in cross border infringements with no clear guidance. India as a member of Berne Convention has an obligation to protect IP rights of other countries regardless of their registration status in India. Additionally, many counterfeit sellers evade security due to lack of Proactive Platform.
Judicial Trends in India
The Indian courts have over time tackled the cases of counterfeit goods being sold on e-marketplaces and uniformly held such platforms to be contributory liable in case of infringement. The Delhi High Court in PUMA SE v. Indiamart Intermesh Ltd (2024) and L’Oréal v. Brandworld have held that platforms cannot profit from counterfeit sales and must proactively remove infringing products and prevent unauthorized use of brand trademarks. Platform liability is further increased by Section 5 of Consumer Protection (E-Commerce) Rules 2020 that creates an obligation on the companies to provide seller information to the buyers which would make it easier to resolve any issues relating to copyright or trademark infringement. These platforms have often claimed protection under Section 79 of the Information Technology Act 2005 that acts as a safe harbour for intermediaries that exempts liability for any publications or information made available on it. Cases like Christian Louboutin v. Nakul Bajaj have clarified this position and held marketplaces to be accountable when they facilitate, aid, abet or benefit from the counterfeit sales. To show such platforms liable, party needs to establish that they had actual knowledge of the infringement of the brand and that necessary due diligence was not taken by the e-commerce company. The courts have over the years remarked a need for stringent e-commerce regulations. By awarding punitive damages of Rs. 1 crore, the court in Cartier International AG v. Gaurav Bhatia set a precedent and emphasized for tougher stance on platform accountability.
International Perspectives
In the United States, the evolution of trademark law plays a significant role in facilitating the liability of the third person. The court has the power to hold them accountable if they convince infringement or knowingly continue to support infringing activities. This principle has played a significant role in e-commerce, where platform and service providers are closely scrutinized for their role in counterfeit sales developed in the case of Inwood Laboratories, Inc. v. Ives Laboratories, Inc. In Louis Vuitton Malletier v. Akanoc Solutions Inc. case judiciary has clarified that online marketplaces are not automatically responsible for counterfeit listing unless they actively or intentionally promote infringement or ignore takedown notices. While just giving general awareness of counterfeiting is not sufficient for liability, courts have imposed liability on service providers, which include web hosting where they intentionally or knowingly facilitate the sale of counterfeit goods. In Tiffany (NJ) Inc. v. eBay Inc case, court held Respondent to be not liable after applying the Inwood test.
The domestic courts in Europe saw a stark contrast in similar facts of cases when Court held eBay liable for its failure to set up effective and appropriate mechanisms to control infringement and played an active broker by profiting off of the counterfeit items sold on its site. The European Union Court of Justice (CJEU) has stressed the duty of care on platforms and that they cannot be exempted if they optimize listings or advertising. Hence a stricter approach is seen in EU with new subjective standards of “neutrality” and “duty of care” are also determining factors to hold a platform liable.
This significant step highlights the growing responsibility of digital intermediaries to prevent counterfeiting while balancing the limitations of general monitoring obligations.
Policy and Tech Solutions
To effectively fight against counterfeiting in e-commerce, it is necessary to introduce simple and straightforward marketplace liability in e-commerce for selling counterfeit goods on their platforms. They have to monitor and remove infringing listings with penalties for frequent violations. The legislature should introduce legal provisions that Empower trademark owners to sue both the platform and seller for damages result from counterfeit sale damage.
A strong notice and takedown system is essential. The platform must process infringement claims quickly, maintain proper legal processes, and follow clear submission guidelines. Globally, some practices offer valuable insights, like – the EU’s E-commerce directive and Digital Services Act that requires platforms to act against infringement, the US Digital Millennium Copyright Act (DMCA) allows takedown requests, while in China’s e-commerce law (2018) imposes joint liability on both platforms and sellers. International cooperation is a significant and effective step in combating counterfeit goods. Harmonizing cross-border IP laws and introducing global anti-counterfeiting standards will enhance legal coordination. Making stronger border control with AI-driven risk assessment tools can improve counterfeit detection. Additionally, India has to require marketplaces to compensate consumers for counterfeit purchases, allowing platforms to recover costs from sellers. This can be support by strengthened implementation of India’s National IPR Policy (2016), that state effective enforcement, consumer awareness and a balanced IP ecosystem.[HT6] . All these measures will create a safer e-commerce ecosystem, protecting both consumers and brands.
To prevent counterfeiting, platforms should adopted proactive trademark registration and IP protection. Companies must have registered trademarks in key jurisdictions, securing domain names, and collaborating with customs agencies can help prevent counterfeit goods at ports entrance points. In order to assess the duty of care taken by platforms they must ensure they incorporate in-built tools like Amazon’s brand registry and eBay’s verified right owner program, have proved to be useful tools to protect trademarks, while social media platforms such as Facebook and Instagram provide IP enforcement mechanisms.
AI-driven technology plays a significant role in detecting counterfeit goods. Businesses should adopt AI monitoring systems, price fluctuations trackers, and optical character recognition (OCR) to track the unauthorized use of trademarks and detect fake listings. In addition to this, consumer awareness is vital. Products on site must be complemented with OR code, holograms, and digital verification apps, along with clear refund policy that ensures protection for buyers. Platforms can also use multi-layered authentications like holograms, UV inks, blockchain trackers and RFID tags which can help detect counterfeit products beforehand. This will also help build consumer trust and protect brand names
Conclusion
The rapid increase of e-commerce in India has led to a proliferation of counterfeit goods, posing serious threats to intellectual property rights and consumer safety. Recently, legal and policy measures have begun to resolve these challenges; stronger implementation is needed. E-commerce platforms have to implement a seller verification process with AI-powered counterfeit detection and a transparent grievance mechanism. Meanwhile, high penalties should be introduced for violations of streamlined cross-border IP enforcement. Consumers have to play a significant role by staying vigilant and reporting suspicious listings. Combating counterfeit trade requires a united effort with the collaboration between regulators, platforms, and buyers, and India can build a trustworthy and secure digital marketplace.
Authored by: Ms. Anshika Kaushik and Mr. Rahul Kumar Gaur
Anshika Kaushik, third year law student at Symbiosis Law School, NOIDA. https://l1nk.dev/0755n
Rahul Kumar Gaur third year law student at Dr. Ram Manohar Lohiya National Law University, Lucknow. https://lnk.ink/dIGuk
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