Introduction
Indian legal framework surrounding trademarks has granted protection to a seller who distributes goods where the mark has been infringed, where the seller has no reasonable cause to believe that the use of the mark constituted infringement.
However, the rise of quick commerce and platforms like Zepto and Swiggy Instamart has changed this notion. These apps have stores known as ‘dark stores’, which are meant to store the goods for later sale. But a fundamental question that arises in this case is whether these stores can claim this protection.
This article examines the continuing relevance of the innocent infringer defence under the Trade Marks Act 1999 (Act) in the context of quick commerce. First, it analyses the statutory framework and rationale underlying the defence. Secondly, it explores how dark stores and algorithm-driven inventory systems challenge traditional assumptions of seller innocence. Thirdly, it evaluates comparative approaches adopted in the European Union (EU) and the United Kingdom (UK). Finally, it argues for a reinterpretation of the defence that reflects the realities of modern platform-based commerce.
The Legal Framework of Innocent Infringement
Section 30(1) of the Act provides that a registered trademark shall not be infringed where the use of the mark is in accordance with honest practices in industrial or commercial matters and does not take unfair advantage of, or harm, the distinctive character or the repute of the trademark. Read alongside Section 32 of the Act, which provides protection to persons dealing in goods where a registered trademark is used, provided that such use is-
- In accordance with honest practices in industrial or commercial matters, and
- Without any intention to take unfair advantage of, or harm, the distinctive character or reputation of the trademark.
The innocent infringer doctrine, as applied by Indian courts, has historically focused on whether the seller had actual or constructive knowledge of the infringing nature of the goods. The Delhi High Court in Christian Louboutin Sas vs Nakul Bajaj & Ors, emphasized that liability depends upon the intermediary’s degree of knowledge, control, and participation in the infringing activity. Indian courts have generally treated knowledge and participation as important determinants of intermediary liability. The test, in essence, was one of subjective ignorance objectively assessed, i.e., whether the seller has sufficient cause to investigate before the sale.
The Problem Created by the Dark Stores
The emergence of quick commerce has fundamentally altered the assumptions underlying the innocent infringer doctrine. Unlike conventional retailers, these platforms do not merely “receive and sell” goods. A dark store is an algorithmically managed hub that (i) pre-stocks inventory based on machine-learning driven demand forecasting; (ii) controls product listings through cataloguing systems; (iii) manages sourcing relationships and procurement channels; (iv) operates high-velocity turnover without meaningful manual verification at the point of dispatch; and (v) exercises contractual authority over the sellers and logistics partners operating within its ecosystem.
This architecture creates what may be characterised as a condition in which the platform insulates itself from knowledge of infringement not through genuine ignorance but through the deliberate design of its system. Consider the following scenario, a brand discontinues a product against a counterfeit variant circulating in the secondary market. In a conventional retail setting, the distributor would be put on notice through trade communications, industry circulars, or regulatory advisories, and could plausibly claim ignorance only in the interim period. However, in a dark store, discontinued or counterfeit goods may enter inventory through automated procurement systems, and can be listed for sale without human curation. The algorithm not only mediates the transaction but also actively obscures the constructive knowledge which should be imputed.
This creates a difficulty in applying the innocent infringer doctrine. The original test was created for a human seller exercising human judgment. In a platform-mediated dark store, the seller is largely an algorithm, and the relevant question becomes whether the platform, as the controller of that algorithm, had institutional knowledge sufficient to constitute constructive notice. It also creates difficulty as an algorithm is far less entitled to claim ignorance than a traditional seller.
Comparative Approaches to Trademark Intermediary Liability
Under the EU Trade Mark Regulation (EUTMR) (Regulation (EU) 2017/1001) and the E-Commerce Directive 2000/31/EC, intermediaries are generally shielded from liability if they act as “mere conduits” of information or goods. However, the courts have consistently limited this safe harbour where intermediaries play an “active role”. In L’Oréal SA v eBay International AG, the court held that an online marketplace loses immunity if it either assists in optimising or promoting infringing listings, or plays an active role that gives it knowledge or control over listings. Similarly, in Google France SARL v Louis Vuitton, the court distinguished between passive hosting and active commercial involvement. These developments reflect a shift from reactive takedown obligations towards proactive prevention, indicating a meaningful oversight occurring within their systems.
Post-Brexit UK trademark law under the Trade Marks Act 1994 closely aligns with EU principles and has developed a strong emphasis on an intermediary’s ability to prevent infringement. In Cartier International AG v British Sky Broadcasting Ltd, the courts required intermediaries to take proportionate measures against infringement because they were well placed to prevent it. The decision suggests that an intermediary’s capacity to control infringement may be as important as its actual knowledge.Similarly, Richemont International SA v British Sky Broadcasting Ltd emphasised that intermediaries benefiting from large-scale commercial activity cannot entirely disclaim responsibility for infringement facilitated through their systems. Though the courts did not impose the trademark infringement liability in the traditional sense. However, this demonstrates the court’s willingness to impose preventive obligations on intermediaries.
This approach suggests that a dark store model, which centralises control over inventory and dispatch, would likely be treated as more than a passive seller. Consequently, the scope for claiming “innocent infringement” is significantly narrower than in traditional retail contexts.
Way Forward
The application of the innocent infringer defence must now be reconsidered in light of modern commercial realities. The key question is no longer whether the seller had direct knowledge, but whether the seller exercised sufficient control or oversight such that ignorance can no longer be considered reasonable. India can draw valuable lessons from the EU and the UK models by adopting a control-based approach to intermediary liability. Therefore, courts may adopt a method requiring higher standards of diligencefor digital intermediaries than for traditional retailers.The Parliament may introduce a statutory due diligence framework for digital retail platforms. Such obligations could include supplier verification mechanisms, maintenance of traceability records, periodic audits of high-risk products, and prompt response systems for trademark infringement complaints.
Ultimately, the rise of quick commerce suggests the gradual erosion in the innocent infringer defence and not its formal abolition of the innocent infringer defence. The law appears to be moving towards a model in which operational control and technological capacity to prevent infringement increasingly influence the assessment of knowledge and reasonable diligence. Therefore, there is a need to change and modify the doctrine of innocent infringer.
Authored By: Mr. Shreyansh Raj, National Law School of India University, Bengaluru
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