Isabella Mariam

The High Court of Delhi Division Bench of Justice Vibhu Bakhru and Justice Tara Vitasta Ganju has partially set aside an earlier interim order in a trademark dispute. The Court held that an online business-to-business portal is not to be restrained from providing brand names, such as 'PUMA', as options in a drop-down menu for sellers registering on its platform, provided it makes reasonable efforts to prevent the hosting, display, upload, or sharing of information that infringes trademarks. The Court directed that the portal must, however, continue to expeditiously take down any infringing listings when such infringements are brought to its notice. This decision modifies a previous judgment that had restrained the portal from offering the specific trademark as a search option to prospective sellers during their registration process.

The case originated from an appeal filed by IndiaMART Intermesh Limited (IIL), an entity operating an integrated electronic business-to-business (B2B) portal named www.indiamart.com. This platform serves as an interface between buyers and suppliers of various products and services. Sellers register on the platform and list their products, and interested buyers can then contact these sellers directly. The actual sale and purchase transactions occur directly between the buyers and sellers, without IIL's direct involvement in the consummation of the sale. IIL contended it is an intermediary under Section 2(1)(w) of the Information Technology Act, 2000 (IT Act), enabling sellers to list goods and services without altering their content.

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The respondent, PUMA SE (PSE), a German company and a major manufacturer of sportswear and accessories, operates in India through its subsidiary. PSE holds several registered trademarks, including the word mark 'PUMA' and various device marks, which it claims have been in use since 1977 and have become source identifiers for its products. The 'PUMA' trademark has also been declared a well-known trademark by the Trademark Registry.

The dispute arose in August 2021 when PSE allegedly received consumer complaints regarding counterfeit PUMA products listed on IIL's platform. The registration process for sellers on Indiamart involves sellers keying in their details, including the products they deal in. IIL provides a drop-down menu to facilitate this, allowing sellers to select from options or directly fill in product descriptions. PSE contended that options for certain products included 'PUMA'. Consequently, sellers describing their goods as 'PUMA' would appear in search results for 'PUMA' products. PSE alleged that various sellers listed counterfeit goods (clothing, footwear, accessories, etc.) bearing its registered PUMA marks on Indiamart. Screenshots of the Indiamart website showing such listings were presented as evidence.

PSE argued that the use of its registered trademarks on goods displayed by sellers on Indiamart constituted trademark infringement under Section 29 of the Trade Marks Act, 1999 (TM Act) and amounted to passing off. PSE further contended that IIL did not conduct adequate due diligence or verification of sellers, alleging IIL's business model focused on enrolling numerous traders to convert them into paid listings. While IIL actioned takedown requests for third-party listings, PSE claimed these parties often relisted under different or similar names, alleging IIL was "encouraging and inducing infringement by lack of due diligence" and "actively infringing its brand name by aiding and abetting the users on its platform".

IIL countered that it is merely an intermediary and does not encourage, abet, or influence sellers. It claimed the drop-down menu facilitates sellers, who can either select from it or key in their own descriptions. IIL argued that genuine PUMA product sellers could use the listing and that it takes steps to remove counterfeit listings upon notification.

The learned Single Judge, in an order dated 03.01.2024, had restrained IIL from providing any of PSE's registered trademarks, including PUMA, as a search option in the drop-down menu for prospective sellers and directed IIL to remove all infringing listings. The Single Judge found that IIL's use of the mark 'PUMA' amounted to trademark infringement under Sub-sections (1), (2), and (4) of Section 29 of the TM Act, and that IIL could not claim "safe harbor" protection under Section 79(1) of the IT Act.

IIL challenged the Single Judge's judgment, arguing, inter alia, that the judge erred in appreciating the nature of its services (claiming it is an online discovery platform akin to a Yellow Pages Directory, not an e-commerce website), in holding that using 'PUMA' in the drop-down menu constituted use 'as a trademark' or infringement under various sub-sections of Section 29 of the TM Act, and in denying IIL safe harbour protection under the IT Act. IIL contended its revenue is from value-added services not involving PSE's trademark use, and the drop-down menu was for descriptive purposes and to avoid misspellings, falling under Section 30(1) of the TM Act.

PSE supported the Single Judge's findings, arguing IIL's model monetizes registered marks to increase traffic, actively suggests their use without verifying genuineness, and that its verified seller listings encourage acceptance of counterfeiters. PSE maintained that IIL's actions constituted infringement and that it was not a passive intermediary. The registration process, as detailed, involves steps where a seller provides company and personal details, and at step 4, product details. For "shoes," suggestions like "Dance Shoes, Adidas Shoes, Lee Cooper Shoes, Puma Shoes" appear, with an instruction: “Please add more specific product name. You can also choose from the suggestions below”. This, IIL argued, was to encourage precise descriptions for better search relevance.

The Division Bench, in its analysis, first addressed the nature of IIL's services and the function of the drop-down menu. The Court observed that IIL is an intermediary as defined under Section 2(1)(w) of the IT Act, a fact not disputed by PSE. It described Indiamart as an online discovery platform for listing suppliers, particularly MSMEs, where sellers register and create catalogues. The crucial point of contention was the effect of including 'PUMA' as an option in the drop-down menu during seller registration.

The Court examined the registration process, noting that at the stage of providing product details, the platform offers suggestions, including brand names, to help sellers describe their products more precisely. It stated, “It is apparent from the above that IIL’s endeavour is to encourage the sellers to describe its product more precisely. This is obviously for the purposes of making the listing more relevant to the buyers searching for any specific product or services.”

A central question was whether listing counterfeit products constituted infringement by IIL. The Division Bench found that the Single Judge's conclusion that IIL aided and abetted infringement was based on premises such as Indiamart being an e-commerce site where goods are bought and sold. The Division Bench disagreed with this premise, stating, “Indiamart is not an interactive website on which buyer can place purchase orders for supply by the supplier. Indiamart renders listing services where buyers can get in touch with sellers... The negotiations and the transaction of sale and purchase of the products, is consummated between the purchaser and the seller directly. Indiamart has no role to play in the said transaction.”

The Court found the nature of Indiamart's services “akin to Yellow Pages Directory.” It elaborated on this analogy: “Like in Yellow Pages Directory, the publisher merely creates an index of the categories of goods and services and distributes the directory. It is for various suppliers to determine the category in which their goods and services fall. The publisher of Yellow Pages Directory would neither determine the genuineness of the products offered by any of the entities / businesses listed in the Yellow Pages nor determine whether the person selecting the category of its goods/services has correctly described the goods or has chosen the appropriate category.”

Regarding the use of the trademark 'PUMA' in the drop-down menu, the Single Judge had found this to be 'use as a trademark' under Section 2(1) (zb)(ii) of the TM Act, leading to infringement. The Division Bench, however, considered IIL's defense under Section 30(1) of the TM Act, which permits use of a registered trademark for identifying the proprietor's goods or services, provided the use is in accordance with honest practices and not detrimental to the mark's distinctive character or repute.

The Court stated, “In the facts of this case, we are unable to accept that the action of offering an option to the sellers to describe their products by a brand name, per se could be termed as a dishonest business practice.” It acknowledged IIL’s contention that the object was to ensure correct spelling by sellers. “Prima facie, we also find no grounds for the allegations that IIL by mentioning an option regarding description of goods by brand names encourages persons, who are neither proprietors nor authorised to use the brand, to use the same.”

Consequently, the Court found, “prima facie, Section 29 of the TM Act is not applicable insofar as IIL provides an option to sellers to describe its goods by using its brands/trademarks.”

The Court also found PSE’s reliance on Lifestyle Equities CV & Another v. Amazon Technologies Inc & Others misplaced, as in that case, the defendants were found to be inextricably linked in the sale transaction, unlike IIL's services, which are “essentially indexing services.”

On the issue of aiding and abetting infringement, the Division Bench noted that such an offence typically includes an element of shared intent. It was “unable to accept that any such prima facie conclusion could have been drawn only on the basis that IIL presents a dropdown menu for specifying the description of the products that sellers may wish to specify.” The Court stated its view on the nature of IIL's platform: “The learned Single Judge has proceeded on the basis that Indiamart is an e-commerce site on which goods and services are bought and sold. However, this assumption is erroneous.”

It further stated, “Prima facie, we are unable to read any intent on the part of IIL to encourage listing of counterfeit Puma Products by offering the sellers an option to choose a specific description of their products/services by indicating the brand name associated with their product/services.”

Regarding the safe harbour protection under Section 79(1) of the IT Act, the Court acknowledged that this protection is subject to sub-sections (2) and (3). The Single Judge had found that the conditions in Section 79(2)(a), (b), and (c) were not met. The Division Bench, however, was “unable to accept that, prima facie, the conditions contained in Clauses (a), (b) and (c) of Sub-section (2) of Section 79 of the IT Act are not satisfied.” It noted that IIL's function is to provide access to a B2B platform. While IIL indicates certain sellers as 'verified', this was explained to mean only that the phone number was verified. The Court suggested, “It would be necessary for IIL to prominently indicate that IIL has only verified the phone number of the sellers thus, no one is deceived to believe that IIL is offering any other assurance in this regard.”

The Court then focused on the due diligence requirement under Section 79(2)(c) of the IT Act and Rule 3(1)(b)(iv) of the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021. This rule requires intermediaries to make "reasonable efforts" to cause users not to host information infringing IPR. The Court observed that IIL's terms and conditions state users will not submit content involving counterfeit items. The Single Judge had found this insufficient for "reasonable efforts." The Division Bench suggested, “the least that IIL can do is to ensure that each of the sellers is aware of the requirement to not display counterfeit products and ensure that they furnish an express undertaking to the said effect. It would also be apposite that the same be included as a prominent part of the online registration form / process.”

The Court affirmed the obligation under Section 79(3)(b) of the IT Act: “There is no dispute that on receipt of knowledge of counterfeiting, IIL would be obliged to take down the link and failure to do so would be actionable. In such circumstances, the safe harbour of Section 79(1) of the IT Act would not be available to IIL.” It also addressed PSE's grievance about sellers re-registering after takedowns: “Prima facie, failure to prevent such a seller from re-listing itself in a case where its listing has been pulled down on account of infringement of IPR, would fall foul of the requirement of due diligence under Section 79(3)(a) of the IT Act.” However, this might differ if a seller fraudulently re-lists under different particulars.

The Court disagreed with the Single Judge’s prima facie finding that IIL conspired, abetted, and aided infringement, thereby losing safe harbour under Section 79(3)(a). It stated: “The fact that IIL provides an option for a seller to choose the brand of its products specifically describing its goods cannot, prima facie, be held to be a ground to hold that it aids and abets the infringer in displaying the counterfeit products of a particular brand.” The Court concluded that the logical outcome of PSE's contention, if accepted at this stage, “would be that IIL cannot accept a description of goods by their brand. It would necessarily have to eliminate references to brands at the time of registration. This, in our view is, prima facie, unsustainable.”

The High Court of Delhi in its judgment, issued specific directives that modify the interim order previously passed by the learned Single Judge

The Court stated its final view on the matter of the injunction. It recorded: "In our view, subject to IIL making reasonable efforts, to cause users of Indiamart not to host, display, upload or share any information that infringes the PUMA trademarks, as discussed earlier; IIL is not required to be interdicted from providing options to identify the products/services by their brands/trademarks and operating its B2B portal – Indiamart."

Consequently, the Court directed a specific alteration to the impugned order. It ordered: "In view of the above, the impugned order is set aside to the extent that it restraints IIL from providing an option to use the PUMA mark for the description of any goods as a search option in the drop-down menu presented to prospective sellers at the time of the registration on the Indiamart platform."

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However, the Division Bench also upheld a crucial aspect of the Single Judge's order aimed at protecting the trademark owner's rights against actual infringing listings. The Court stated: "However, we sustain the direction that IIL shall forthwith take down all infringing listings containing the PUMA marks on the same being brought to its notice."

Finally, the Court formally concluded the appeal based on these modifications. It was recorded: "The present appeal is disposed of in the aforesaid terms. All pending applications are also disposed of."

Advocates Representing the Parties

For the Appellant: Mr Sandeep Sethi, Mr Rajshekhar Rao, Sr. Advocates with Mr Sidharth Chopra, Mr Nitin Sharma, Mr Naman Tandon, Mr Kuber Mahajan, Ms Riya Kumar, Mr Sumer Saeth and Mr Harshil Wason, Advocates.

For the Respondent: Mr. Ranjan Narula, Mr. Shakti Priyan Nair and Mr. Parth Bajaj, Advocates.

Case Title: IndiaMART Intermesh Ltd. v. PUMA SE

Neutral Citation: 2025: DHC:4819-DB

Case Number: FAO(OS)(COMM) 6/2024

Bench: Justice Vibhu Bakru, Justice Tara Vitasta Ganju

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