In a landmark ruling on February 25, 2025, the Delhi High court ordered Amazon to pay a hefty Rs. 339.25 crore in compensatory damages for the sale of counterfeit Beverly Hills Polo Club (BHPC) goods on its platform. This case highlights the intersection of trademark law and e-commerce regulation, raising questions about the accountability of online marketplaces in protecting brand integrity.

The Plaintiffs LifeStyle Equities C.V. and Lifestyle Licensing B, V, who are the rightful owners of the mark Beverly Hills Polo Club (BHPC), a luxury brand known for its high-quality apparel and accessories, accused Amazon Technologies Inc. and its affiliates, Cloudtail India Pvt. Ltd. and Amazon Seller Services Pvt. Ltd., of facilitating the sale of counterfeit BHPC products, tarnishing the brand’s image and causing substantial financial loss. 

Plaintiff’s mark Defendant’s mark

The Court’s Decision:

The Delhi High Court, led by Justice Prathiba M. Singh, ruled in favour of the Plaintiffs awarding Rs 292.7 crore (USD 33.78 million) for lost royalties that the Plaintiffs would have earned had counterfeit goods not been sold on Amazon and Rs 43.32 crore (USD 5 million) for the extra marketing and advertising costs that Plaintiffs incurred to repair its damaged reputation.

Further, the Court dismissed the Plaintiffs claim for further compensation, including USD 5 million for loss of goodwill and reputation. The Court deemed these claims speculative and unsubstantiated, underscoring the need for tangible, concrete evidence of losses in trademark disputes.

In a significant twist, Amazon was ordered to bear the legal costs of the litigation, which amounted to Rs. 3.23 crore. This ruling marks a pivotal moment in the ongoing battle of intermediary liability especially in the e-commerce industry. The Plaintiff claimed that it repeatedly notified Amazon about the sale of these counterfeit goods, but Amazon did not take sufficient action to remove the listings or prevent further infringement. Therefore, the crux of the case is whether Amazon, as an intermediary, can be held liable for infringing the plaintiff’s trademark when it allows third-party sellers to offer counterfeit goods on its platform. With platforms like Amazon now being held accountable for the damage caused by the sale of counterfeit products, this case sets an important precedent for future trademark disputes. However, this is just one battle in a much larger war.

The Legal Conundrum:

In recent times, the role of e-commerce platforms like Amazon has been the subject of intense legal scrutiny. On one hand, Amazon argues that it is merely an intermediary platform providing a marketplace for sellers. The legal defense typically presented by such platforms is that they are not directly involved in the sale of counterfeit goods and, as such, should not be held responsible for the actions of third-party sellers. This legal distinction hinges on whether platforms like Amazon are considered “mere intermediaries” or whether they hold some level of liability for the actions of third-party vendors using their services. Under Section 79 of the Information Technology Act, 2000 (IT Act) in India, intermediaries are provided a safe harbor, meaning they are not generally liable for third-party content unless they have actual knowledge of the infringing material and fail to act upon it.

However, in this case, the Plaintiff claims that Amazon had sufficient knowledge of the counterfeit goods being sold through its platform and failed to take proper action to remove the infringing items. This aspect brings into question the extent to which an e-commerce platform can claim safe harbor protection when it is notified of infringement.

A critical factor in this case is the issue of knowledge and control. The Plaintiff contends that Amazon was not merely a passive platform but actively participated in the sale and promotion of these counterfeit goods. If Amazon was aware of the infringement and failed to take adequate action, it could be argued that Amazon waived its right to immunity as an intermediary. This legal argument is rooted in the principle of “actual knowledge.” Under Indian law, intermediaries like Amazon are required to take down infringing content once they have actual knowledge of the violation. In this case, the question is whether Amazon had knowledge of the counterfeit goods being sold and whether it acted promptly to remove them once notified. The case also touches upon the question of Amazon’s business model, which actively promotes third-party sellers through its platform. Amazon’s algorithm and recommendation systems are designed to boost sales, which can lead to questions about whether such algorithms play a role in amplifying trademark infringement.

As an e-commerce platform, Amazon has specific policies and systems in place to monitor and control the listings of third-party sellers. The Plaintiff argues that Amazon failed to exercise sufficient due diligence and allowed counterfeits to be sold under its platform. Amazon, on the other hand, contends that it takes reasonable steps to ensure that the products listed on its platform are legitimate and that it cooperates with trademark holders to resolve complaints when they arise. However, it is now evident that these policies may not be robust enough to prevent counterfeit goods from slipping through the cracks, especially when high-demand branded goods are involved.

The Way Forward?

This ruling sets a significant precedent for the liability of e-commerce platforms. Several important takeaways from this case include:

  1. Stronger Due Diligence Requirements: E-commerce platforms will now be under greater scrutiny to ensure they take proactive measures to prevent the sale of counterfeit goods. The ruling may lead to a stricter interpretation of intermediary liability under Indian law.
  2. Impact on Business Models: E-commerce platforms that rely on third-party sellers may need to reevaluate their business models to ensure they are not facilitating the sale of counterfeit goods. The case highlights the importance of implementing robust intellectual property protection mechanisms to avoid liability.
  3. Pressure to Strengthen Intellectual Property Protection: With growing concerns about counterfeiting on digital platforms, this ruling may prompt Amazon and other platforms to invest in more effective monitoring tools to protect trademark owners and consumers alike.

Despite this landmark judgment, counterfeit goods are still rampant on e-commerce platforms. What will these e-commerce giants do now? Will they set up to protect brands and consumers, or will continue to sale of counterfeit goods as well as the legal ramifications that follow? The challenge is clear, and the pressure is on.

Case title: Lifestyle Equities CV & Anr. Vs, Amazon Technologies, Inc. & Ors (CS(COMM) 443/2020)

Written By Vijayalakshmi R