A single judge held that e-commerce platforms had lost their safe harbour and injuncted them from listing direct sellers’ products. It was a striking result — and the Division Bench set it aside the following year. Both stages are worth understanding, because the appeal is now the governing position.
The suits
IP owners face persistent difficulty with counterfeit products sold by unauthorised sellers on e-commerce platforms — and, on the plaintiffs’ case, with the platforms themselves.
A batch of seven suits for injunction was filed in the Delhi High Court by Amway, Modicare and Oriflame against 1MG, Amazon, Flipkart and other e-commerce entities, seeking to restrain direct sellers from selling the plaintiffs’ products on those platforms without consent.
The four questions
- The validity and binding effect of the Direct Selling Guidelines, 2016.
- Whether sale of the plaintiffs’ products on the platforms violated their trademark rights, amounting to misrepresentation, passing off and dilution of goodwill.
- Whether the platforms were entitled to intermediary safe harbour under Section 79 of the IT Act and the Intermediary Guidelines.
- Whether the platforms bore tortious liability for interfering with the contractual relationship between the plaintiffs and their direct sellers.
The single judge’s answers
All four were answered in the plaintiffs’ favour.
The Direct Selling Guidelines were held to be law and binding. Absent the plaintiffs’ consent, use of their marks by the defendants violated their trademark rights.
On safe harbour, intermediaries must exercise due diligence by putting proper IPR protection policies in place; the defendants had not, and were therefore disqualified from Section 79 protection.
On tortious interference, the defendants argued they were mere facilitators not directly involved in sales. The court rejected that — interference need not be direct, and platforms have a duty not to interfere unnecessarily with contractual relationships.
An injunction was granted.
The appeal
The Division Bench set the injunction aside in 2020, in Amazon Seller Services Pvt. Ltd. v. Amway India Enterprises Pvt. Ltd.
The appellate court took a materially different view on the foundations of the claim — including the legal status of the Direct Selling Guidelines and whether their breach could ground a claim against the platforms, the availability of safe harbour to intermediaries that had not been shown to be active participants in the infringing conduct, and whether the case for tortious interference was made out at an interlocutory stage on these facts.
The practical result is that the single judge’s findings should be read as superseded. Anyone assessing platform liability in India needs the appellate position, not the first-instance one.
What survives
Two propositions from the wider case law are unaffected, and worth separating from what was reversed.
Safe harbour depends on conduct. Section 79 protects a passive intermediary. Where a platform actively participates in, curates or monetises the infringing activity, the protection is not available — the principle applied against Google in DRS Logistics on keyword advertising. The question is always what the platform actually did, not what it calls itself.
Due diligence obligations are real. The Intermediary Guidelines impose requirements, and a platform with no functioning IP complaint mechanism is in a considerably weaker position than one that responds promptly to takedown requests.
What the appeal establishes is that those propositions do not, without more, convert a marketplace into a party liable for every listing on it — and that guidelines issued by the executive do not carry the force the single judge attributed to them.
The takeaways
- The single judge injuncted the platforms on all four questions.
- The Division Bench set that aside in 2020 — the appellate position governs.
- Safe harbour turns on conduct — active participation forfeits it.
- Executive guidelines are not automatically binding law — a recurring theme.
Frequently asked questions
Are e-commerce platforms liable for third-party listings in India? Not automatically — the Division Bench set aside the injunction granted at first instance, and platforms retain safe harbour where they are genuinely passive intermediaries.
When does a platform lose safe harbour under Section 79? Where it is an active participant in the conduct rather than a passive conduit, or fails to meet its due diligence obligations.
Are the Direct Selling Guidelines binding law? The single judge held they were; the appellate court took a different view of their legal status, which is the position that governs.
What should a brand do about counterfeits on marketplaces? Use the platform’s IP complaint and takedown mechanisms, which operate far faster than litigation, alongside action against the sellers themselves.
Useful official resources
- The Information Technology Act, 2000
- The Trade Marks Act, 1999
- Delhi High Court