Delhi High issues stay against Zostel for alleged theft of copyright material

The Delhi High Court has issued a stay order against the hostel chain startup Zostel over a complaint by Oyo rooms for alleged theft of copyright materials.

Zostel had recently launched ZoRooms and works on a similar model as Oyo Rooms. Oyo has alleged that there has been theft and also submitted evidence such as mails, CCTV footage and theft of its ‘software’ by few of its own employees who had left the company to join Zostel. Oyo is owned by Oravel Hospitality.

The High Court in its stay order dated April 21, 2015 barred Zostel which recently started budget hotel aggregation business ‘Zo Rooms’ from using ‘confidential information and software’ of Oyo Rooms.

Zostel was founded in 2013 by a group of IIM Calcutta graduates Chetan Chauhan, Paavan Nanda and Tarun Tiwari; and IIT alumnus Abhishek Bhutra. It was funded with Rs 5 crore from Malaysia-based angel investor PreshaParagash.

Oravel is also venture capital backed. The firm was founded by Ritesh Agarwal in 2012 when he was just 17. It earlier operated Oravel.com, which was a marketplace for boutique guest homes, inns, bed & breakfasts, serviced apartments, holiday rental and palaces. The firm aggregated bed-and-breakfast establishments, private rooms and serviced apartments for short and mid-term rental. However, the company shut down Oravel in June last year, and the domain name Oravel.com now redirects to OYO Rooms.

It recently raised Rs 150 crore ($24 million) in a new investment round led by Greenoaks Capital with participation of its three existing VC investors Lightspeed Venture Partners, Sequoia Capital and DSG Consumer Partners.

The next date of hearing is September 2, 2015.