E-Commerce Platforms Can't Permit Third-Party Sellers To "Latch On" Bestseller's Trademark: Delhi HC Grants Interim Injunction Against Flipkart

In the context of e-commerce platforms, the Delhi High Court has held that permitting a third-party seller to 'latch on' to a Best-Seller's name or trademark is nothing but 'riding piggyback', which also constitutes passing off.

Justice Pratibha M Singh further said:

"It amounts to taking unfair advantage of the goodwill that resides in the Plaintiff's mark and business. In the context of e-commerce, this Court has no doubt that 'latching on' by unauthorised sellers results in and constitutes 'passing off' as known in the brick and mortar world. It is a mode of encashing upon the reputation of the Plaintiff which he has painstakingly built."

Passing an interim injunction against Flipkart, the Court restrained the e-commerce platform from allowing any third party sellers from 'latching on' to the trademark 'V Tradition' or its product listings, so as to ensure that third party unauthorised sellers are unable to misuse the same.

The suit was filed by one Akash Aggarwal, the sole proprietor of an entity operating under the trademark 'V Tradition', which was engaged in the business of sale of clothing for women on various retail e-commerce platforms including the defendant Flipkart.

It was the plaintiff's case that when a third-party seller wishes to place a listing on Flipkart, the platform's software itself suggests 'V Tradition' products as one of the most popular listings and 'Best-Sellers' and allows such third party sellers to add various products under Plaintiff's mark into their own listings, along with Plaintiff's products, photographs, by way of the 'Opportunities' option under the 'Listings' tab.

It was claimed that by doing so, various third-party sellers were portraying themselves as 'V Tradition' and were riding on the popularity of its products and designs.

"E-commerce platforms provide an alternate platform to small and medium entrepreneurs to showcase their products and conduct their businesses in a profitable manner. However, certain features on these platforms can also cause damage to such entities and entrepreneurs. One such feature, as is clear from the present case, is the feature described as 'latching on' provided by the Defendant No.1 - Flipkart on its e-commerce platform," the Court observed.

The Court thus observed prima facie that Flipkart was permitting third-party sellers to 'latch on' to the best sellers in one particular segment of products, resulting in misuse of the Plaintiff's mark.

"This Court is satisfied that such a feature cannot be allowed to be used or offered, to the detriment of the owner of the brand or the person who has created the original product. Consent and authorisation of the brand owner and the listing owner would be required before such conduct by any seller is permitted," it said.

Observing that Flipkart allowed third-party sellers to 'latch on' to the Plaintiff's product listings which were featuring as 'Best Sellers', by way of the 'Opportunities' option, the Court said that any infringing third-party product listings would be liable to be taken down.

Thus, the Court directed Flipkart to ensure that the 'latching on' feature is disabled qua the mark 'V Tradition' till the next date of hearing.

"All such third-party sellers shall also stand restrained from 'latching on' to the product listings of the Plaintiff and misusing the product listings and mark/name 'V Tradition', for promoting their products which are not connected to the Plaintiff, in any manner," it added.

The Court also directed that the URLs of 45 third-party sellers, who had already started using the mark 'V Tradition', product listings and pictures, must be disabled or taken down.

The matter will now be heard on November 11.

Case Title: AKASH AGGARWAL v. FLIPKART INTERNET PRIVATE LIMITED AND ORS.

Citation: 2022 LiveLaw (Del) 756

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