This article explores the liability of intermediaries through the Louboutin Case, with specific emphasis on selling products that infringe on the IP rights of brands.

Introduction to e-commerce

There is no precise definition of e-commerce, but it means a method of conducting business through electronic means. Several fashion and luxury goods brands have websites where customers can buy products online.

There are primarily two kinds of models of e-commerce, namely, the market-based model (also known as the ‘zero-inventory model’) and the inventory-based model.

The market-based model refers to when e-commerce provides merely a platform for buyers and sellers to exchange services or products, thereby acting as a facilitator or an ‘intermediary’. eBay is an example of a market-based e-commerce model. 

In the inventory-based model, the goods and services are owned by the e-commerce startup and sold directly to the customers. Jabong is an example of an inventory-based model. 

Several compliances need to be followed by e-commerce websites. A plethora of legal issues also arise due to online contracts and transactions. Some common examples are issues pertaining to counterfeit products, return/exchange policy, online payment disputes, cybersquatting and IP infringement by e-commerce websites.

Aside from the abovementioned issues, content regulation is a significant problem that online intermediaries and platforms often face.

It is primarily the Information Technology Act, 2000 that governs and enforces liability for e-commerce platforms along with the applicable IP legislations and provisions of the IPC.

Intermediary Liability & Safe Harbour Provision 

It is often argued that e-commerce websites that solely act as an intermediary should not be liable for the violations committed by the ‘seller’ or the ‘buyer’. But that is not the case. An e-commerce platform has certain responsibilities regarding the content published on its website. However, there has been considerable case law to deal with intermediary liability, with the most significant case being that of Avinash Bajaj v. State.

In this case, despite baazee.com having a filter for posting objectionable content, an obscene video clip was listed on the platform, and a student had placed an order for the same. An FIR was charged against the accused, the buyer and the owner of the website, Avinash Bajaj.

However, the owner contended that the transfer was directly between the seller and the buyer without any intervention from the website. He also argued that due diligence was followed, and the website immediately took the video down when it came to their knowledge. 

The result of this case was the introduction of section 79 for intermediary liability to the IT Act, 2000. Section 79 is known as the safe harbour provision for intermediaries. It provides an exemption from liability to the intermediary in some instances.

Section 2(1)(w) of the IT Act, 2000 defines intermediary as any person who receives, stores or transmits electronic record on behalf of another person or provides service with respect to that record and includes online auction sites and online marker places.

The exemption under section 79 has certain conditions, such as the intermediary should not initiate the particular transmission, determine the receiver of transmission or modify or alter the information in the transmission. 

Thus, it is evident that fashion brands that have their own inventory and deal directly with customers will not be liable for the safe harbour provisions. 

Christian Louboutin SAS v. Nakul Bajaj & Ors

Facts of Case

Christian Louboutin is a luxury fashion brand primarily famous for its red-sole heels. This red sole is protected in numerous jurisdictions, and Louboutin has often undergone trademark litigation suits to protect its red sole.

The defendant is a company called Darveys.com, which is an exclusive online shopping portal for luxury goods and high-end fashion brands. It requires users to pay a certain amount merely to access the website.

Louboutin filed a suit against Darveys for importing and selling products that had allegedly infringed on Louboutin’s trademark rights.

 Darveys sought protection under the safe harbour provision as it claimed to be an intermediary.

Issues 

1. The primary issue in this case was whether Darveys.com would be exempted from liability under trademark infringement via section 79 because it is an intermediary.
2. The second issue was whether using trademarks in Meta Tags amounts to infringement.
3. The third issue was determining whether the defendant company owed the plaintiff any relief or other awards.

Decision 

The court went through an array of case law and observed that Darvey’s policies were such that apart from merely listing and pricing the products on its website, it was also looking after the transportation of the products and logistics. Darveys was conducting quality tests for the products and would then place a seal of authenticity. It did not disclose its foreign sellers. Moreover, it made claims that all products were 100% genuine and provided a guarantee of twice the amount of the product if it turned out to be fake.

Hence, the court held that since Darveys had considerable control over the inventory, its role was more than that of an intermediary and that it would be held liable for selling infringed luxury goods to a customer.

As to the question of trademark infringement via meta tags, the court relied on Kapil Wadhwa v. Samsung Electronicswherein it was held that if a trademark, such as a brand name, is used as a keyword for meta-tagging, it would be considered an infringement. 

Conclusion

This is a landmark case regarding intermediary liability of e-commerce platforms that sell branded products. The e-commerce website is responsible for ensuring that no counterfeits or infringed products are listed on its platform. Moreover, if they have control over the inventory, the liability of the intermediary increases, as seen in the Louboutin case. 

Thus, the case is a lesson for both intermediaries and owners of fashion brands. Brands can file for infringement proceedings against intermediaries that list their products on their website and seek relief. 

Meanwhile, intermediaries that sell branded products need to ensure that they have the legal right to do so and that the products do not infringe any IP rights of the original brand.

Cultural appropriation is harmful as it reinforces stereotypes and causes a power imbalance wherein most of those who are at a loss are from Third world countries and indigenous tribes. No acknowledgement or compensation is given by the global brands that have derived their designs from local artisans and customs.

The following are some of the most infamous instances of cultural appropriation within the fashion industry.

• Noose-style Necklace by Givenchy 

Givenchy, the French fashion house was heavily criticised when its models walked the Paris Fashion Week Show wearing noose-shaped necklaces. Many condemned the necklace and stated that “suicide is not fashion”. 

A similar controversial row had erupted in the year 2019 when Burberry had released a hoodie with a neck noose. It became popularly known as the ‘suicide hoodie’. The neck noose has connotations of suicide and slavery.

• Resort 2020 by Carolina Herrera 

The Resort 2020 fashion line’s label was “take on the playful and colourful mood of a Latin holiday”.The Mexican culture minister, Alejandra Frausto wrote to Carolina Herrera, the Venezuelan fashion designer and accused her of theft. The Mexican government claimed that one of the embroideries was taken from the Tenango de Doria community while two of the other dresses had impressions of the traditional Saltillo shawls based in Coahuila state.

• ‘Indy Turban’ by Gucci

Gucci showcased its “Indy Full Turban” in the 2018 fall runway show. White models wore the turban as an accessory. It was immediately criticised as the headscarf is an integral part of the Sikh religion. Moreover, Gucci had priced the turbans for a whopping sum of USD 790.

Gucci failed to realize that members from the Sikh community often times face racial violence for wearing such a turban.

• ‘Chandelier Hair Clip’ by ASOS

The ‘tikka’ is a traditional and religious head jewellery in the South Asian communities, particularly in India. It is also commonly called as ‘bindi’ or ‘tikli’. ASOS, the U.K. based fashion company was heavily criticised when they started to sell the ‘tikka’ on their website by calling it a ‘Chandelier Hair Clip’. Many users took to social media and called out ASOS. Shortly after, the ‘hair clip’ was not available on their website and they issued a public apology.

• Native American-Inspired look by Victoria’s Secret

At the annual fashion show of Victoria’s Secret in 2012, model Karlie Kloss walked the runway wearing a feathered headdress with suede fringe and leopard-print lingerie as a way of representing Thanksgiving. The feather is symbolic to the Native-Americans.

This angered communities and Victoria’s Secret was accused of being indifferent towards the indigenous people’s values and genocide. 

After heavy backlash, Victoria’s Secret issued an apology and so did Karlie Kloss. 

A similar instance had occurred back in 2010 when Victoria’s Secret models covered their bodies with black lines which were similar to indigenous body art. The female models donned animal print lingerie and the men wore sarongs.

The Way Forward-

Fashion houses can collaborate with local artisans and give them credit and acknowledgement along with a share of the profits. This will help the local communities which often time live below poverty. 

Intellectual Property Rights can act as an effective tool to combat cultural appropriation by ensuring adequate protection and a legal recourse. Geographical Indication, Trademarks and Copyrights are some of the commonly used IPs in the fashion industry. Geographical Indication is really helpful for small artisans and tribal communities as it prevents third parties from producing their designs and artwork.

]]> https://fashionlawjournal.com/ritika-pvt-ltd-v-biba-apparels-pvt-ltd-case-analysis/ Sat, 01 Apr 2023 16:13:01 +0000 http://fashionlawjournal.com/?p=6664 Introduction

Intellectual Property (herein referred to as ‘IP’) refers to that property which is intangible and is a product of a human’s thinking and labour. Common examples of IP include software patents, artistic works, and industrial designs.

When one makes any original invention, one wants to have sole control over it. Hence, by getting exclusive ownership rights of the product invented, one can salvage economic benefits and personal gains by restricting and monetizing its usage.

Countries, too, ensure adequate IP protection is given to their citizens because being granted exclusive ownership rights acts as a driving force for making more inventions.

A nation’s economic and technological development will halt if no protection is given to intellectual property rights. The contribution of IP is the sine qua non for the industrial and economic development of a nation.

In India, the primary laws governing IPR are the Trade Marks Act, 1999, Patents Act, 1970, Copyright Act, 1957, and Designs Act, 2000.

In the fashion industry, there is a massive intervening of various types of laws. The industry encompasses almost every kind of law in some manner.

IPR laws play a significant role in the fashion industry. The importance of IP laws in fashion cannot be neglected. From clothing designs and colour-coding of fabrics to brand logos and fashionwear in the metaverse, IPR plays a significant role.

When fashion designers make a design, they put in their sweat and blood making it. They must get to retain ownership of their designs. Moreover, due to the sheer size and complexity of the textile industry, it can become challenging to determine whether and to what extent one design or pattern has been copied.

One way to overcome such issues is to have one’s products registered under the appropriate laws. Though registering one’s IP does not guarantee that third parties will not copy the designs and products, it definitely assures the one registering their IP with a proper legal recourse in case of IP theft or IP infringement.

Since the extent of IP protection guaranteed under various IPR legislations is different, it becomes necessary to know the level of protection for each kind of IP before filing for registering an IP.

Section 2(c) of the Indian Copyright Act of 1957 defines “artistic work”. Painting, sculpture, drawing (including a diagram, map, chart, or plan), engraving, picture, building, and other work of handicraft are all considered as “artistic work”.

Section 2(d) of the Designs Act of 2000 defines the term “design” as the characteristic of shape, configuration, pattern, ornament, or composition of lines or colours applied to any article, whether two-dimensional or three-dimensional or both, which is finished by industrial, mechanical, or chemical means, separate or combined, and can be seen with the naked eye or must be tangible.

Case Analysis 

The following case of Ritika Pvt. Ltd. v. BIBA Apparels Pvt. Ltd at the Delhi High Court highlights the legalities of IP infringement and is a landmark case in differentiating between designs that are eligible for copyright protection under the Indian Copyright Act, 1957 and those designs suitable for copyright protection under the Designs Act, 2000.

Basic Facts of the Case

In this case of 2016, the Plaintiff, Ritika Private Limited, was claiming to be the first owner of the copyright for various sketches and drawings being printed on garments for dresses being sold under the brand name of ‘RITU KUMAR’. It pleaded that the drawings and sketches were distinctive and original. To guarantee that their product was genuine, they kept digital records of all the designs and affixed identification numbers. The Plaintiff also gave a comprehensive account of how the work was carried out using its brand.

The Plaintiff filed a suit against the Defendant, BIBA, for copyright infringement. Plaintiff sought the relief of an injunction prohibiting BIBA from reproducing, printing, publishing or selling the garments which had Plaintiff’s prints and designs on them.

The Plaintiff also pleaded violation of its trade secrets as the Defendant was employing past employees of the Plaintiff who were revealing the trade secrets to the Defendant. However, the Defendant argued that there is no proof of violation of trade secrets.

Arguments made by Defendant- 

The Defendant strongly objected to the Plaintiff’s contention of being the true owner of the copyright and called for the claims to be dismissed by replying on section 15 of the Indian Copyright Act, 1957. 

Section 15(2) of Indian Copyright Act, 1957- “Copyright in any design, which is capable of being of being registered under the Designs Act, 2000, but which has not been so registered shall cease as soon as any article to which the design has been applied has been reproduced more than fifty times by an industrial process by the owner of copyright or, with his license, by any other person.”

If any material is considered an artistic work under the copyright law, then it does not have automatic protection under the Designs Act, 2000.

The Defendant argued that since the copyright in the design has been applied to an article by an industrial process more than 50 times by the Plaintiff, the ownership of the copyright has ceased to exist.

Moreover, since the none of the designs were registered under the Designs Act, 2000, they are not protected.

Arguments made by Plaintiff-

The Plaintiff contended that the subject matter of copyright continues to be a subject matter of copyright in the exclusive ownership of the owner of the copyright despite the copyright being used for manufacturing of an article for more than 50 times. The contention was based on the fact that the definition of “artistic work” is a subject matter of a copyright under section 2(c) of the Indian Copyright Act and excluded from definition of “design”, as a result of which Section 15(2) of the Designs Act, 2000 would not be applicable.

The Plaintiff further argued that non-registration under the Designs Act, 2000 of the drawings and sketches will not extinguish the rights of the Plaintiff to copyrights existing in such works; hence, the Defendant is liable to be injuncted from infringing the copyrighted works of the Plaintiff.

Decision of Court

The Delhi High Court relied on the case of Microfibres Inc. Girdhar & Co. & Anr while deciding the matter. It was held in the Microfibres case that once a sketch/design is used for creating dresses and the total number crosses 50, then the copyright ceases to exist based on the language of section15(2) of the Indian Copyright Act, 1957. The Court stated that the decision given by the Hon’ble Division Bench of the Court in Microfibres case is binding upon this Court.

The Court held that the Plaintiff’s copyright was not infringed under the Indian Copyright Act, 1957 and since the Plaintiff used the same for producing more than fifty items via an industrial process for commercial gains, the copyright protection had ceased to exist. It held that the Plaintiff was not entitled to design protection.

Conclusion

It is evident that the legislature intended to give a lesser period of protection to copyrights when a design is created from the copyright and applied for commercial usage via industrial processes.

The main argument put up by the Hon’ble Court in this instance was that, under Section 15(2) of the statute, a design loses its copyright protection once it has been copied more than 50 times. This frame of view also supports healthy competition in the fashion business, prevents market monopolies by a single producer, and meets clients’ many needs at reasonable rates. 

Thus, copyright persists until put to industrial purposes, thereby limiting the rights enjoyed under Copyright protection. 

]]> https://fashionlawjournal.com/recent-mergers-and-acquisitions-in-fashion-industry/ https://fashionlawjournal.com/recent-mergers-and-acquisitions-in-fashion-industry/#respond Wed, 16 Nov 2022 10:20:19 +0000 https://fashionlawjournal.com/?p=3734 There have been numerous mergers and acquisitions in the fashion industry. M&A transactions have their pros and cons, and it is essential that companies do a detailed study before getting into such a transaction with one another. The following are some of the most recent and notable mergers and acquisitions that have taken place in the fashion industry.

• Reebok acquired by Authentic Brands Group

Reebok is an American footwear and clothing manufacturing company that is particularly known for its sportswear and footwear. Reebok created the first spiked running shoe and is well-known for introducing its “pump” technology.

Authentic Brands Group is an American brand management company that has its headquarters in the city of New York. It is known for holding numerous apparel, sports and entertainment brands. It grants licenses of the brands that it owns to third parties and tries to promote the brand’s identity by various marketing efforts.

On March 1, 2022, Authentic Brands Group (ABG) acquired Reebok at an estimated price of USD 2.5 billion. The team has great potential and seems to be very promising for Reebok as ABG has already assembled a roster of star players from different countries and sports who will be crucial in the distribution of Reebok products and its brand identity. Moreover, ABG looks to maintain Reebok’s independent DNA and identity while expanding its market base.

Since the acquisition is still in its nascent stage, it will be interesting to see whether it can fulfil the estimated outcomes and deliver a stronger brand by synergy of the two companies.

• Hey Dude acquired by Crocs

Crocs is an American company based in Broomfield, Colorado. It is a manufacturer of footwear and has gained immense popularity due to their unique products. The shoe wear is extremely comfortable and customisable. Moreover, the resin used to make the shoes is a company secret which only they know how to make.

Hey Dude was originally founded in Italy as a company which would produce comfortable and accessible footwear. It gained popularity for their footwear being lightweight and extremely comfortable. The Hey Dude footwear kind of resembled Crocs shoes. Hey Dude shoes are made while keeping sustainability in mind. Crocs acquired Hey Dude by USD 2.05 billion in cash and over 2 million shares issued to the founder of Hey Dude, Alessandro Rosano.

Crocs announced the acquisition of Hey Dude with the closing effective from February 17, 2022. According to Crocs, the primary reason for the acquisition is that Hey Dude would have second high-growth, thereby making the Crocs portfolio highly profitable. This would also enable Crocs to increase their global presence. Part of the reason for this acquisition is also to cut down on competition as both work in the similar line of products.

• THE YES acquired by Pinterest 

The Yes is an AI-powered shopping service website founded in 2018 by Julie Bornstein and Amit Aggarwal. It provides a personalized shopping feed on a daily basis in relation to brands and various styles. It learns the user’s shopping tendencies and style as the user browses across fashion platforms. It uses technology to better understand the customer’s needs and wants and the style of clothing/accessories they prefer.

Pinterest is a social media platform where images, GIFs and videos can be shared via pinboards. It is a popular platform to get ideas, find inspiration and new products. Currently, it is working to improve online shopping through its platform.

 In the month of June, 2022, Pinterest completed the acquisition of The Yes. According to Pinterest, the acquisition would be a step forward to integrate technology and accelerate the vision of Pinterest as a new taste-driven shopping platform.

• Paima acquired by Chanel

Paima is a knitwear business based in the Marche region that originated in 1976 as a knitting factory. It was run by the Marabini family. Over time, Paima started to produce knitwear for third party businesses. Ranging from wool and cotton to cashmere, it set the benchmark for knitting in an area which was not much into knitting. Paima had many luxury brands as clients, Chanel, the French luxury fashion house, being one of them. In fact, Chanel was a client for over 25 years.

Chanel confirmed its acquisition of Paima in August, 2021. Chanel wants to spread its presence in Italy and this acquisition seems the perfect way forward. Chanel would also be able to facilitate the training of craftsmen and strengthen its own network of partners.

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