[This post is authored by Khushi Jain and Vishno Sudheendra. Khushi is a third-year B.A., LL.B (Hons) student at the National Law University Delhi with a keen interest in the intersection of law and policy. Vishno is a third-year B.A., LL.B (Hons) student at the National Law School of India University, Bangalore with a keen interest in various aspects of IPR and technology law.]
In a recent judgment on February 25, 2025, the Delhi High Court (“DHC”) in Lifestyle Equities CV & Anr. v. Amazon Technologies, Inc. & Ors, imposed a staggering ₹339 crore in damages and costs on Amazon Technologies, Inc (D1) for trademark infringement. The Court appears to have disregarded the distinct corporate personalities of three entities without a thorough veil-piercing analysis. It partly routed liability to D1 via D3 (e-commerce intermediary) in effect negating safe harbor protection for D3 though no liability was attributed to D3. This judgment raises significant concerns and questions regarding intermediary liability, safe harbor protection, and corporate veil piercing in the e-commerce space, which we shall examine in this two-part piece.
Part I would summarise the key parts of the judgment while analysing the Court’s approach towards intermediary liability. Part II would analyse the aspects relating to corporate veil piercing, importance of safe harbor protection, e-infringement and damages.
Factual Matrix
The plaintiffs, Lifestyle Equities, owners of the registered trademark Beverly Hills Polo Club, initiated trademark infringement proceedings against Amazon Technologies, Inc. (D1), Cloudtail India Private Limited (D2) and Amazon Seller Service Private Limited (D3) for selling items bearing a similar polo mark as them, under the Amazon owned brand called “Symbol”.
The roles of the parties are as follows:
- D1: Amazon Technologies, Inc. (Brand owner of ‘Symbol’)
- D2: Cloudtail India Private Limited (Retailer selling infringing products)
- D3: Amazon Seller Service Private Limited (Intermediary operating http://www.amazon.in)
E-infringement
The DHC acknowledged that the growth of internet and technology leading to the emergence of e-commerce intermediaries has created both opportunities and challenges for IP owners. It has also introduced legal complexities to enforce their rights and seek redress for trademark infringement. The Court observed that the multi-tiered ecosystem of e-commerce platforms make it difficult to identify those who are responsible for trademark infringement. (Para 42)
Thus, to remedy this situation the DHC coined a term for “this species of infringement” known as ‘e-infringement’ where unlike traditional trademark infringements, here multiple parties are involved: owner of the infringing brand, retailer of infringing products, e-commerce platform, entity involved in warehousing, delivering etc, supplier of infringing products and brand being used on the infringing product. It notes that the biggest challenge in such cases is to affix responsibility on each party since it involves complex questions regarding intermediary liability, safe harbor protection, and jurisdictional issues. (Para 43-44)
The Court applied the triple identity test to assess trademark infringement (first laid down in Reckitt & Colman Products Ltd. v. Borden Inc., (1990), it looks at whether the marks, goods and consumers/trade channels are identical) and held that the plaintiff’s mark is infringed because the competing marks are almost identical, while the goods sold under the mark and the consumers/trade channels of the brands are also identical. (Para 80)
No Safe Harbor for Closely Connected Companies?
The Court notes that D1, D2, and D3 are closely related and interlinked but have sought to show they are independent of each other to avoid liability (Para 47). After perusing the license agreement between D1 and D2 to use the brand ‘Symbol’ the Court observed that Amazon (D1) retains significant control over Cloudtail’s (D2) branding and distribution activities, and, Amazon (D1) being a licensor and Cloudtail being a licensee, any infringement or unlawful use by the licensee would also affix liability upon the licensor (Para 52). It further notes that the contractual restrictions on unauthorized trademark use along with indemnification obligations backs the Plaintiff’s contention of Amazon’s (D1) direct involvement in the infringement (Para 52). All the defendants belong to the Amazon Group of Companies and operate as a cohesive commercial entity (Para 99). Lastly, the Court noted that Amazon (D1) is directly liable for infringement since it retains control over the trademark usage, licensing, and distribution of the infringing mark and the license agreement demonstrates direct commercial and operative nexus between defendants thus Amazon (D1) cannot escape liability under the guise of being a mere intermediary (Para 101). So, in short, the Court relied on two justifications:
- First justification: Amazon (D1) is involved in branding and distribution activities of D2 and thus has control over D2. Any infringement or unlawful use by the licensee would also affix liability upon the licensor (Para 52). In the indemnity clause of the licensing agreement (for the brand ‘Symbol’) D1 indemnifies D2 against “any claim, liability, loss, damage, cost or expense, including court costs” made by third-party including infringement of their trademark rights (Para 51).
- Second justification: All the defendants were a cohesive commercial entity and denial of safe harbor protection (Para 99).
Damages
The Court awarded a total sum (damages and costs) of ₹339 crores for compensation, costs, lost sales, and royalty (Para 122 and 103). Since D1 did not submit sales figures, damages were determined based on the Plaintiffs’ financial harm (Para 86). The Court relied on Strix Ltd v. Maharaja Appliances Limited (“Strix”) to assess damages on a reasonable royalty basis (Para 93). The Court noted that the Trademark License Agreement between the Plaintiffs and major brands provided a sufficient basis for damage calculation (Para 103). It recognized that mala fide conduct by the Defendant justifies higher damages (Para 97).
The Court’s Unexpected Treatment of Safe Harbor Protection
Amazon e-commerce platform (D3) operates an online marketplace where third-party sellers list and sell their products. This qualifies it as an intermediary under Section 2(1)(w) of the Information Technology Act, which defines an intermediary and explicitly includes an online marketplace within its ambit. An intermediary may face liability for third-party content made available on its platform. However, Section 79(1) of the Act provides an exemption from liability of intermediary (safe harbor protection) subject to sub-sections (2) and (3). To disqualify an intermediary from availing this exemption, the law requires that the intermediary be actively involved in the unlawful conduct.
In the given case only D1’s (Amazon Technologies, Inc) liability was to be determined since damages were already awarded against D2 (retailer) and D3 (Amazon e-commerce platform) was struck off the array for being an intermediary entitled to safe harbor protection (both by order dated 2nd March 2023)
However, despite the intermediary being struck off from the array of defendants the Court has dealt with the question of intermediary liability. The Court’s dealing with intermediary liability in the given case raises a few questions: Was there a need to go into the question of intermediary liability? Given that it has gone into the same, has it used relevant principles regarding safe harbor protection? Could the Court have adopted an alternative approach?
There was no requirement for the Court to go into the question of intermediary liability because D3, the intermediary, was struck off the record. And neither did (or could) D1 raise the defence of safe harbor protection because it was placed ex-parte and nor was it an intermediary. So the Court has by itself gone into the question of intermediary liability and has negated safe harbor protection to impose liability on D1. This effectively implies that safe harbor protection was denied for D3 (since it is the only intermediary involved), albeit without damages or liability, and the same was routed to D1 to impose liability on it.
Furthermore, while effectively denying the safe harbor protection to D3 and routing liability to D1, the Court has also not considered some relevant principles regarding safe harbor protection like:
- “Mere conduits or passive transmitters” of information continue to be intermediaries and will gain the benefit of the exemption under Section 79(1). This exemption can be denied if the e-commerce platform is an active participant or contributor to the unlawful act. [Christian Louboutin v. Nakul Bajaj (2018) and Google LLC v. DRS Logistics (P) Ltd (2023)]
- An e-commerce platform does not lose its intermediary status merely because third-party sellers use it to conduct transactions (Snapdeal was granted safe harbor protection despite allegations of unlawful sales, as it was not actively involved in the transactions). [Sri Kunal Bahl v. State of Karnataka (2021)]
- Where safe harbor protection is denied, Courts have duly done so after analysing relevant case laws and providing adequate reasoning [Luxottica Group S.P.A. v. Mify Solutions (P) Ltd (2018) and Skullcandy Inc. v. Shyam Telecom (2018)].
- The safe harbor protection under Section 79 applies equally to all intermediaries, whether passive or active. Providing logistics, packaging, and warranties does not necessarily remove the intermediary from safe harbor protection [Amazon Seller Services Pvt. Ltd. v. Amway India (2020)]
Additionally, the Court seems to have confused D1 and D3, since it observes in Para 101 that Amazon (D1) cannot escape liability under the guise of being a mere intermediary. D1 is a company focussed on research and development, and handling the intellectual property of Amazon and is not an intermediary whereas D3 is a company incorporated in India to manage the online e-commerce platform which is an intermediary. Thus, the question of intermediary liability for D1 does not arise while it is relevant for D3.
The approach adopted by the Court to impose liability on D1 has effectively negated safe harbor protection of D3 and has resulted in what could be a potentially dangerous precedent in terms of e-commerce liability because protection may be denied based on terms like “interconnection” or “commercial nexus”. We believe that, rather than going into the question of intermediary liability, the Court could have directly imposed liability on D1 based on its status of licensor of the infringing brand, involvement in branding and distribution activities of D2, indemnity clause between D1 and D2 in the trademark licensing agreement, and its control over D2.
In part II of the post we’ll assess the Court’s approach to corporate veil piercing and damages
We thank Praharsh Gour and Swaraj Barooah for their valuable input.