Delhi High Court Grants Rs10 Million as Damages Against e-commerce Website
13 April 2016
The Delhi High Court pronounced a historic judgment on January 4, 2016, when it passed a decree for payment of the highest damages granted in a trademark suit in India till date. The suit was filed by Anand and Anand in 2014 on behalf of multiple Richemont Companies, including Cartier, Panerai, Vacheron Constantin and Jaeger LeCoultre, against a Chandigarh-based company, Digaaz e-Commerce and its directors.
Digaaz was operating the e-commerce website www.digaaz.com where counterfeit products bearing the trademarks and logos of various luxury brands were being offered for sale.
Digaaz was not acting in the capacity of an intermediary but was directly sourcing the counterfeit goods and selling these to customers online. Unlike most of the other websites engaged in the sale of counterfeit products, Digaaz registered the domain name digaaz.com on its own and not through a proxy, and also provided an accurate physical address. Moreover, at the time of launch of the website www.digaaz.com, Digaaz received significant media coverage and publicity. This was ironically the instrument of their undoing as it brought them in the public eye and deprived them of the clandestine anonymity that e-commerce counterfeiters thrive on.
The spurious goods being offered for sale by Digaaz were purported to be completely genuine and were ingeniously priced accordingly albeit with heavy ‘discounts.’ For instance, the maximum retail price of a PANERAI watch offered for sale on www.digaaz. com was indicated as Rs702,000 (US$10,200). However, the watch was offered for sale at an alleged discount for Rs92,000 (US$1,340). This pricing scheme induced potential customers to believe that the products were genuine – after all, who charges Rs92,000 for a counterfeit? – while Digaaz turned a tidy profit.
This was a strategy that paid off. Thousands of customers were duped into buying Digaaz’s counterfeit products under the mistaken belief that these were assuredly original, all while Digaaz raked in exorbitant sums of money. Discovery of the spurious nature of the product usually took place after delivery, and often when the poor quality of the product raised suspicions and prompted customers to check its authenticity from an authorized seller. Digaaz, however, consistently never refunded any money or replaced the counterfeit product with a corresponding original product. As a result, the internet is chockablock with hundreds of complaints lodged by disgruntled customers who have been cheated by Digaaz.
One of these cheated consumers, who had purchased counterfeit OMEGA watches from Digaaz, lodged a complaint with the Cyber Crime Cell of the Chandigarh Police. The Cyber Cell conducted an investigation and discovered that apart from the website www.digaaz.com, this entity was also selling counterfeit products on the websites www.watchcartz.com and www.luxecart.com. On September 24, 2014, raids were conducted at Digaaz’s premises in Chandigarh where hundreds of thousands of counterfeit products bearing the trademarks of various luxury brands were seized. According to police sources, this may have very well been the biggest catch of counterfeit goods ever seized by the Chandigarh Police. This led to the arrest of Digaaz’s directors on October 8, 2014, who were remanded in judicial custody for 14 days. The case is presently pending.
The Delhi High Court took serious note of these factors and permanently restrained Digaaz from dealing in counterfeit products bearing the Richemont brands. The court also considered the evidence on record and declared that the trademarks PANERAI, VACHERON CONSTANTIN and JAEGER LECOULTRE are wellknown marks as defined under Section 2(1)(zg) of the Trade Marks Act, 1999. As a result, these marks, in addition to CARTIER which has already been declared well known in India, are entitled to the highest degree of protection conferred under law, including against disparate products and services.
When considering the aspect of damages, the court observed that Section 135(1) of the Trade Marks Act, 1999 entitled a plaintiff to choose either damages or an account of profits. Since Digaaz had opted to deliberately stay away from the proceedings, despite being served with summons, an enquiry into their accounts for determination of damages could not take place. The court considered that a defendant who chooses to stay away from the proceedings should not be permitted to enjoy the benefits of evasion of court proceedings, and deemed it appropriate to grant a decree of damages to the tune of Rs10 million (US$145,400) in favour of the Richemont companies. A new record!
While these proceedings have drawn to a close, there remain several other luxury brands, including Montblanc and Louis Vuitton, which have also instituted civil proceedings against Digaaz. These proceedings are pending before the Delhi High Court, and it remains to be seen what lies ahead for them.
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