Chanel, the luxury fashion house succeeded in protecting its Intellectual Property against online counterfeiters this June. The sellers were engaged in selling counterfeit products using the Chanel Logo through Amazon.com. In the trademark infringement suit, the California Federal judge sided with the fashion house entering into a default judgment against over two dozen sellers making Chanel $3 million richer. Chanel has added itself to the list of luxury brands like Gucci and Dior who have ferociously protected their Intellectual Property against online sale of their counterfeit goods in the past. These houses have even received judgments in their favor. For luxury brands like these, such trademark infringement suits are not about the money, but rather to create a deterrence and protecting the brand image, they dote. This judgment comes as a holy grail for brands seeking protection against counterfeiters. It has already started what seems like a domino effect in prosecuting online counterfeiters. Following the Chanel lawsuit, Louis Vuitton, another luxury brand, has initiated proceedings against sellers on Amazon.com.
The convenience and anonymity that e- commerce provides to counterfeiters encourage them while threatening many businesses’ Intellectual Property. The boom in the counterfeit market is not limited to domestic sales but also includes exports of counterfeit goods. The advancement in technology, the liberalization of the Indian economy and the ever-increasing demand for luxury products at the price of peanuts, has encouraged counterfeiters in India. The Foreign Direct Investment policy in India favors the Business to Business model, which is a thriving market opportunity for counterfeiters. Although Indian law has provisions safeguarding Intellectual Property right holders from counterfeiting, no specific laws govern online counterfeiting. The laws that apply to brick and mortar stores also govern the online platforms under provisions in The Trademark Act of 1999, The Copyright Act of 1957, The Indian Penal Code of 1860, The Consumer Protection Act of 1986 and a few more.
What does this decision of the Chanel case mean? This decision comes as a relief for brands frustrated with large scale counterfeiting of their trademarks through e-com platforms. Now, brands which face trademark infringements through counterfeiting can claim relief as well as claim damages for their lost revenue. A multitude of businesses can be expected to approach the courts claiming relief for counterfeiting and trademark infringement now more than ever.
The e-com platforms used as channels to buy and sell counterfeiting goods cannot do any more than they currently are. Platforms like Amazon.in and Flipkart have tight anti-counterfeiting policies which also include criminal liability. However, the small businesses that are springing up like mushrooms after the rain in the e-com field need to buckle up and tighten their anti-counterfeiting policies. Platforms like Amazon and Flipkart may contain and survive the brash counterfeiting claims that tear into their businesses, the same cannot be said for the others. With social media as an oblivious accessory added to the equation, this could prove detrimental to small businesses and their continuance. Here are a few things these small and upcoming businesses can do to soften the blow and protect themselves:
Draft strict policies against counterfeiting and IP infringement;
Set up a customer support team to aid customers with dispute resolution;
Set up a “Complaints processing and action system” to effectively deal with complaints and take action against counterfeiting;
Display clear cautions and warnings of limited liability of the platform/site in such cases;
Impose a single strike removal system for sellers indulging in counterfeiting;
Set up an uncompromising take-down policy and comply with the same expeditiously.
It has to be kept in mind that no matter what terms or policies these platforms enforce, counterfeiters will find a way to make profits by gaming the system. The platforms must do all they can do to hinder the booming counterfeiting industry. It may not be feasible for e-com companies that act as intermediaries to screen each seller before allowing them to sell on the platform. However, these businesses can adopt strong and effective anti-counterfeiting policies and provide the necessary mechanisms for effective resolution of such disputes.
Authored by Samreen, Intern from Alliance School of Law
