Author: Gunjan Arora, Faculty of Law, Jai Narain Vyas University

The case of Kent Ro Systems Ltd. v. Amit Kotak (2017) is an important precedent, balancing the liability of intermediaries with the intellectual property rights of individuals. In this case, the Delhi High Court clarified the scope of liability of intermediaries under the IT Act of 2000, the Designs Act of 2000, and the IT Rules of 2011. The issue before the court was to what extent intermediaries like eBay can be held liable for monitoring or removing the counterfeit content from their portal. This judgment also reinforced the concept of “safe harbour” protection.

1. Kent RO Systems Ltd. (Plaintiff) is a manufacturer of water purifiers, the designs of which are protected by various copyrights under the Designs Act 2000. The Plaintiff sells its products both directly and through e-commerce websites such as eBay. 

2. Defendant No. 1, Mr. Amit Kotak, is also a manufacturer of water purifiers that look and work like the plaintiff’s copyrighted designs. Under the Designs Act, producing and selling copyrighted products is considered piracy.

3. Defendant No. 2, eBay, is a well-known e-commerce website with various vendors selling their products.

4.  Defendant No. 1 frequently displayed its counterfeit products on Defendant No. 2’s e-commerce website (eBay). 

5. Before instituting a lawsuit, the Plaintiff drew the attention of eBay and Amit Kotak to the infringement and requested the removal of such content from their website. 

6. Upon receiving the notice, eBay removed the infringing content from its website, but the Plaintiff claimed that a large number of counterfeit products were still displayed on eBay’s website, and appropriate steps were not taken to remove those counterfeit products, and eBay should remove them all without the plaintiff’s demand.

7. eBay denied the request by claiming that it is not feasible for them to remove such content without any notice.

8. The plaintiff Kent Ro Systems filed a suit against the defendant No. 1 Amit Kotak, claiming relief for taking down the counterfeit products. (Amit Kotak admitted the claim and did not contest it), and against defendant No. 2 for the grant of an injunction to prohibit the advertisement and selling of infringing content on their website.

The question of law raised during the dispute was the following:

Should the intermediaries, like eBay, be held responsible for infringing content on their platform?

The plaintiff raised the following arguments:

• The foremost claim of the plaintiff was that the first defendant was using the water purifier designs of which the plaintiff had obtained the copyright, and under the Designs Act, producing and distributing copyrighted products constitutes piracy.

• The plaintiff contended that the Information Technology (Intermediaries Guidelines) Rules, 2011, should be imposed on the second defendant as an intermediary. According to Rule 3 of the IT Rules, intermediaries such as eBay are required to observe “due diligence” while functioning. 

• The plaintiff also contended that section 79(3) of the IT Act does not apply when the intermediary has conspired or abetted or aided or induced the commission of an unlawful act.

Defendant No. 2 eBay, raised the following arguments:

• The counsel of the defendant claimed that the defendant is innocent, as the defendant, immediately upon the complaint by the plaintiff, has, from time to time, been removing the infringing content from its website and shall, upon receipt of a complaint from the plaintiff in the future, also remove the infringing content from its website.

• Defendant No. 2 contended that, under section 79 of the IT Act, an intermediary is not responsible for third-party information or data on its website because the role of an intermediary is limited to providing access to a communication system over which information is made available by third parties. 

The court analysed that:

• The IT Rules only require intermediaries to publish their rules, regulations, and privacy policy and to inform users not to host, display, or publish any information or content that infringes any patent, trademark, copyright, or other property rights. The Rules do not mandate the intermediaries to screen all information about infringement of the rights of all those persons who have at any point in time complained to the intermediary about infringement, as it would result in converting the intermediaries into a body that determines whether there is any infringement of IP rights or not, which the intermediaries are not well-equipped to carry out.

• Also, as per the IT Rules, the intermediaries are only required to disable the infringing content from their portal within 36 hours after receiving complaints in writing. 

The court gave its decision in favour of defendant No.2 eBay, and gave the following reasons to support it:

• Everything that the Act requires the intermediaries to carry out, like the removal of infringing content from websites, after receiving a complaint from a plaintiff, is done by them; hence, there is no negligence on the part of eBay as an intermediary.

• To hold an intermediary liable under section 79(3), the plaintiff is required to plead and prove the common intention, which the plaintiff failed to do.

The case of Kent Ro Systems Ltd. vs. Amit Kotak (2017) reinforced the legal position of intermediaries' liability in India. This case has been repeatedly reaffirmed in various cases, such as in the case of Flipkart Internet Private Limited vs. State of NCT of Delhi & Anr., where the Delhi High Court held that the principle of “Safe Harbour” protection is available for intermediaries under Section 79 of the IT Act of 2000, even in criminal matters.

It is further analysed that e-commerce platforms must be vigilant while drafting their privacy policies, which will guarantee that the users are warned not to submit any counterfeit or infringing content. It is also observed that it is not feasible for intermediaries to monitor or screen all the details or all the content uploaded by users on their website.

In this case, the court reaffirmed that the intermediaries, such as eBay, are not liable to monitor or screen all the potentially infringing content; they are only required to exercise “due diligence” and remove infringing content within a time frame of 36 hours after receiving a receipt of complaint. The court also held that intermediaries like eBay can only be held liable under section 79(3) of the IT Act if there is proof of active participation, conspiracy, or common intention in an unlawful act. No such proof or evidence was presented by the plaintiff, so the court held that eBay cannot be held liable, hence delivering its decision in favour of defendant No. 2, eBay, and also directing eBay to remove the counterfeit products from its website.

• Kent RO Systems Ltd. & Anr. v. Amit Kotak & Ors., 2017 (69) PTC 551 (Del) (India). 

• Information Technology Act, No. 21 of 2000, India Code (2000).

• Information Technology (Intermediaries Guidelines) Rules, 2011, G.S.R. 314(E) (April 11, 2011)

• Designs Act No. 16 of 2000, India Code (2000).