Startup Originals Team
Background of the Case:
In a major relief for Amazon Seller Services, the Delhi High Court has put a temporary hold on a previous ruling that directed the company to pay ₹340 crore in damages. The case was related to trademark infringement concerning a product called “Markfed Sohna”, a brand under the Punjab government’s cooperative body-MARKFED.
Earlier, a single-judge bench had held Amazon liable for permitting counterfeit products with the “Sohna” brand to be sold on its e-commerce platform. The judgment also included a direction for Amazon to deposit the massive ₹340 crore compensation amount.
Division Bench Puts Verdict on Hold:
However, the division bench of the Delhi High Court has now stayed the enforcement of that order. This came after Amazon challenged the previous ruling, arguing that it was only acting as an intermediary and cannot be held liable for third-party sellers’ actions on its platform.
The bench observed that several legal questions were involved in this case, particularly around the interpretation of an “intermediary’s” liability under Indian e-commerce and trademark law. The court added that these matters need a deeper examination before such a heavy penalty can be enforced.
What Amazon Argued:
Amazon’s main defense was that it acts as an intermediary under the Information Technology Act and that it should not be treated the same as a manufacturer or seller of products. The company insisted that it provides a platform for third-party sellers and is not directly involved in listing or branding of products.
The company also pointed out that placing such a huge financial burden on intermediaries would negatively impact the entire e-commerce ecosystem in India and discourage digital growth.
Why This Case Matters:
This case has larger implications for all e-commerce platforms operating in India, including Flipkart, Meesho, and others. If Amazon were held liable for sellers’ trademark infringements, it could have set a precedent where platforms would become accountable for every third-party listing, significantly changing the legal responsibilities of intermediaries.
Industry experts believe this case could influence the interpretation of the Consumer Protection (E-commerce) Rules, 2020 and the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021.
What’s Next?
The Delhi High Court will now hear the matter in detail in the coming weeks. Until then, Amazon does not have to deposit the ₹340 crore penalty. Legal experts expect that the case will revolve around two key questions:
- To what extent is an e-commerce platform liable for counterfeit or infringing goods sold by third-party sellers?
- Can an intermediary be treated the same as a seller under India’s trademark laws?
The outcome of this case could reshape how India regulates online marketplaces and could impact how companies structure their platform policies in the future.
