Delhi High Court Intervenes: Stays ₹340 Crore Damages Order Against Amazon

Delhi High Court Intervenes: Stays ₹340 Crore Damages Order Against Amazon

Introduction

The Delhi High Court has stayed a single-judge order directing Amazon Technologies to pay Lifestyle Equities damages of $39 million (around ₹340 crore) after finding that Amazon infringed upon its ‘Beverly Hills Polo Club’ trademark. The Division Bench of Justices Hari Shankar and Ajay Digpaul passed the interim order, noting that Amazon need not pay any pre-deposit in exchange for the stay.

Factual Background

Lifestyle Equities filed a trademark infringement suit against Amazon Technologies and others alleging that they infringed upon its registered "BEVERLY HILLS POLO CLUB" logo/device marks by using a deceptively similar mark on apparel and other products sold on their platforms. Specifically, it was claimed that Amazon is manufacturing and selling products under the brand "Symbol" with the infringing mark, and that Cloudtail India, operating on the Amazon.in marketplace, is also involved in the sale of these infringing products.

Procedural Background

The High Court initially granted an interim injunction on October 12, 2020, restraining Amazon and others from using the logo and directing Amazon Seller Services to remove the infringing products from their platform. Subsequently, Amazon Technologies failed to appear in court and was proceeded against ex-parte. Cloudtail India expressed willingness to accept a decree of injunction and proposed a settlement involving damages, leading to unsuccessful mediation.

Issues Involved

1. Trademark Infringement: Whether Amazon Technologies infringed upon Lifestyle Equities' trademark.

2. Damages: Whether the single-judge order directing Amazon Technologies to pay damages of $39 million was justified.

3. Liability of E-commerce Platforms: Whether Amazon, as an e-commerce platform, can be held liable for trademark infringement committed by its sellers.

Contentions of the Parties

• Amazon's Contentions: Amazon contended that the single-judge order was passed without serving formal court summons, violating fundamental due process requirements. Amazon also argued that the damages awarded were excessive and not supported by the pleadings. Additionally, Amazon claimed that it was merely an intermediary and not liable for the infringement committed by its sellers.
• Lifestyle Equities' Contentions: Lifestyle Equities contended that Amazon's relationship with Cloudtail, a key seller on its platform, made it liable for the infringement. Lifestyle Equities also argued that the damages awarded were justified based on the sales figures and profits made by Cloudtail.

Reasoning & Analysis

The Division Bench analyzed the record and observed that the single-judge order was passed without serving formal court summons on Amazon, violating fundamental due process requirements. The Court also noted that the damages awarded were excessive and not supported by the pleadings.

The Court examined the Amazon Brand License and Distribution Agreement with Cloudtail and concluded that the agreement granted Cloudtail extensive rights to use Amazon's trademarks and branding, undermining Amazon's claim of being merely an intermediary. The Court held that these contractual terms made Amazon directly accountable for the acts of Cloudtail.

Final Judgment

The Division Bench stayed the judgment of the Single Judge qua Amazon. The Court clarified that the observations and findings contained in the judgment are only prima facie and for the purposes of disposing of the present application, and shall not be binding on the Court while deciding the present appeal.

Final Order

The parties are directed to appear before the Court for further proceedings. The Court will decide the appeal on its merits.

Implications

This decision sets a significant precedent for the liability of e-commerce platforms in trademark infringement matters where affiliated sellers are involved. The Court's decision highlights the importance of considering the contractual relationships between e-commerce platforms and their sellers in determining liability for trademark infringement.

In this case the appellant was represented by Mr. Neeraj Kishan Kaul and Mr Arvind Nigam, Sr. Advocates. with Mr. Saikrishna Rajagopal, Mr. Sidharth Chopra, Ms. Sneha Jain, Mr. Devvrat Joshi, Mr. Angad S Makkar, Ms. Ira Mahajan, Ms. Pritha Suri, and Mr. Agnish Aditya, Advocates.