The Case Against Meesho: Why E-Commerce Portals Must Ensure Complete Disclosure of Sellers Details

The Case Against Meesho: Why E-Commerce Portals Must Ensure Complete Disclosure of Sellers Details. India is one of the fastest growing markets for e-commerce. The e-commerce market is slated to double from $83 billion in the year 2022 to over $163 billion in 2026. However, considering the proliferation of online selling portals, the risks of consumer frauds such as misrepresentation have increased. This has made compliance with e-commerce rules even more necessary. In this article, Compliance Calendar brings to you a recent ruling against the online fashion brand Meesho, while also highlighting important obligations for e-commerce operators.
Case name - Tibra Collection v. Fashnear Technologies Pvt. Ltd and Others 2023 SCC Online Del 6237
Brief Facts of the case

The Plaintiff - Tibra Collection, the plaintiff in this case filed a suit for copyright infringement and passing off against the fashion website Meesho (which operates under the registered name Fashnear Technologies).

The plaintiff runs their own clothing company that makes designer ethnic wear for men and women.

This company is registered as a seller on various platforms such as Meesho, Amazon and Flipkart and clocked in a turnover over 10 crores in the last financial year.

The defendants  - A case was filed by the plaintiff against Meesho as well as several other defendants listed as sellers on their platform.

As unauthorized operators using the Plaintiff’s copyrighted pictures, the defendants started selling counterfeit products on Meesho.

While the identity of some of these Defendants could be traced, some sellers illegally using the photographs of the Plaintiff’s products, were operating on Meesho in an in-cognito manner.

They were also pricing their products lower than the original price quoted by the Plaintiff, thereby causing a drastic loss to the Plaintiff since the listing of the fake sellers.

Upon enquiry, it was found that these defendants did not disclose their complete addresses on the invoice. Further, the addresses on all e-commerce portals were different, and tracing them via the GST number was also challenging.

Defendant’s arguments - Intermediary platform’s limited obligation and safe harbor provisions
The lawyers for Meesho argued that being an intermediary, the only obligation of Meesho remains that whenever fake photographs of products listed on their portal are revealed, the same
would be taken down. However, in light of the E-Commerce Rules, 2020, the court did not find merit in this submission. Further, the “safe harbor” provisions otherwise available to a platform under the Information Technology Act, which allow an accidental copyright infringement on an intermediary portal (such as Google, YouTube) to go unpunished as long as the platform can prove due-diligence, were also not extended in this case.
The verdict by Delhi High Court - No E-commerce portal can be allowed to operate without accurate verification of seller’s details

Misuse of images and product design - The court noticed that the defendants are misusing the product images, designs, listing details that rightfully belong to the plaintiff by copying them on their own product listing. In several cases, cropped images with minor differences were being uploaded to conceal their attempt at forging the images.

No e-commerce portal must be misused for causing loss and violating Intellectual Property Rights - The sellers in this case did not have any right over the photographs, product designs and the intellectual property involved. The court highlighted the role played by e-commerce portals in bringing small businesses to the doorstep of the consumers but cautions that the same must not be allowed to be misused for causing monetary losses to an innocent business.

Obligations of e-commerce portal for ensuring consumer rights - The Delhi High Court categorically stated that it is an obligation cast upon the platform owner (that is Meesho in this case) to accurately verify that complete details of the seller are available on their platform. Any invoice with incorrect information is a lapse not only on behalf of the seller but also a procedural defect in compliance on behalf of the e-commerce platform.

Further, as per Consumer Protection (E-commerce) Rules, 2020 notified on July 23, 2020, there is an obligation on the e-commerce platform to provide the following to the consumers for making an informed choice :

The full geographic address

Customer care number

Ratings

Feedback of other consumer

Interim Order of the Delhi High Court : Injunction against defendants and Full disclosure by Meesho
While the final verdict in the case is yet to be delivered in this case, an interim injunction was granted to stop the defendants from copying, reproducing, publishing or imitating any of the
Plaintiff’s designs. Meesho was further asked to hold back any payments due to be processed to such sellers. It was also asked to fully reveal all the details of the sellers including their addresses, mobile numbers, total sales made by sellers, GST details and payments processed so far to the sellers.
Key takeaways from this case for liability of e-commerce platforms in India
As far as the liability of marketplace e-commerce entities is concerned, the Consumer Protection (E-commerce) Rules, 2020 seek to impose greater responsibility on e-commerce sellers for compliance.
Specifically, Section 4 imposes duties of full disclosure on their website, appointing a consumer grievance redressal officer. Section 5 highlights the liabilities of marketplace e-commerce entities, and contrasts this with the safe harbor provisions under Section 79, Information Technology Act, 2000. Under this provision, every e-commerce platform must require sellers to ensure that descriptions, images and content accurately and directly correspond to the features of such goods or services.
Every marketplace entity is also required to maintain a record of relevant information allowing the identification of sellers who have offered goods and services that have been disabled under the Copyright Act, 1957, the Trade Marks Act, 1999 or the Information Technology Act, 2000.
Liability of sellers on the e-commerce portal under Section 6(4) of the Consumer Protection (E-commerce) Rules, 2020
Every seller offering goods or services through a marketplace e-commerce portal is also required to have a prior written contract with the respective e-commerce entity in order to undertake or solicit such sale or offer. They must not adopt any unfair trade practices in the course of their offer on the e-commerce entity’s platform. They must ensure that advertisements for marketing of goods or services are consistent with the actual characteristics, access and usage conditions of the goods. Further, sellers are required to provide the e-commerce portal accurate details of their registered address, headquarters and branches, GSTIN and PAN details.
For the latest updates on copyright violations and e-commerce registration, consult the legal resources available on our website at Compliance Calendar. You may also consult our in-house legal professionals to ensure that you have the most up-to-date advice on legal compliances for your e-commerce business in India.

India is one of the fastest growing markets for e-commerce. The e-commerce market is slated to double from $83 billion in the year 2022 to over $163 billion in 2026. However, considering the proliferation of online selling portals, the risks of consumer frauds such as misrepresentation have increased. This has made compliance with e-commerce rules even more necessary. In this article, Compliance Calendar brings to you a recent ruling against the online fashion brand Meesho, while also highlighting important obligations for e-commerce operators.

Case name - Tibra Collection v. Fashnear Technologies Pvt. Ltd and Others 2023 SCC Online Del 6237

Brief Facts of the case

The Plaintiff - Tibra Collection, the plaintiff in this case filed a suit for copyright infringement and passing off against the fashion website Meesho (which operates under the registered name Fashnear Technologies).
The plaintiff runs their own clothing company that makes designer ethnic wear for men and women.

This company is registered as a seller on various platforms such as Meesho, Amazon and Flipkart and clocked in a turnover over 10 crores in the last financial year.

The defendants - A case was filed by the plaintiff against Meesho as well as several other defendants listed as sellers on their platform.

As unauthorized operators using the Plaintiff’s copyrighted pictures, the defendants started selling counterfeit products on Meesho.
While the identity of some of these Defendants could be traced, some sellers illegally using the photographs of the Plaintiff’s products, were operating on Meesho in an in-cognito manner.
They were also pricing their products lower than the original price quoted by the Plaintiff, thereby causing a drastic loss to the Plaintiff since the listing of the fake sellers.

Upon enquiry, it was found that these defendants did not disclose their complete addresses on the invoice. Further, the addresses on all e-commerce portals were different, and tracing them via the GST number was also challenging.

Defendant’s arguments - Intermediary platform’s limited obligation and safe harbor provisions

The lawyers for Meesho argued that being an intermediary, the only obligation of Meesho remains that whenever fake photographs of products listed on their portal are revealed, the same

would be taken down. However, in light of the E-Commerce Rules, 2020, the court did not find merit in this submission. Further, the “safe harbor” provisions otherwise available to a platform under the Information Technology Act, which allow an accidental copyright infringement on an intermediary portal (such as Google, YouTube) to go unpunished as long as the platform can prove due-diligence, were also not extended in this case.

The verdict by Delhi High Court - No E-commerce portal can be allowed to operate without accurate verification of seller’s details

Misuse of images and product design - The court noticed that the defendants are misusing the product images, designs, listing details that rightfully belong to the plaintiff by copying them on their own product listing. In several cases, cropped images with minor differences were being uploaded to conceal their attempt at forging the images.
No e-commerce portal must be misused for causing loss and violating Intellectual Property Rights - The sellers in this case did not have any right over the photographs, product designs and the intellectual property involved. The court highlighted the role played by e-commerce portals in bringing small businesses to the doorstep of the consumers but cautions that the same must not be allowed to be misused for causing monetary losses to an innocent business.
Obligations of e-commerce portal for ensuring consumer rights - The Delhi High Court categorically stated that it is an obligation cast upon the platform owner (that is Meesho in this case) to accurately verify that complete details of the seller are available on their platform. Any invoice with incorrect information is a lapse not only on behalf of the seller but also a procedural defect in compliance on behalf of the e-commerce platform.

The full geographic address
Customer care number
Ratings
Feedback of other consumer

Interim Order of the Delhi High Court : Injunction against defendants and Full disclosure by Meesho

While the final verdict in the case is yet to be delivered in this case, an interim injunction was granted to stop the defendants from copying, reproducing, publishing or imitating any of the

Plaintiff’s designs. Meesho was further asked to hold back any payments due to be processed to such sellers. It was also asked to fully reveal all the details of the sellers including their addresses, mobile numbers, total sales made by sellers, GST details and payments processed so far to the sellers.

Key takeaways from this case for liability of e-commerce platforms in India

As far as the liability of marketplace e-commerce entities is concerned, the Consumer Protection (E-commerce) Rules, 2020 seek to impose greater responsibility on e-commerce sellers for compliance.

Specifically, Section 4 imposes duties of full disclosure on their website, appointing a consumer grievance redressal officer. Section 5 highlights the liabilities of marketplace e-commerce entities, and contrasts this with the safe harbor provisions under Section 79, Information Technology Act, 2000. Under this provision, every e-commerce platform must require sellers to ensure that descriptions, images and content accurately and directly correspond to the features of such goods or services.

Every marketplace entity is also required to maintain a record of relevant information allowing the identification of sellers who have offered goods and services that have been disabled under the Copyright Act, 1957, the Trade Marks Act, 1999 or the Information Technology Act, 2000.

Liability of sellers on the e-commerce portal under Section 6(4) of the Consumer Protection (E-commerce) Rules, 2020

Every seller offering goods or services through a marketplace e-commerce portal is also required to have a prior written contract with the respective e-commerce entity in order to undertake or solicit such sale or offer. They must not adopt any unfair trade practices in the course of their offer on the e-commerce entity’s platform. They must ensure that advertisements for marketing of goods or services are consistent with the actual characteristics, access and usage conditions of the goods. Further, sellers are required to provide the e-commerce portal accurate details of their registered address, headquarters and branches, GSTIN and PAN details.

For the latest updates on copyright violations and e-commerce registration, consult the legal resources available on our website at Compliance Calendar. You may also consult our in-house legal professionals to ensure that you have the most up-to-date advice on legal compliances for your e-commerce business in India.