In the recent case of Snapdeal Pvt. ltd. v. Come on dad. Com LLC and Ors a Single Judge of the Delhi High Court by an order dated April 18, 2022, while ruling on the provisional application, explored various provisions of the Trade Marks Act 1999 (‘Trademark Law‘) and the Information Technology Act 2000 (‘IT law‘) to determine whether domain name registrars (‘DNR‘, ‘Defendants‘) can be qualified as alleged infringers, because they offer, for registration, domain names similar to those of Snapdeal (‘Applicant‘) registered trademarks.
The plaintiff had filed a complaint accompanied by an interim request, requesting a quia timet injunction and temporary injunction against DNRs, to prevent them from registering domain names deceptively similar to that of the applicant. Plaintiff argued that due to the fast and dynamic nature of the Internet, prosecuting each individual infringer who registers an infringing domain name was highly impractical. Therefore, a futuristic general order was essential to safeguard the plaintiff’s exclusive rights. The defendants, on the other hand, objected to such categorization. It was argued that under computer law, the defendants are mere intermediaries who provide a recording platform. They are therefore protected by the safe harbor provided for in Section 79 of the Information Technology Act. The real infringers, according to the defendants, are the domain name registrants who applied for the registration of a domain name deceptively similar to that of the plaintiff.
The Court dealt with the case in depth and analyzed the TM Act and the IT Act to determine whether the defendants qualified as “intermediaries” under the law and, if so, whether they could claim the protection provided for in article 79 of the computer law. Law.
Summary of the case
Plaintiff was the registered owner of the SNAPDEAL marks and had been using them since 2010. The prolonged use of said mark has enabled Plaintiff to establish the notoriety and reputation of said marks.
Subsequently, several third parties were seen registering deceptively similar domain names that included the thread/word “SNAPDEAL”, with the alleged ulterior motive of taking advantage of the goodwill and well-established reputation of the applicant. Plaintiff asserted that Defendants permitted such registrations and therefore facilitated the infringement of its marks. This authorization thus made the defendants infringers under Articles 28 and 29 of the Trademark Law.
Defendants objected to allegations of being involved in any type of trademark infringement, as Defendants were mere intermediaries who provided a platform for the registration of domain names and therefore protected under Section 79 computer law.
The Court, in this detailed order, denied Plaintiff’s request for an omnibus order prohibiting Defendants from offering domain names containing the word “SNAPDEAL”. Yet the Court ruled that the defendants would not benefit from the protection of the “safe harbour” under Article 79 of the Computer Law if they continued to provide alternative domain names, for commercial purposes, that infringe trademarks.
Detailed observation of the Court on the issues identified:
(i) whether the defendants are “intermediaries”
The Court provided a clear and elaborate interpretation of the word “intermediaries” under the Information Technology Act and examined the term “regarding” as used in the definition of intermediaries and concluded that this required a broad and concise interpretation. It was concluded that the scope of the term “electronic records” used in the definition of intermediaries would include the service of providing electronic records for use by applicants for registration. The domain names, particularly those provided by intermediaries, were therefore classified as electronic records under Section 2(1)
(ii) on the provision of brokerage services by the defendants
The Court agreed with the defendants that there was no legal prohibition on the provision of brokerage services by the defendants. However, the benefit of the “safe harbour” under Section 79 of the Information Technology Act will not extend to these services.
iii) on the supply of domain names containing ‘SNAPDEAL’
The Court noted that defendants are acting commercially for profit when they provide alternative domain names for a fee. Thus, by providing domain names and offering SNAPDEAL wire registration at a higher price, defendants were enabling infringement and causing infringement of plaintiff’s rights under Sections 28 and 29 of the Trademark Act.
iv) on the “safe harbour” under section 79 of the Information Technology Act
The Court observed that if the services provided by the intermediary are superior to those offered in the natural course, such as the provision of alternative options in the present case, they cannot be entitled to the benefit of the “sphere security” article 79(1) of the IT law.
(v) technological limitation for the Defendants to limit certain domain names containing an offer thread or word to aspiring registrants
The Court refused to accept the defendants’ assertion that the process of providing domain names was automated and could not be guaranteed to secure alternative options that did not infringe any trademarks. The fact that the defendants offered no alternative to their own “GoDaddy” brand indicated that modulation of the algorithm was possible. The Court ordered that either the algorithm for offering alternative domain names be changed or Defendants must cease offering such options.
vi) on the prohibition on DNRs from providing, in the future, to any future registrant, any domain name containing “SNAPDEAL” as quia timet
The Court held that it was contrary to the principle of justice to consider that any other domain name containing the word “SNAPDEAL” was of an infringing nature and therefore inadmissible. However, such an order can only be considered a remedy when the plaintiff is aware that an individual/entity is likely to launch a counterfeit product.
The plaintiff in this case argued for a blanket order to stop the endless struggle of trademark owners vis à vis individuals infringing on their marks by using similar marks to fraudulently exploit the goodwill associated with those marks. The solution proposed by the applicant was to obtain a temporary preventive injunction against the fraudulent registration of any domain name by any natural person/entity incorporating its trademarks.
One of the reasons behind the plaintiff’s request for an omnibus order could be the very availability of similar/identical domain name suggestions to the registered trademarks which in turn induce registrants to purchase the same in order to increase, directly or indirectly, the visibility of their business. in the global space and capture a wider audience. Additionally, due to the vast and fluid nature of the Internet, it is difficult to keep tabs on the hundreds and thousands of websites that pop up every day. Therefore, the protection of its intellectual property can become difficult.
However, the Court denied the plaintiff’s request for a temporary preventive injunction. The decision of the Court regarding the said petition rejected by the plaintiff stems from the logic that when it comes to trademark infringement, each case must be analyzed separately. Therefore, a blanket order against any future registrations containing the SNAPDEAL yarn/trademark did not appear warranted in the interests of justice.
Furthermore, the Court, while declaring that the defendants are intermediaries, also pointed out that in the event that the algorithm designed by the defendants suggests alternative domain names that infringe the trademarks, the defendants will not be able to take the defense of the safe harbor. However, no reliable technique or system has been provided by the Court as to how to provide the alternative domain names that will not infringe any registered trademarks, as there would be countless such occurrences generated by the algorithm.
Due to the outcome of this case, the debate in the contemporary legal world regarding the standoff between punitive and preventive law regarding the accused remains unresolved. The Court Order leaves a huge gap between its order and the eventual enforcement of said order. In such a situation, legislation imposing a legal obligation on defendants to make such modulations may be a viable avenue. Additionally, defendants in the process to stay off the radar of the legislation may also be asked to self-regulate and make such modulations or create a profile for an ombudsman to address these issues.