Delhi High Court has ordered (order copy here) Amazon Seller Services to delist sellers selling counterfeit products on its platform after lifestyle brand Beverly Hills Polo Club said that Amazon India was selling its fake products like belts, perfumes, apparel products, accessories, watches, etc on the e-commerce marketplace.

HC in its order said that, “The defendant shall remove forthwith from its platform any URLs which are pointed out by the plaintiff which are selling products in violation of the plaintiff’s right.”

Beverly Hills Polo had filed a case against Amazon Seller Services-which runs Amazon.in- last month alleging that some of its sellers including Cloudtail were indulging in “widespread sale of counterfeit products”.  Note that Cloudtail India is a 49:51 joint venture between Amazon.com Inc. and Infosys Ltd co-founder N.R. Narayana Murthy’s Catamaran Ventures.

According to the order, Amazon India had taken off the URLs for some of the Beverly Hills Polo alleged fake products, however, the lifestyle company pointed out that, “what is happening is that if one of the URLs are removed a fresh link spring up on the website…sale of counterfeit products
continues unauthorisedly.”

In a statement shared with MediaNama, Amazon’s spokesperson said that,

Amazon has zero tolerance for counterfeit. Amazon’s customers trust that when they make a purchase through Amazon.in-from one of its sellers—they will receive authentic products manufactured by the true manufacturer of those products. To preserve that trust, Amazon is investing heavily in protecting the integrity of the Amazon marketplace for consumers, sellers, and manufacturers. Amazon is also working closely with rights owners to strengthen protections for their brands on Amazon. We remove suspected counterfeit items as soon as we become aware of them, and we suspend or block bad actors suspected of engaging in illegal behavior or infringing others’ intellectual property rights. We have taken independent legal action against bad actors, and will continue to do so. And we work with law enforcement who present us with valid legal process.

Counterfeit Products

Over the past three years, there have been several reported cases of fake or counterfeit products being sold on all the major e-commerce marketplaces in India. According to a Velocity MR survey report carried by Quartz“nearly one in three Indians have reported receiving a counterfeit product through online shopping”. The survey polled 3,000 respondents across Mumbai, Delhi, Bangalore, Kolkata, Hyderabad, Chennai, Ahmedabad, and Pune in April 2018.

In May 2018, Flipkart filed a police complaint against its senior-level executive and one of its vendor Macrowagon Retail (MRPL) for alleging for cheating, fraud, forgery, and breach of trust. Flipkart had a contract with MRPL to sell products like Skechers shoes on the platform. In December 2017, sports-wear brand Skechers had filed a case in Delhi High Court against five companies Flipkart, Retail Net, Tech Connect, Unichem Logistics and Marco Wagon for selling Skechers’s counterfeit products in India. Flipkart has now offered an out-of-court settlement to Sketchers.

Govt Mechanism on fake products

In March, The Department of Industrial Policy & Promotion (DIPP), along with the Department of Consumer Affairs (DCA) and various e-commerce platforms were reportedly discussing a proposal for setting up a cashback or compensation mechanism for counterfeit products sold via online platforms. However, the proposed cashback system was to be voluntary in nature, which actually defeats the purpose. DIPP official had told BusinessLine that the compensation mechanism will primarily look to address cases which do not fall within the usual 30 day replacement period offered by most e-commerce platforms. For example, a customer might be made aware that a mobile phone bought online is counterfeit only when it is sent for repair, a few months after the purchase, which is well past the standard replacement period, the official said.

Now that the government is expected to come out with a national e-commerce policy this year, it should add a policy on fake products on online marketplaces, as it is a prevalent issue.

Update: We have updated the post with Amazon’s official statement.