• Indian government releases draft rules regarding conduct of online retail industry
  • Rules include provisions related to liability for platforms that sell counterfeit products
  • Experts tell WTR of mixed feelings towards draft rules; urges IP owners to comment

The Indian government has released a draft of new e-commerce rules that lay out exactly how e-commerce entities and sellers must conduct business in India’s rapidly growing online retail industry. The new rules include tough new provisions that target those selling or hosting counterfeit goods. Talking to WTR, some of India’s most high-profile IP experts praise the draft rules, although some claim they do not go far enough.

The Consumer Protection E-Commerce Rules 2019 were published last week and are aiming to regulate e-commerce businesses from the perspective of consumers in India. More specifically, some of the issues the rules address include fraud and unfair practices, price influencing (including so-called ‘deep discounting’ and ‘predatory pricing’), the integrity of reviews, the transparency of e-commerce platform terms, and the disclosure of seller information.

Another major issue the rules seek to combat is trade in counterfeit goods. There are two particularly relevant draft rules in that regard:

  1. “If the e-commerce entity is informed by the consumer or comes to know by itself or through another source about any counterfeit product being sold on its platform, and is satisfied after due diligence, it shall notify the seller and if the seller is unable to provide any evidence that the product is genuine, it shall take down the said listing and notify the consumers of the same.”
  2. “An e-commerce entity shall be held guilty of contributory or secondary liability if it makes an assurance vouching for the authenticity of the goods sold on its marketplace – or if it guarantees that goods are authentic.”

For Ajay Sahni, founder and principal of Ajay Sahni & Associates, those two stipulations should “make international brand owners happy” – however, he reveals that certain anti-counterfeiting provisions appear to have been withdrawn.

“The draft rules have left out certain key provisions forming part of the draft e-commerce policy, especially under chapter three of the anti-counterfeiting measures,” he tells WTR. “Those left out include provisions regarding the rendering of an undertaking of genuineness by sellers, a condition to produce distributorship/license agreement by sellers to offer sale of luxury goods, cosmetics and goods having an impact on public health, notification of sale of a branded product to a brand owner, no sale of branded goods without prior concurrence of the brand owner, blacklisting and financially disincentivising sellers who sell counterfeit goods, and others. These are, in my opinion, all necessary to ensure sustainable, safe and stable growth of trade over e-commerce platforms. They also provide assurance to brand owners regarding protection of their intellectual property, and make the environment conducive for more foreign investment to reach Indian shores.”

However, there is one other provision in the draft rules that could indirectly help IP owners, according to SS Rana & Co managing partner Vikrant Rana. “In point three, tilted ‘general conditions for carrying out e-commerce business’, it specifically states one of the conditions as, ‘details about the sellers supplying the goods and services, including the identity of their business, legal name, principal geographic address, name of website, email, contact details, including clarification of their business identity, the products they sell, and how they can be contacted by customers shall be displayed in the website’. This is a significant pointer that the international brand owners should know about as this would help in combating the menace of counterfeiting on the web.”

So, there are some positive, much-needed developments in the new draft rules – but what are the next steps? According to Ashwin Julka, managing partner of Remfry & Sagar, the key now is for all relevant stakeholders to send comments to India’s Department of Consumer Affairs, which is open until 2 December. “Given the robust nature of the business of e-commerce entities in India and the continuously expanding digital marketplace, one expects that all stakeholders – including e-commerce entities, sellers on e-commerce platforms as well as brand owners – will provide extensive feedback to the rules,” he tells us.

“Further, one would hope that all such comments will be scrutinised and noteworthy suggestions incorporated in the final version of the rules before publication in the official gazette of India, whereafter they would come into effect within 90 days. Alternatively, if the comments/suggestions offer significant amendments that merit further discussion, we can expect a fresh draft of the rules being published for further deliberation.”

Therefore, brand owners (and relevant associations) are urged to send in comments before the deadline. For now, some of the IP experts we spoke with have mixed feelings about the new rules – and hope that improvements will be made in the final version. “The draft rules are a step in the right direction, but could have covered more distance,” Sahni concluded. “While the intent to increase liability of e-commerce platforms is evident, nevertheless the rules leave a lot to be desired.”

 This article first appeared in World Trademark Review. For further information please visit https://www.worldtrademarkreview.com/corporate/subscribe