In Modern Molds v. Flipkart, the Delhi High Court was deciding a passing-off suit. The Plaintiff claimed that Flipkart allowed other sellers to ‘latch on’ to the Plaintiff’s listings on the e-commerce website. What does latching on mean? This video by Flipkart on YouTube provides a quick explainer. Latching on allows a seller, who is, let’s say selling garments, to see which is the best-selling product in that category. After that, the seller can ‘latch’ to the listing of the product as an alternate seller of that product. This is called ‘latching on’ to a product listing. Aditya and Kartik have previously explained latching on here.
In the present case, the Plaintiff, a furniture seller, was selling his products under the brand name ‘Maharaja’ on Flipkart and various other e-commerce websites. Other furniture sellers, latching on to Maharaja’s listing, used Plaintiff’s product image as well as brand name and tagged themselves as the alternative sellers of the goods. Further, the tax invoice of the sale made by third-party sellers also used the brand name ‘Maharaja’.
The Court noted that other sellers, using the latch-on feature, were trying to pass off their products as those emanating from the Plaintiff’s. Although the name ‘Maharaja’ was not trademarked (multiple oppositions had been filed), the Court said the Plaintiff had a right in common law to use the name ‘Maharaja’ being a prior user. Third-party sellers, the Court observed, using latch-on, were “misleading the gullible public into purchasing products which did not emanate from the Plaintiff.”
As remedy, it directed Flipkart to ‘brand-gate’ the Plaintiff’s brand name, disallowing others from selling products as though they emanated from the Plaintiff. Further, the Court directed the Plaintiff to disable the latching-on feature on the Plaintiff’s listing if someone else tried to latch on.
This is not the first case which discusses latching on.
In 2022, in Akash Aggarwal v. Flipkart, a DHC SB decided that latching on “is nothing but riding piggyback…amounting to taking unfair advantage of the goodwill that resides in the Plaintiff’s mark and business…It is a mode of encashing upon the reputation of the Plaintiff which he has painstakingly built.” After determining the Plaintiff’s goodwill and likely damage thereto, the Court held that latching on amounted to passing off.
On appeal, prima facie, the DHC DB observed that “providing a link of another seller on the webpage of a particular seller, absent anything more, neither infringes that seller’s trade mark nor amounts to passing off.” It further said that resellers of genuine products cannot be prohibited from selling their products, and the same does not infringe trademark.
It referred the question of passing off- “whether a link provided on a web page, which permits a customer to access the site or a web page of another seller per se amounts to passing off requires examination”- to a larger bench.
After the referral, I could find two orders from the DHC.
In Trilogy Solutions v. Flipkart (2022), the DHC had declined the relief of disabling latching on, observing that “the larger issue of the feature of ‘latching on’ is pending consideration before the Division Bench.”
On appeal (2023), the DHC had noted that “latching-on feature can have adverse consequences for the quality control of products, leading to damage to brand reputation, and loss of potential revenue for the proprietor of a mark.” Similar to the SB order, it ordered Flipkart to brand gate Plaintiff’s product. It also directed Flipkart to file an affidavit explaining the latching-on feature and steps taken to avoid confusion.
Clearly, there is confusion as to whether latching on amounts to passing off or not.
Aditya and Kartik, in this post, argued that latching on to Plaintiff’s photograph does not constitute passing off since such photograph lacks distinctiveness and has not acquired any secondary meaning. As a result, the likelihood of confusion is also absent on the platform.
As regards providing the link of competing sellers on the Plaintiff’s listing, the DHC DB observed that this aspect of the latch-on feature, prima facie, does not amount to passing-off. For the Court, it only allowed competitor sellers to become the resellers of the same product. However, this view does not hold a binding value as of now.
In all the cases, the sellers, under the latched listing, mentioned that they were the ‘sellers’ of the product and not the Plaintiff. Therefore, it can be argued, that third-party sellers are not misrepresenting and trying to pass off the products as if they were made by the Plaintiff. Aditya and Kartik also point out that the details of the manufacturers are clearly laid down when a customer is redirected to another listing. Further, the product photograph did not amount to a mark under the Trademark since no nexus could be drawn between the manufacturer and the product. Therefore, no case of passing off could be made.
However, in the present case, the product listing of the reseller advertised the product with the name and logo of ‘Maharaja’. Moreover, the tax invoice generated after the sale also mentioned the brand name ‘Maharaja’. The product photo used on the listing contained the brand name as well as the logo of the Plaintiff. Apart from providing the link of the seller in Plaintiff’s listing, Flipkart’s latching allowed the Defendant seller to also use Plaintiff’s brand name and logo.
In passing off suits, the Plaintiff has to prove (i) goodwill owned by the claimant (2) misrepresentation by the defendant; and (3) the likelihood of damage to that goodwill. It is not necessary to have a registered trademark, as in the present case. As held in S. Syed Mohideen v. P. Sulochana Bai, passing off doctrine operates on the general principle that no person is entitled to represent his or her business as the business of another person. Relief under passing off is premised on protecting the goodwill of the brand as well as from likely damage by third parties.
In this case, it could be argued that the goods were deceptively similar or that the Defendants, knowingly or unknowingly, were misrepresenting that the goods were manufactured by the Plaintiff. As Prarthana points out, it is not necessary to show fraudulent intent to prove passing off. The Defendant’s state of mind is irrelevant. (here) Rather, the Court will look at whether there was a likelihood of confusion in the minds of the consumers.
The Plaintiff also has to prove the goodwill of the logo and name by relying upon the volume of the sales and extent of advertisement. Further, it should also be proved that there is likelihood of damage to the reputation of the Plaintiff.
Unfortunately, in the present case, the Court does not go into the question of goodwill and likely damage to such goodwill before concluding that the Defendants were liable for passing off. As a result, a lot of questions remain unanswered. For instance, would it be passing off if the brand name and logo were removed from the picture(this post argues no)? What if the resellers put it on top in bold writing that they are merely resellers? Most importantly, what is the extent of the intermediary liability of Flipkart for providing the latching-on feature? Readers are welcome to write their views in the comments.
As the DHC observed, there is no prohibition against a reseller of a genuine product. However, a line needs to be drawn. As long as a third party does not present itself as the original seller, no case of passing off is made out. Of course, the original seller can still oppose the resale of the products if the conditions u/s. 30(4) are satisfied. However, the tort of passing off will not be implicated. In the present case, Defendant was using the product image from Plaintiff’s listing as well as Plaintiff’s logo and brand name. As I have shown earlier, the test is not fraudulent intent but the likelihood of confusion, which in this case, prima facie, seems satisfied.
In my opinion, latching on, to the extent it does not enable passing off but allows competitors to become genuine resellers of a top-selling product, is not legally suspect. The (prima facie) observations of the DB of the DHC are also aligned with this view. Merely providing a link to a competing reseller on the Plaintiff’s listing, although might adversely affect the Plaintiff’s commercial interests, is not passing off. The legality of the latching-on feature, as long as minimum safeguards against passing-off are built in, does not seem doubtful. We will have to await the DHC’s judgement for a clear position.