e-Bay held liable for Selling Counterfeit Goods
The infamous Baazee.com (Now called ebay.in) case
where the CEO of Baazee.com was once arrested by Delhi Police on
application of the provisions of Section 67 of Information Technology Act
2000 (ITA 2000) has been a landmark case in India for ITA 2000 observers.
The incident invoked such hot passions that the
Ministry of Communications and Information Technology (MCIT), Government
of India thought it fit to propose amendments to ITA 2000 and exempt
"Intermediaries" as a whole from liabilities for any criminal activity
committed by network users. In the process the law makers in India were
ready to sacrifice the principle of "Due Diligence" as a requirement for
every Intermediary to avoid such liabilities.
Naavi.org has been in the forefront of opposing the
change of laws since it would indirectly weaken the laws and enable
several offenders to go scot free.
Finally with the intervention of the Parliamentary
standing committee, the changes proposed were ordered to be reviewed
again and the same is back with MIT. Though there are some stories in the
media that the MIT has re submitted the recommendations, MIT is tight
lipped on the issue. There is therefore a speculation that another
attempt for dilution of ITA 2000 is on cards.
The essence of the argument in the Baazee.com case is
the "Vicarious Liability" of an intermediary when an offence is committed
by a third party using the resources of the Intermediary. Naavi.org has
also brought to the attention of the public the need to impose "Due
Diligence" requirements on e-Bay in respect of selling of spurious goods
when a fraud involving selling of Nokia phones in e-bay.in was committed
by a person in Tiruppur.
In this context, the recent decision of a French Court
making e-Bay liable for selling Counterfeit goods and imposing a fine is
In this case eBay has been convicted of selling
counterfeit goods and ordered to pay $32, 497 (Approximately Rs 1.3
million) as damages to Hermes on charges that two counterfeit Herms bags
were sold on the site.
The arguments which clinched the decision included
"eBay is an active player in the
transaction because not only does it offer a number of services to
improve the sale, but when it does not work well enough or fast enough,
they intervene with the client," "They are perfectly informed of the
transactions since they take a percentage cut."
It is reported that more
such actions are pending in French Courts.
This development has
serious implications on the "Security of Online transactions". The
Netizens have a right to expect that online auction houses donot breed
fraudsters. The reason why Netizens would like to buy goods from a
reputed auction place instead of an unknown website is the trust that
they would get a fair deal. If the owners of such sites disown their
responsibility to take sufficient precautions to weed out fraudsters then
they cannot claim a "Brand" value for their business and attract Netizens
soley on the basis of attractive advertisements on and offline.
Naavi.org re-iterates that
what is expected in such circumstances is that the Intermediaries need to
take suitable precautions... and not be deliberately negligent on
security practices. We are not advocating that Intermediaries need to be
jailed for the offences committed by some body else. It is only a drive
for a more responsible functioning.
This is what we call as
"Cyber Law Compliance" which is considered necessary for all
Intermediaries. We urge all Intermediaries to undertake "Cyber Law
Compliance Audit" and upgrade their security for the Netizens and at the
same time protect themselves from liability.
June 10, 2008
Related Article at smh.com