Let's Build a Responsible Cyber Society




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 of significance.

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