Delhi High Court stays order directing Amazon to pay $39 million to Lifestyle Equities in trademark dispute

A division bench of the Delhi High Court on Tuesday stayed a single-judge order directing Amazon Technologies to pay Lifestyle Equities damages of $39 million (around ₹340 crore) after finding that Amazon infringed upon its ‘Beverly Hills Polo Club’ trademark. .A Bench of Justices Hari Shankar and Ajay Digpaul passed the interim order after noting that Amazon need not pay any pre-deposit in exchange for the stay. Amazon has been directed to give an undertaking that they will satisfy the damage award if the court rules against it. The Court furthermore held that the findings in the order will not influence the final decision on the appeal..In 2020, Lifestyle Equities filed a trademark infringement suit against Amazon Technologies and others alleging that they infringed upon its registered "BEVERLY HILLS POLO CLUB" logo/device marks by using a deceptively similar mark on apparel and other products sold on their platforms.Specifically, it was claimed that Amazon is manufacturing and selling products under the brand "Symbol" with the infringing mark, and that Cloudtail India, operating on the Amazon.in marketplace, is also involved in the sale of these infringing products..The High Court initially granted an interim injunction on October 12, 2020, restraining Amazon and others from using the logo and directing Amazon Seller Services to remove the infringing products from their platform. Subsequently, Amazon Technologies failed to appear in court and was proceeded against ex-parte.Cloudtail India expressed willingness to accept a decree of injunction and proposed a settlement involving damages, leading to unsuccessful mediation. Cloudtail acknowledged that it used the infringing mark from 2015 to July 2020, with revenue from infringing products amounting to ₹23,92,420 and a profit margin of approximately 20%.The Court acknowledged Cloudtail's admission of liability but emphasised that Lifestyle could not be denied the opportunity to seek damages from Amazon. Based on the undisputed sales figures provided by Cloudtail, the Court decreed the suit in favour of Lifestyle against Cloudtail, awarding damages of ₹4,78,484, representing 20% of the revenue from infringing products..In its final judgment, the Court held Amazon liable for around ₹340 crore in compensatory damages and costs in a trademark infringement case brought by Lifestyle. The ruling stemmed from Amazon’s commercial relationship with Cloudtail, a key seller on its platform, which the Court found closely linked to the alleged infringement.While acknowledging that e-commerce platforms increase consumer access, the Court observed that they also pose serious challenges to intellectual property enforcement. It criticised the defendants for attempting to present themselves as separate entities in an effort to “diffuse and dissipate the consequences of infringement.”In evaluating Amazon’s connection to the infringing conduct, the Court examined the Amazon Brand License and Distribution Agreement with Cloudtail. It noted that the agreement granted Cloudtail extensive rights to use Amazon’s trademarks and branding, undermining Amazon’s claim of being merely an intermediary. The Court concluded that these contractual terms made Amazon directly accountable for the acts of Cloudtail..As a result of the infringement, Lifestyle had to undertake substantial advertising and promotional efforts to protect its brand reputation. The Court found these expenditures to be a direct and foreseeable consequence of Amazon’s actions, and awarded $5 million in damages on this account.Additionally, the Court determined that Lifestyle was entitled to $33.78 million in compensatory damages for lost royalties, amounting to ₹292.7 crore. Together with the advertising-related damages, the total award came to $38.78 million (approximately ₹336 crore).The Court also directed Amazon to pay litigation costs and court fees, taking the final amount payable to approximately ₹340 crore. The judgment sets a significant precedent for liability of e-commerce platforms in trademark infringement matters where affiliated sellers are involved..The Division Bench found that the single judge awarded ₹336 crores against Amazon despite original claims of only ₹2 crores, with no amended pleadings to support the enhanced amount. The Court said "At no stage of the proceedings did the plaintiffs ever claim the awarded amount of ₹ 336,02,87,000/-. Till the filing of written submissions, after conclusion of arguments, the claim continued to remain ₹ 2,00,05,000/-..The Court found Amazon was declared absent and proceeded against ex parte without ever being served formal court summons, violating fundamental due process requirements under Indian civil procedure law."When one peruses the orders passed in the suit, it becomes apparent that, in fact, no summons in the suit were ever served on Amazon Tech.".The Division Bench found that despite awarding massive damages, the Single Judge made no specific findings establishing Amazon's actual involvement in the alleged trademark infringement, relying instead on speculation about Amazon's market dominance."We do not find any specific finding against Amazon Tech, identifying its role in the affixation of the mark on the apparel sold by Cloudtail.".Thus, the Court stayed the judgment of the Single Judge qua Amazon. However, it clarified that "Observations and findings contained in the present judgment, we clarify, are only intended to be prima facie and for the purposes of disposing of the present application. They shall not be binding on the Court while deciding the present appeal.".Amazon was represented by Senior Advocates Neeraj Kishan Kaul and Arvind Nigam with Advocates Saikrishna Rajagopal, Sidharth Chopra, Sneha Jain, Devvrat Joshi, Angad S Makkar, Ira Mahajan, Pritha Suri and Agnish Aditya from Saikrishna & Associates.Lifestyle Equities CV was represented by Senior Advocates Gaurav Pachnanda, Ankit Jain and Sai Deepak along with a team from Sim and San comprising Advocates Mohit Goel, Sidhant Goel, Deepankar Mishra, Karmanya Dev Sharma, Aditya Goel, Namrata Sinha and Love Virvani..Read Judgment