Plea to reverse order on paying Rs 340 crore damages to Amazon

New Delhi:The Supreme Court on Wednesday dismissed a plea filed by UK-based fashion brand Lifestyle Equities CV challenging the stay imposed by the Delhi High Court Division Bench on an order directing Amazon Technologies to pay it Rs 340 crore in damages for trademark infringement. A Bench of Justices JB Pardiwala and KV Viswanathan rejected the plea, stating that the reasons for dismissal would be detailed in a subsequent order.

The Court clarified, however, that this dismissal would not prevent the Delhi High Court Division Bench from proceeding to hear the matter on merits.

What is the case?

The lawsuit originates from a 2020 complaint by Lifestyle Equities, which alleged infringement of its Beverly Hills Polo Club (BHPC) trademark. The company claimed that products sold under Amazon’s private label, "Symbol," on Amazon.in carried logos that were deceptively similar to its registered BHPC marks. Cloudtail India, a major seller on the platform, was also named as a defendant.

In October 2020, the Delhi High Court granted an interim injunction restraining the defendants from using the infringing mark. Cloudtail later admitted liability and disclosed sales of approximately Rs 24 lakh from such products, while Amazon Technologies failed to appear and was proceeded against ex parte.

Subsequently, a single judge of the High Court ruled in favour of Lifestyle Equities, holding Amazon liable for trademark infringement. The Court observed that Amazon’s brand licence and distribution agreement with Cloudtail permitted extensive use of Amazon's marks and branding, showing that the commercial relationship extended beyond that of a neutral intermediary. As a result, Amazon was held accountable for the infringing products listed and sold through its platform.

The judgement awarded USD 5 million in damages for corrective advertising and brand rehabilitation, along with USD 33.78 million (Rs 292.7 crore) for lost royalties, in addition to litigation costs. The total compensation payable by Amazon was assessed at about Rs 340 crore.

However, on July 1 this year, a Division Bench of Justices C Hari Shankar and Ajay Digpaul stayed the single-judge order. The Bench observed that Amazon had not been properly served with summons before being proceeded against ex parte, raising concerns about due process.

The Division Bench also pointed out that the original suit sought only Rs 2 crore in damages, and no amended pleadings or formal applications had been filed to support the grant of Rs 336 crore.