Draft e-commerce policy puts intermediaries in a fix

By Ashwini Vittalachar and Sanjana Mathur, Samvad Partners
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The Department for Promotion of Industry and Internal Trade released the draft national e-commerce policy for India on 23 February 2019. Given that “data is the new oil”, the principal focus of the draft policy is around data localization, sovereign rights over data collected by private parties and the concept of community rights over data.

However, the draft policy also touches upon a crucial aspect of e-commerce marketplace businesses, i.e. the role of an e-commerce intermediary. While the existing legal framework (both on foreign exchange laws as well as data protection laws) sets out the role of an intermediary to be merely that of a facilitator, policymakers have imposed a number of additional liabilities on intermediaries under the draft policy, which fundamentally changes the nature of their role and operations.

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Ashwini Vittalachar
Partner
Samvad Partners

Some of the crucial liabilities proposed under the draft policy are: 1) a refund mechanism to the customer in case of sale of a counterfeit product by a seller, 2) seeking permission of trademark owners prior to making certain high-value (luxury) goods available on their platforms, 3) taking active measures to prevent online dissemination of pirated content, and 4) responsibility and liability of the platforms or intermediaries to “ensure genuineness” of information posted on their platform. The proposed liabilities show a significant shift from the current jurisprudence under section 79 of the Information Technology Act, 2000, and its judicial precedents, which recognize due diligence requirement and actual knowledge criteria before attributing liability to an intermediary. No intermediary has been subjected to any primary or contributory liability in India so far.

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Ashwini Vittalachar is a partner and Sanjana Mathur is an associate at Samvad Partners.

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