L’Oréal wins case against Shopclues.com

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Cosmedic India Network
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Image source: www.economictimes.indiatimes.com

In the last few years, several well-known brands have been filing court petitions, complaining against fake products under their brand name, being sold by eCommerce websites. There are also a large number of smaller niche websites, with suspicious credentials, leaving consumers seeking genuine products, a vulnerable lot. Shopclues.com has also been barred from availing immunity provided to intermediaries. A report

In a development that can bring some cheer to cosmetics and beauty product companies which complain about fake products bearing their brand name, being sold by online shopping sites, L’Oréal India has won a court case against online website Shopclues.com, accused of selling counterfeit L’Oréal products.

The Delhi High Court has ordered Shopclues.com not sell counterfeit products of L’Oréal, in a judgment that came almost four years after France headquartered cosmetics major had filed a case against the online shopping website. According to a media statement released by L’Oréal India, the court also ruled that Shopclues.com was barred for the exemption under Section 79 of the Information Technology Act, 2000 as the website’s role was more than that of an intermediary.

If eCommerce websites and online shopping platforms wish to enjoy the immunity provided to intermediaries, they have to operate with restraint, the high court observed.  

Sales authorization certificates from brands

The court also ordered Shopclues.com to reveal complete details of all its sellers and their addresses and to also, acquire certificates from sellers declaring that the products being sold are genuine products of the sellers. It directed the eCommerce site to attain all brand’s authorization certificate before uploading any of their products on its platform for sale, according to the statement. Shopclues.com was also restrained from dealing in L’Oréal products by way of a permanent ruling.

The statement issued by L’Oréal India, quotes its Managing Director, Amit Jain, as saying “Counterfeits is a serious issue faced by the beauty industry in India across online and offline platforms. This verdict will help us fortify our fight against online counterfeiting rampant on such marketplaces. We understand the importance of consumer protection and are hence encouraged by this first-of-its-kind decision.”

Rising trend of fake products’ online sales

During the last few years, there has been a number of petitions filed with the courts by both brands as well as consumers on fake products being sold online by eCommerce sites. With the rising popularity of online shopping, there has also been an increase in incidences of consumers being cheated into buying fake products of the big brands. Some of the biggest brands have in the last few years, helped seize thousands of fake apparels through court-supported raids on warehouses, belonging to either sellers or smaller fashion shopping websites.

Meanwhile, in early November 2018, Shopclues.com’s parent company Clues Networks Pvt. Ltd. had declared its financial results for the financial year 2017-18, lessening its net loss by 40 per cent to Rs. 208.14 crore. According to the filings accessed through Tofler, the business intelligence platform for India, the company reported a total income of Rs, 273.3 crore, an increase of 46 per cent from Rs. 187.1 crore in the previous year.

The same month also saw Shopclues.com diversifying into offline sales, focusing on the franchise model. It launched its first retail store in Lucknow, Uttar Pradesh, featuring its exclusive labels along with offerings across multiple categories.  To take its offline initiative further, ShopClues is reported to up with companies like iTiger (part of Sahaj Group) Aditya Birla Payments Bank, and Emart, with the objective of leveraging their retailer spread.

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