Amway India v 1MG Technologies
Rule established
E-commerce platforms have a duty to prevent unauthorized sale of trademarked products; intermediary immunity under S.79 does not extend to active participation in infringement.
Facts
- Amway operates an exclusive direct selling model through authorized independent business owners (IBOs)
- IBO agreements prohibited resale through unauthorized channels including e-commerce
- Amway products appeared on 1MG sourced from unauthorized sellers
- Amway could not guarantee product authenticity or storage conditions for diverted goods
- Amway filed suit for permanent injunction
Issues
- Whether a selective distribution brand can restrain e-commerce platforms from unauthorized sales
- Whether the exhaustion doctrine applies to products diverted outside authorized channels
Held
- Amway's selective distribution model is legally valid
- 1MG's listing constitutes tortious interference with distribution contracts
- Product quality concerns justify channel restrictions
- Exhaustion does not override contractual resale restrictions
- 1MG restrained from listing Amway products
Ratio Decidendi
A brand owner's right to control distribution channels is enforceable against third-party platforms enabling unauthorized sales. The selective distribution model serves legitimate quality purposes. Platforms cannot claim immunity for facilitating sales breaching the brand's contractual structure.
How to use it in an exam
- Cite in IPL/IT questions on selective distribution and platform liability
- Relevant for competition law vertical restraints discussions
- Pair with FDI policy marketplace vs inventory model distinction
Source
Source: 2020 SCC OnLine Delhi 1839
This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.
Cited in study notes
it-lawE-Commerce Concept and Legal AspectsE-commerce platforms have a duty to prevent unauthorized sale of trademarked pro