In this post we revisit the IP Updates ie., any amendments, ordinances, notifications, and other information related to IP published in the year 2021. For reader’s convenience it has been divided into parts, please find the link to the previous and next parts towards the end of this post.

CONSUMER PROTECTION (E-COMMERCE) RULES, 2020 – PROPOSED AMENDMENTS (2021)

INTRODUCTION

On 23rd July, 2020 the Central Government had notified the Consumer Protection (E-Commerce) Rules, 2020. The Department of Consumer Affairs on 21st June, 2021 published the proposed amendments to Consumer Protection (E-Commerce) Rules, 2020 and has sought views/ comments/ suggestions to be sent within 15 days, ie., by 6th July, 2021 by email to js-ca@nic.in.

In summary the amendments proposed are as follows:

  • Registration of entities with DPIIT shall be mandatory
  • Chief Compliance Officer, Nodal Contact Person and Grievance Officer shall be mandatory
  • Information to be provided within 72 hours of receipt of order from government agency
  • Ban on misleading users by manipulating search results
  • Ban on fraudulent flash sales and mis-selling
  • Mandate to provide details about country of origin and best before or use before date

HIGHLIGHTS OF THE PROPOSED AMENDMENTS

  1. Registration

As per Rule 4, every e-commerce entity (any person who owns, operates or manages digital or electronic facility or platform for electronic commerce) intending to operate in India shall have to register itself with the Department for Promotion of Industry and Internal Trade (DPIIT).

  1. Duties of the e-commerce entities

  • To not allow any display or promotion of misleading advertisement either in the course of business on its platform or otherwise.
  • To appoint a Chief Compliance Officer responsible for ensuring compliance with the Act.
  • To appoint nodal contact person for 24×7 coordination with law enforcement agencies and officers.
  • To appoint a Resident Grievance Officer.
  • To set up an adequate grievance redressal mechanism and publish name of the Grievance Officer and his contact details on its website, mobile application, or both.
  • The Grievance Officer shall receive and acknowledge any order, notice or direction issued by the Appropriate Government, any competent authority or a court of competent jurisdiction.
  • While offering imported goods and services for sale the e-commerce entity must mention the name and details of any importer, identify goods and provide filter mechanism based on country of origin and provide ranking for goods and ensure whilst ensuring that the ranking mechanism doesn’t discriminate against domestic goods.
  • To not indulge in mis-selling (by deliberate misrepresentation of information suiting the user) of goods and services offered on its platform.
  • E-commerce entities engaged in cross-selling (related, adjacent or complimentary to a purchase made by a consumer), shall provide adequate disclosures to its users in clear and accessible manner on its platform. (refer SNo. 2 and 13 of the table below)
  • To not mislead users by manipulating search results or search indexes having regard to search query of the user.
  • To use the name or brand associated with the e-commerce entity for offer for sales or promotion, suggestive of such association.
  • To not pre-record automatically, including in the form of pre-ticked checkboxes, consent of the consumer to share their information with anyone else. The consent so given must be express and affirmative consent.
  • To not use information collected by market e-commerce entities amounting to unfair trade practices or impinging consumer’s interest.
  • To ensure that sponsored listing of products and services are distinctly identified with clear and prominent disclosures.
  • To not organize a flash sale of goods or services offered on its platform.
  • Any e-commerce entity which holds a dominant position in any market should not abuse its position.
  • To provide any information under its control and possession within 72 hours of the receipt of an order from any competent authority. (Rule 5(16))
  • To display the name of the seller in the invoice prominently in the same size and font as that of the e-commerce entity.
  1. Liabilities of marketplace e-commerce entities:

  • To provide information about the country of origin, best before or use before date prominently to its users.
  • The logistics service provider of a marketplace e-commerce entity shall not provide differential treatment to sellers of same category.
  • To ensure that it does not use any information collected through its platform for unfair advantage of its related parties and associated enterprises.
  • To ensure that none of its related parties and associated enterprises are enlisted as sellers for sale to consumers directly. To also ensure that nothing is done by related parties or associated enterprises which the e-commerce entity cannot do itself.
  • To not sell goods or services to any person who is registered as seller on its platform.
  • To not advertise a body of sellers for the purpose of subsidizing a sale on its platform.
  • If a seller registered on its platform fails to deliver the goods or services ordered by a consumer due to negligent conduct, omission or commission of any act by such seller in fulfilling the duties and liabilities in the manner as prescribed by the marketplace e-commerce entity which causes loss to the consumer, the entity shall be subject to a fall-back liability.
  1. Duties of seller in a marketplace

Seller offering goods or services for sale must provide the marketplace e-commerce entity details about best before or use before date, information related to return, refund, exchange, expiration date, details of best before usage, warranty and guarantee, delivery and shipment, cost and return shipping, mode of payments, and any other similar information which are necessary for enabling the consumer to make an informed decision at the pre-purchase stage.

Provided below link to the post comprising of a table summarizing the amendments proposed to the Consumer Protection (E-Commerce) Rules, 2020

Read our Comments and  Suggestions here

Read Obligations of Marketplace E-commerce entities and Inventory E-commerce entities here

Link to the post: https://www.bananaip.com/ip-news-center/consumer-protection-e-commerce-rules-2020-proposed-amendments-2021/ dated JUNE 24, 2021.

OBLIGATIONS OF MARKETPLACE E-COMMERCE ENTITIES AND INVENTORY E-COMMERCE ENTITIES.

The Center has extended the deadline for seeking suggestions on the proposed e-commerce rules till July 21, 2021 according to a notification issued by Center on July 5, 2021. Earlier the Ministry of Consumer Affairs had sought feedback on the proposed amendments to the Consumer Protection (E-Commerce) Rules, 2020, till July 6, 2021.

Highlights of Duties and Liabilities of Marketplace E-commerce and Inventory E-commerce entities:

Liabilities of Marketplace E-commerce entities:

  • To provide information about the country of origin, best before or use before date prominently to its users.
  • The logistics service provider of a marketplace e-commerce entity shall not provide differential treatment to sellers of same category.
  • To ensure that it does not use any information collected through its platform for unfair advantage of its related parties and associated enterprises.
  • To ensure that none of its related parties and associated enterprises are enlisted as sellers for sale to consumers directly.
  • To not sell goods or services to any person who is registered as seller on its platform.
  • To not advertise a body of sellers for the purpose of subsidizing a sale on its platform.
  • If a seller registered on its platform fails to deliver the goods or services ordered by a consumer due to negligent conduct, omission or commission of any act by such seller in fulfilling the duties and liabilities in the manner as prescribed by the marketplace e-commerce entity which causes loss to the consumer, the entity shall be subject to a fall-back liability.

Liabilities of Inventory E-commerce entities:

  • To provide information regarding to best use before, contractual information, payment methods, refund and exchange, total price     including other charges and ticket number to track the order and lodge complain.
  • Not to misrepresent itself as consumer and post false reviews for the product.
  • Not to provide any misleading advertisement
  • No inventory e-commerce entity shall refuse to take back goods except for the force majeure conditions.
  • To bear the liability of authenticity of a product if vouched explicitly by entity.

The link to the post give below comprises of tables showcasing bifurcation of duties of Marketplace E-commerce and Inventory E-commerce entities as well as Marketplace E-commerce and Inventory E-commerce entities in accordance with Proposed Amendments to Consumer Protection (E-commerce) rules 2020

Understanding of E-commerce and its models:

As per Consumer Protection (E-commerce) rules Section 3(b) E-commerce entity means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce including any entity engaged by such person for the purpose of fulfillment of orders placed by a user on its platform and any ‘related party’ as defined under Section 2(76) of the Companies Act, 2013, but does not include a seller offering his goods or services for sale on a marketplace e-commerce entity.

As per Consumer Protection (E-commerce) rules Section 3(f) Inventory e-commerce entity means an e-commerce entity which owns the inventory of goods or services and sells such goods or services directly to the consumers and shall include single brand retailers and multi-channel single brand retailers.

As per Consumer Protection (E-commerce) rules Section 3(g) Marketplace e-commerce entity means an e-commerce entity which provides an information technology platform on a digital or electronic network to facilitate transactions between buyers and sellers.

Read our Comments and Suggestions here

Read Consumer Protection (E-Commerce) Rules, 2020 – Proposed Amendments (2021)  here

Link to the post: https://www.bananaip.com/ip-news-center/obligations-of-marketplace-e-commerce-entities-and-inventory-e-commerce-entities/ dated JULY 9, 2021.

COMMENTS & SUGGESTIONS ON THE PROPOSED E-COMMERCE RULES (2021)

Background

On 23rd July, 2020 the Central Government had notified the Consumer Protection (E-Commerce) Rules, 2020. The Department of Consumer Affairs on 21st June, 2021 published the proposed amendments to Consumer Protection (E-Commerce) Rules, 2020 and had sought views/ comments/ suggestions to be sent within 15 days, i.e., by 6th July, 2021 by email to js-ca@nic.in. Later the last date was extended to 21st July, 2021.

Structure

The comments, suggestions and inputs have been provided in two parts. The first part relates to general comments pertaining to the rules as a whole, and the second part provides specific comments/inputs with respect to specific provisions that have been proposed.

Part I – General Comments and Suggestions

We at BananaIP believe that several provisions of the proposed rule changes may not suit all eCommerce entities in the context of the objectives of Consumer Protection Law to promote competition, encourage formation of new entities, protect consumer interests, and prevent unfair trade practices. Based on our experience and work in the field, we believe that if the proposed rules are applied to all eCommerce entities irrespective of their nature and size, they may have a detrimental effect on business, competition, consumer protection and economic growth. Also, compliance may become too burdensome and the field, over regulated, which may have negative consequences for business progress. In the said context, our general comments/suggestions are as follows:

  1. The proposed amendments require all e-commerce entities irrespective of their size, number of subscribers, revenue, etc. to comply with the proposed rules, which include several compliances that might be burdensome to small entities and startups. Like the differentiation provided in the recently notified intermediary guidelines (Information Technology [Intermediary Guidelines (Amendment) Rules] 2018), the Government may consider differentiating compliance requirements based on the nature, size and status of the e-commerce entity. This may be considered specifically for:
    • Registration under DPIIT (Rule 4), and
    • Appointment of Chief Compliance Officer, Nodal Officer and Grievance Officer (Rule 5).
  2. The proposed amendments focus only on sellers while also covering both goods and services within their scope. The Government may consider including service providers wherever relevant.

Part II – Specific Comments and Suggestions

This section includes specific comments and suggested changes to particular rules. We have made comments with respect to applicability, clarity and scope of a rule wherever relevant. Also, we have proposed specific language changes for consideration of the Department of Consumer Affairs.

Rule 3(d)

(d) “Fall back liability” means the liability of a marketplace e-commerce entity where a seller registered with such entity fails to deliver the goods or services ordered by a consumer due to negligent conduct, omission or commission of any act by such seller in fulfilling the duties and liabilities in the manner as prescribed by the marketplace e-commerce entity which causes loss to the consumer;

Comment:

The Government may consider including “breach of terms or contract” along with omission and commission as a part of the definition because breach of terms or contract forms an important part of consumer disputes pertaining to e-commerce entities, and fall back liability may be extended to such disputes as well.

Suggested Rule:

“Fall back liability” means the liability of a marketplace e-commerce entity where a seller registered with such entity fails to deliver the goods or services ordered by a consumer due to negligent conduct, breach of terms or contract, omission or commission of any act by such seller in fulfilling the duties and liabilities in the manner as prescribed by the marketplace e-commerce entity which causes loss to the consumer;

Rule 3(e)

(e) “Flash sale” means a sale organized by an e-commerce entity at significantly reduced prices, high discounts or any other such promotions or attractive offers for a predetermined period of time on selective goods and services or otherwise with an intent to draw large number of consumers.
Provided such sales are organised by fraudulently intercepting the ordinary course of business using technological means with an intent to enable only a specified seller or group of sellers managed by such entity to sell goods or services on its platform.

Comment:

This definition may give rise to ambiguity with respect to what exactly amounts to a flash sale, and different terms may be used to make it clear and easy to implement.

Suggested Rule:

“Flash sale” means a sale organized by an e-commerce entity at significantly reduced prices, high discounts or any other means of giving consumers the impression that goods or services are being offered at a highly reduced price or discount for a predetermined period of time on selective goods or services or otherwise with an intent to draw large number of consumers.
Provided such sales are organised by fraudulent or wrongful means in the ordinary course of business using technological measures with an intent to enable only a specified seller or service providers or group of sellers managed by such entity to sell goods or services on its platform.

Rule 5(7)

Where an e-commerce entity offers imported goods or services for sale, it shall:-
(a) mention the name and details of any importer from whom it has purchased such goods or services, or who may be a seller on its platform;
(b) identify goods based on their country of origin, provide a filter mechanism on their e-commerce website and display notification regarding the origin of goods at the pre-purchase stage, at the time of goods being viewed for purchase, suggestions of alternatives to ensure a fair opportunity for domestic goods;
(c) provide ranking for goods and ensure that the ranking parameters do not discriminate against domestic goods and sellers.

Comment:

E-Commerce entities may not be required to suggest any alternatives to goods or services displayed on their platform, as the consumer has a choice to search for multiple products and on multiple platforms before making a choice. Also, this may require certain technological capabilities that all e-commerce entities may not have.

Suggested Rule:

here an e-commerce entity offers imported goods or services for sale, it shall:-
(a) mention the name and details of any importer from whom it has purchased such goods or services, or who may be a seller on its platform;

(b) provide ranking for goods and ensure that the ranking parameters do not discriminate against domestic goods and sellers.

Rule 6(5)

(5)No logistics service provider of a marketplace e-commerce entity shall provide differentiated treatment between sellers of the same category.

Provided that each logistics service provider of a marketplace e-commerce entity shall provide a disclaimer including terms and conditions governing its relationship with sellers on the marketplace e-commerce entity platform, a description of any differentiated treatment which it gives or might give between sellers of the same category.

Explanation-

Logistics service provider for all extent and purposes of this rule shall be a company engaged in business of providing any one or more services, which include rail/road/sea/air transportation, air cargo, cargo consolidation, ware housing, Inland Container depot, cold chain services, port terminal services or any other such services for the goods and services sold on any marketplace ecommerce entity platform.

Comment:

Though the proviso to the prohibition against differentiation carves out an exception, the prohibition does not include a specific reference to the exception. A change has been proposed to clarify the language.

Suggested Rule:

(5) No logistics service provider of a marketplace e-commerce entity shall provide differentiated treatment between sellers of the same category without a valid basis for such differentiation.

Provided that each logistics service provider of a marketplace e-commerce entity shall provide a disclaimer including terms and conditions governing its relationship with sellers on the marketplace e-commerce entity platform, a description of any differentiated treatment which it gives or might give between sellers of the same category.

Explanation-

Logistics service provider for all extent and purposes of this rule shall be a company engaged in business of providing any one or more services, which include rail/road/sea/air transportation, air cargo, cargo consolidation, ware housing, Inland Container depot, cold chain services, port terminal services or any other such services for the goods and services sold on any marketplace ecommerce entity platform.

Disclaimer

The views, opinions, comments and inputs provided in this document are based on the understanding of, and information available to attorneys and experts at BananaIP Counsels working on eCommerce law matters. It may be noted that opinions of other legal experts may differ from those of BananaIP’s attorneys and experts. The comments, inputs and suggestions are legal research and policy contributions of attorneys and experts of BananaIP Counsels, and the firm is not representing any client or a third party with respect to the comments/inputs provided in this document. Also, it may be noted that views of other attorneys at BananaIP may vary from the opinions of those submitting this document.

Read Obligations of Marketplace E-commerce entities and Inventory E-commerce entities here

Read Consumer Protection (E-Commerce) Rules, 2020 – Proposed Amendments (2021)  here

Link to the post: https://www.bananaip.com/ip-news-center/comments-suggestions-on-the-proposed-e-commerce-rules-2021/ dated JULY 24, 2021.

Read previous part of this post: Recap 2021: IP Updates – Part 2

Read next part of this post: Recap 2021: IP Updates – Part 4


This post is brought to you by BananaIP’s Consulting & Strategy Department

About BananaIP’s Consulting & Strategy Department

BananaIP’s Consulting & Strategy Department has the experience of helping companies use IP for business and competitive advantage. Companies regularly seek their assistance, advise and opinions on identifying/mining inventions and creations, conducting IP audits, protecting IP assets appropriately, launching risk free products, managing litigation for business benefit, resolving disputes out of Court, making money out of IP, enforcing IP, and licensing transactions. If you have any questions, or need any clarifications, please write to contact@bananaip.com.

Disclaimer

Please note that these updates have been put together from different sources, primary and secondary, and BananaIP’s reporters may not have verified all the decisions published in the bulletin. You may write to contact@bananaip.com  for corrections and take down.

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