Monday, 13 July 2015

Alpha Partners secures John Doe” for “Appu Ghar”.


On June 30, 2015 the Hon’ble High Court passed an ad-interim ex-parte order, restraining the Defendants from directly or indirectly dealing in any services or businesses under the trademark, trade name or company name APPU GHAR until the next date of hearing. The Court not only restrained the entities/individuals identified, but also those who could not be identified and were impleaded as “Ashok Kumar” – the Indian equivalent for “John Doe”. The firm represented the International Amusement Limited along with its holding and subsidiary companies owning/using the “Appu Ghar” trademarks.


"The suit was filed since numerous entities/individuals are using the mark Appu Ghar on online real estate portals and other offline platforms without any right or authority. This is a big win for our client and a landmark judgment in itself and probably the first of its kind in real estate industry," said Ankit Prakash, Co-Founding Partner at Alpha Partners. The team at Alpha Partners working on this matter also included Sumit Roy, Senior Associate.

Alpha Partners launches Bangalore office

Delhi NCR headquartered, Alpha Partners inaugurated their Bangalore office, located in the Executive Centre of UB City in June.

Bangalore was the obvious strategic move for Alpha Partners, as the firm is assisting a number of startup companies and funds investing in startups and other ventures, with end to end legal advisory services. In addition to start ups, Alpha Partners will also be catering to other companies who may need representation in North India, specifically in NCR of Delhi for transactions, intellectual property filings or dispute resolution.


"This is a very strategic decision keeping in mind the steady growth of the firm. We plan to engage at least one senior associate and one associate within this month for the Bangalore office. In 2-3 months time, we would like to locate a partner level person to run the Bangalore office," said Mr. Akshat Pande, Co-Founding Partner of Alpha Partners.

The Conundrum of Clicking Commerce –Implementation of “Click-Wrap” Contracts in E-Commerce

Soon after internet creeping its way into being a daily necessity, its birth-child E-commerce became the next big-thing.The toil of travelling miles to get that one desired good, has reduced to a click on an e-commerce website. In such a situation, the free and quick shipment and wider choice of products, along with the ease of shopping online as compared to in-store shopping, is also helping E-Commerce gather momentum.[1]

Despite the popularity, these e-commerce websites have attracted additional lime-light as manufacturers deter purchases through e-commerce websites by denying the manufacturer’s warranty. Consumer electronics manufacturers like Sony, LG, HP, Nikon, Lenovo, Dell, etc. have clearly mentioned on their websites that they cannot vouch for the genuineness of products sold on these e-marketplaces, as they do not consider the e-marketplaces like Flipkart, Amazon India, Snapdeal, eBay India as 'authorised resellers". On the other side of the story, it is the contention of the e-commerce website owners that when the products are original, and is backed by an official invoice with all taxes paid, warranties cannot be denied to the consumer.

1.   “Click-Wrap” Agreements:-

In e-commerce, the sale and purchase of the goods takes place through an e-contract which is equivalent to the form of a “click-wrap” agreement, wherein the consumers are made to click "I Accept" before downloading any software, registration of an online service or purchasing certain goods. In such a situation, as one of the parties making the contract of sale is an inanimate website, the choice of negotiating or modulating the terms such as warranty, policy of return is in-exercisable. This backed situations such as denial of manufacturer’s warranty, service etc., eventually lead to consumer disputes.
There are basically two types of click-wrap agreements:

i.Type and Click.: wherein, a party must type "I accept" or other specified words in an on-screen box and then click a "send" or similar button to signal acceptance of contractual terms.
ii. Icon Clicking: wherein, a party simply has to click an "I accept," "I agree," or similar icon to signal acceptance of the terms in the click-wrap agreement. Users not wishing to enter click a "No" or "I do not agree" icon.

2.   The existing legal framework:-

The essence of e-commerce law is based on the validity and the formation of contracts. The Indian Contract Act, 1872 gives a statutory effect to the basic common law contractual rule that a contract will be considered valid if it is made by free consent of the parties who are competent to contract, for a lawful consideration and object.[2] Taking into consideration the provisions, it is clear that the Act does not prescribe any particular way of communicating the offer and acceptance. It may be done by writing, verbal, or even by conduct.[3] Thus, there is no requisite of writing for the validity of contracts except specifically mentioned by law.[4]Apart from certain limited provisions in the Information Technology Act, 2000, India does not have a separate legislation governing e-contracts.Therefore, it can be construed that the IT Act avoids incorporating any specific provision giving validity or otherwise to online contracts.[5] In light of this, even in the absence of any specific legislation governing online contracts, its validity cannot be challenged solely on such technical grounds.[6]

3.   Loop-Holes in the Law:-

The Delhi High Court in the case of Societe Des Products Nestle S.A. And Anr.vs.Essar Industries AndOrs.[7]noted that “Rapid rise in the field of information and technology in the last decade of 20th Century and the increasing reliance placed upon electronic record by the world at large necessitated the laying down of a law relating to admissibility and proof of electronic record.” Despite the increasing technological awareness in the legal framework, the existing laws are far from being amended.
          i.       Identification of parties: In case of Click-wrap agreements, unlike traditional agreements where the individuals or the company meet and negotiate the terms of the contract, the parties are not able to meet and hence lack the sense of security.

        ii.        Jurisdiction: The Information Technology Act, 2000 states that the in case of electronic contracts such as click-wrap agreements, the place of dispatch and the place of receipt will be the place where the originator and the acceptor have their respective offices.[8] This has led to a great controversy as it is contradictory to the provisions of the Civil Procedure Code states[9] that a suit may be brought up where the defendant has his place of business or where the cause of action arises. Owing to the nature of the internet the laws of contract governing the transaction may have certain variations in cases where an international element is present in the transaction, like the procedural formalities etc. may be different in separate jurisdictions. Therefore, ascertaining the correct jurisdiction is of great consequence to the outcome of the case.

      iii.        Legal recognition of transaction:As the Indian law does not explicitly lays down provisions regarding Click-wrap agreements; refuge can be taken in few section of the Indian Evidence Act. Presumptions as to electronic records are vividly covered under section 85A, 85B, 85C, 88A, 90A of the Act, whereas its admissibility is dealt under section 65B of the same act. However, the evidentiary value of such contracts is still disputed as there is always a possibility that such contracts may have been subjected to tampering thus forcing the legal machinery to disregard the same.

       iv.        Notice: One of the important points considered by courts while deciding the enforceability of contracts in the nature of click-wrap is notice. As held in the case of Specht v. Netscape[10] , it was held that a click-wrap license was unenforceable because to view the terms of the license agreement, the user was required to scroll to the bottom of the webpage.

         v.        Stamping Requirement: Further, it is essential to get the instrument stamped under the stamp duty legislations enacted by different states in India whenever right are created or transferred. The Indian Stamp Act, 1899 does not lay down a procedure for stamping of click wrap and browse wrap contracts, although e-stamps are available but then the use of the same is not prevalent. However, e-contracts may be stamped either by printing the document on a stamp paper or by getting the printed document franked or by procuring a stamp duty certificate by the process of e-stamping.

       vi.        Signature Requirements and Contracts with Minors:It is not necessary for every contract to be signed under the Indian Contract Act, 1872, however certain provisions concerning specific contracts makes it necessary to contain signature as in the case of Copyright Act where it is mandatory for the instrument concerning transfer of rights to be signed. However, until today, no suchnotification regarding electronic signatures has been issued by the Central Government.

In addition to that, it is difficult to ascertain the competency of the party as a major[11], i.e., above 18 years of age, as it is impossible to know of the right age of the person who is actually clicking the "I Agree" button.

4.   Possible Solutions:-

Apart from bringing in amendments to the legislations in order to implement specific laws to deal with such contract, steps can be taken by both the parties to mitigate the adversities.
     i.        
        Mandatory electronic signatures on every page of such agreements prevents the user from proceeding further or ahead, without going through the content of its respective previous page.

   ii.        The exit option provided to the user should be present on every page of the electronic contract.
  iii.      
              Along with the requirement of having an acceptance option at every page of such contract, it is pertinent that the user has an access to the contract in an entirety before the product can be accessed or purchased.

  iv.        For accountability and documentation of information, the date and time of Acceptance or Rejection should be taken into account. This may be electrically recorded and presented as evidence in adjudicating the enforceability of such a click-wrap agreement.

    v.        The user is required to register him so that the details therein provided may be useful in determining his capacity to contract and thereby validly exercise his right to consent and shall be responsible in providing accurate information while registering.

  vi.        For the authentication of the user and improve the ability of the company to connect to the user with regards to periodic acknowledgements or related communications, a valid email address should be given of an authorised party for the acknowledgement of such information provided.

 vii.        The documents so provided should be at periodic scrutiny by making the user acknowledge the documents on annual basis.

viii.        It is important that the terms and conditions of the click-wrap agreement should not be limited in accessibility by being displayed only during the acceptance or rejection of the agreement. The conditions therein laid should also be conveniently present in the product and be made accessible to user post installation for his future perusal.

5.   Conclusion

Despite the grey area, initiatives such as IRCTC portal are governed by the concept of E-contracts. For interpreting and implementing developing concepts such as shrink-wrap contracts, the terms, conditions and the contract as a whole should be seen based on a commercial background. Countries like USA have not only upheld the validity of such kind of adhesive contracts but also has implemented them by initiatives such as Mass Market Transactions and framing laws such as 

The Uniform Computer Information Transactions Act (UCITA), which was developed to exclusively regulate transactions in computer information.

Thereby to draw a conclusion, it can be said that with effective amendments to the existing laws and intermingling of sectored regulators, a legal framework can be set up wherein novel concepts such as click-wrap agreements may be effectively implemented.

Kathakoli Bose



[1] Outlook 15: What Indian niche e-commerce companies plan to do in 2015, Medianamahttp://www.medianama.com/2015/01/223-outlook15-niche-e-commerce/
[2]Section 10, Indian Contract Act, 1872
[3]Section 3, Indian Contract Act, 1872
[4]See Section 10, Indian Contract Act, 1872
[5] However, the UNCITRAL Model Law has a specific provision regarding validity of contracts: “Article 11. Formation and validity of contracts.—(1) In the context of contract formation, unless otherwise agreed by the parties, an offer and the acceptance of an offer may be expressed by means of data messages. Where a data message is used in the formation of a contract, that contract shall not be denied validity or enforceability on the sole ground that a data message was used for that purpose.”
[6]Some commentators have viewed otherwise. They have opined that e-commerce in India had no legal validity before the enactment of the IT Act. See “India’s cyber law comes into force”, available at: http://www.legalserviceindia.com/cyber/indian cyber law.htm
[7]2006 (33) PTC 469 Del
[8] See Ahmed, Farooq: “E-commerce: An Indian Perspective”, International Journal of Law and Information Technology, Vol. 9, No. 2 available at: http://www3.oup.co.uk/inttec/hdb/Volume 09/Issue 02/pdf/090133.pdf.
[9]See Section 20 of the Civil Procedure Code, 1908
[10]Case. No. 01-7860 (L) (2d Cir., October 1, 2002)
[11]Section 11 of the Indian Contract Act, 1872

SEBI EXTENDING ITP TO START-UPS

Many new startups and technology companies play a major role in nation building and have a great potential in generating income as well as innovation. These companies for want of a better price discovery and the relaxed regulatory regime often plan to get listed in Singapore or the US. For removing this problem and for creating a more appealing environment for Indian entrepreneurs to list their securities in India, SEBI has through its press release proposed simplified framework for capital raising by technological start-ups and other companies. The highlights of the proposals are as follows:


a.    Listing to be done on the Institutional Trading Platform (ITP).

b.   Following types of companies covered:

·         companies which are intensive in their use of technology, IP, data analytics with substantial value addition and who have at least 25% of the pre-issue capital being held by QIBs[1], or
·         any other company in which at least 50% of the pre-issue capital is held by QIBs.

c.    No person (individually or collectively with persons acting in concert) in such a company shall hold 25% or more of the post-issue share capital.

d.   Considering the nature of business of companies which may list on ITP, disclosure may contain only broad objects of the issue and there shall be no cap on amount raised for General Corporate Purposes.

e.    Further, the lock in of the entire pre-issue capital shall be for a period of 6 months from the date of allotment uniformly for all shareholders.

f.     As the standard valuation parameters such as P/E, EPS, etc. may not be relevant in case of many of the subject companies, the basis of issue price may include other disclosures, except projections, as deemed fit by the issuers.

g.    Companies intending to list on the ITP, shall be required to file draft offer document with SEBI for observations, as provided in SEBI (ICDR) Regulations, 2009.

h.   Only following categories of investors shall be permitted

·         QIB;
·         family trusts;
·         systematically important NBFCs registered with RBI; and
·         intermediaries registered with SEBI, all with net-worth of more than Rs. 500 crore and
·         Non-Institutional Investors (NIIs) other than retail

i.     Allocation between QIB and NII shall be in the ratio of 75% (discretionary) and 25% (proportionate), respectively.

j.     QIB's allotment shall be limited to 10% of the issue size and shall be subject to a lock in of 30 days at present.

k.   Minimum application  - Rs. 10 lakhs

l.     Minimum trading lot  - Rs. 10 lakhs.

m.  Minimum number of allottees 200

For Category I and II AIFs, which are required under the SEBI (Alternative Investment Funds) Regulations, 2012 to invest a certain minimum amount in unlisted securities, investment in shares of companies listed on this platform may be treated as investment in 'unlisted securities' for the purpose of calculation of the investment limits.


[1] as defined in SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009

SAFE HARBOR NO MORE SAFE


Given the potential for widespread and permanent damage caused by Internet publication, and given the difficulty in establishing the identity of posters of defamatory comments, it is extremely difficult to expect third parties to assume the burden of continual monitoring of the Internet. The decision rendered in Delfi v. Estonia is of great significance to website publishers, in particular news and other media organizations.

In January 2006, the applicant company, a leading Estonian news portal, published an article discussing the implications of a shipping company’s decision to move its ferries from one route to another and in doing so breaking the ice at potential locations of ice roads. In the space of two days, the article attracted 185 comments. About twenty of them contained personal threats and offensive language against L, a member of the shipping company’s supervisory board. Upon receipt of L’s complaint, the comments were taken down without delay. However, L pursued the applicant company for damages in relation to the intervening period of six weeks before the comments were removed.
In June 2009, the Estonian Supreme Court upheld the lower court’s finding that the applicant company was liable for the defamatory comments and awarded L damages. It rejected the applicant company’s contention that it was exempted from liability under the EU E-Commerce Directive (Directive 2000/31/EC) and the domestic legislation which implemented that Directive on grounds that it had had neither knowledge of nor control over the information being stored. By contrast, it decided that the applicant company exercised too great a degree of control over comments on its website to avail itself of the provisions as transported into Estonian law.
The applicant company had two general mechanisms in operation for dealing with comments. Firstly, it had an automatic system of deletion of comments based on stems of certain vulgar words. Secondly, it had a notice-and-take-down system in place according to which anyone could notify it of an inappropriate comment by simply clicking on a button designated for that purpose. It also pro-actively moderated comments on controversial articles on an occasional basis.
In its Chamber judgment of 10 October 2013 the Court held, unanimously, that there had been no violation of Article 10 (freedom of expression) of the European Convention. It found that the finding of liability by the Estonian courts had been a justified and proportionate restriction on the portal’s right to freedom of expression, in particular, because: the comments were highly offensive; the portal had failed to prevent them from becoming public, profited from their existence, but allowed their authors to remain anonymous; and, the fine imposed by the Estonian courts had not been excessive.

The aforementioned decision was then referred to the Grand Chamber, pursuant to Article 43 of the ECHR.

The Grand Chamber of the European Court of Human Rights handed down its judgment, finding no violation of Article 10 by the Applicant (website) that was held liable for third party defamatory comments made by its users, despite the fact that the article itself was balanced and contained no offensive language. The decision affirms the judgment rendered by the first section of the Court in 2013, which also held that there had not been a violation of Delfi’s right to freedom of expression, despite the fact that it had removed the comments as soon as it had been notified of them.
The Grand Chamber emphasised a number of factors that led it to rule that Delfi was liable: the "extreme" nature of the comments which the court considered to amount to hate speech, the fact that they were published on a professionally-run and commercial news website, the insufficient measures taken by Delfi to weed out the comments in question and the low likelihood of a prosecution of the users who posted the comments, and the moderate sanction imposed on Delfi.
The above ruling has the capacity to challenge the safe harbor created for internet intermediaries in certain situations and the intermediaries will now have to take greater precautions.  


 -------- Shreya Seth, Associate, Alpha Partners