201810.22
7

Amway obtains ‘John Doe’ order to curb unauthorised sale

Recently, Amway Corporation (now known as Alticor Inc.) a direct selling company operating in consumer healthcare space obtained “John Doe” order from the Delhi High Court against the shopkeepers/stockist who were selling Alticor products through illegitimate and unauthorized channels. Alticor argued that they are a direct selling entity and in full compliance with the guidelines issued in 2016 by the Ministry of Consumer Affairs, Food and Public Distribution (Department of Consumer Affairs) declaring framework on Direct Selling and Multi-level Marketing. The Company claimed to have filed its undertaking to the Ministry of Consumer Affairs in December, 2016 with the declaration that it is 100% compliant with the guidelines issued by Government of India which was duly acknowledged by the authorities.

The Company submitted that it further issued an internal circular for its already existing Amway Business Owners/Direct Sellers to caution them on sale of products illegally and without authority. It also published a cautionary notice in the ‘The Times of India’ (a national daily) on November 7, 2017 to protect its consumers. In May 2018, it came to know that its products are being sold by medical shops at wholesale pharmaceutical market in Delhi without its authority and written permission.

Investigations were carried out by Alticor through professional/s who identified two parties, Rajendra Medicos and Himgiri Medicines dealing in such unauthorised sale of Amway products. Additionally, they found many other shops keeping considerable stock of ‘Amway Products’ and found to be selling them illegally and without authorisation after removing the unique codes placed on the lid of the product. In some case even without issuing invoice and not providing benefit of Return/Refund Policy.

Court Action

Alticor sought a “John Doe” order from the court arguing that they are not aware of the parties and particulars of all shops that are violating their rights. Thus they have a right to have their identities revealed and seize the unauthorised products.

Alticor also requested for Court appointed officers/commissioners to inspect and prepare inventory of Amway products lying with the parties. The Court allowed Alticor’s request and appointed four commissioners; two to visit the specific parties identified in the law suit and two against unknown parties directing them to handover goods seized to be kept in safe custody by the Defendant and produced in the Court as per Court’s direction.

Our comments

The ‘John Doe’ orders have been commonly granted by the Indian courts in case of online piracy in music, film and software industry. The John Doe orders have also been granted in case of counterfeiting of products where the problem is widespread and identity of traders could not be determined. This is the first time ‘John Doe’ orders have been granted in case of goods being sold outside the distribution chain where they were meant for direct sales. The Court with this order has given boost to the direct selling companies which is a growing industry in India, currently valued at INR 75 billion (approx US$ 1 billion).