The Delhi High Court draws a firm line between customization and infringement in two luxury goods cases

Although there are no legal precedents in India addressing customization of luxury goods, the Delhi High Court has shed light on the doctrine of first sale and emphasized the need for transparency in Louis Vuitton Malletier v Haute24.com and Seagate Technology v Daichi International.

Personalization is a strong trend in fashion – consumers take pride in personalized luxury goods that allow them to express their individuality through a designer Louis Vuitton handbag or a pair of Nike Air Jordan sneakers, for example. Companies around the world are even establishing business models that focus solely on creating custom custom designs.

However, brand owners have legally challenged the unauthorized customization, citing infringement of intellectual property rights, consumer confusion and dilution of brand identity. It is essential to examine how Indian courts have dealt with infringement related to personalized luxury goods in recent cases and research foreign legal precedents to explore how they might adjudicate similar cases in the future.

Opposite customization reasons

Brand owners can object to personalization for a number of reasons:

• an unauthorized product can lead to consumer harm and jeopardize a brand’s reputation;
• the amended articles may lead customers to mistakenly believe that there is an affiliation or endorsement between the companies, which could create confusion, especially if there has been prior collaboration between them; and
• Third-party customizers generate revenue from modifying original products without compensating brand owners, who lose profits as well as control over how their products are represented in the marketplace, resulting in brand dilution.

Customizers often invoke the first sale doctrine as a defense, arguing that brand owners cannot control the resale of their products after the initial sale. They also state that customization is a form of artistic expression and is protected as transformative or fair use. However, proving transformative use requires the customizer to demonstrate that their changes add meaningful artistic expression and are not intended to mislead consumers into thinking that the brand approved the changes. This can be a difficult burden, especially when customizers take advantage of such activities.

Indian courts take a strict stance on personalization

The Indian Trademarks Act 1999 prohibits unauthorized use of registered trademarks, including deceptively similar variations, and provides remedies for trademark dilution to protect trademark owners from reputation-damaging customizations. Similarly, under the Copyright Act 1957, derivative works (eg, unauthorized adaptations or modifications of copyrighted works) may infringe the copyright of the original owner. Indian courts take a strong stance against fair use when third parties derive commercial benefit from it.

Recent jurisprudence

While there is no legal precedent in India addressing the customization of luxury goods, recent jurisprudence provides insight into how courts might approach such disputes. In Louis Vuitton Malletier v Haute24.com (CS/COMM, 874/2022, 21 August 2024), the Delhi High Court prohibited Haute24 from using copyrighted Louis Vuitton promotional images on its website or from marketing new Louis Vuitton products unless who has obtained the express written permission of the company. Haute24 – which sells second-hand luxury goods – was allowed to continue operating under the first sale doctrine, but was required to display disclaimers clarifying that the goods were pre-owned and not directly associated with Louis Vuitton.

Similarly, in Seagate Technology v Daichi International (CS/COMM, 67/2024, 21 May 2024), Seagate and Western Digital claimed that refurbishing and reselling discarded HDDs with the brand removed infringed sections 29 and 30 of the Trade Marks Act. On the principle of exhaustion, the Delhi High Court ruled that the trademark rights of Seagate and Western Digital were exhausted on the first sale of their products. While recognizing refurbishing as a valid business practice, the court emphasized the need for transparency. Refurbished products must include clear disclaimers that they are not new, do not have manufacturer’s warranties, and are sold under the refurbishing brand to avoid misleading consumers and incurring legal liability.

Key recommendations

While luxury brand owners may tolerate third-party customization of their products, they prefer it to happen through licensed collaborations. Licensing agreements benefit all stakeholders because they allow brand owners to retain control over their products, customizers can avoid legal challenges, and consumer confusion is minimized. An official collaboration is a win-win situation for both parties.