Indore Institute of Law

Affiliated to D.A.V.V. & Bar Council of India

NIRMALA DEVI BAM

MEMORIAL INTERNATIONAL
MOOT COURT COMPETITION
CHAPTER 5

19-21 MAY, 2023

MOOT PROPOSITION
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1. India is one of many countries that contributes to the
expansion of the global health and wellness sector, which is a
burgeoning $1 trillion business. With the Covid-19 virus outbreak
the need of the hour is to preserve excellent health with a
balanced diet and regular exercise because of the global health
crisis that is wreaking havoc. With its headquarters in New Delhi,
Fusion Natural Health is an Indian firm that was founded in 2016.
It aims to promote a healthy lifestyle by offering protein
powders, collagen shots, health drinks, vitamin supplements,
nutrition guidance, food counselling, and exercise regimens. The
beverages and supplements are made from plants, are organic,
and are made in line with Ayurvedic recipes with the help of
qualified health professionals and Ayurvedic practitioners.

2. The company has developed into one of India's top providers of

plant-based nutrition and wellbeing. Fusion Natural Health
divides its health offerings into categories for men, women,
children, and nutrition for the skin and hair. The company's
website, www.FusionNaturalHealth.Co.in, offers for sale all of its
items. Moreover, Fusion Natural Health includes a smartphone
application that provides recipes, training videos, and nutrition
guidance. Using the app, a trained nutritionist is also available for
private health counselling sessions upon payment of a certain
price. On the Playstore and Apple store, the mobile app has one of
the top ratings. The products are also sold through a well-
established network of direct sellers and/or dealers outside of its
website.
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3. A Direct Selling Contract is used to sell these premium
consumer goods principal to principal (B2B). The terms and
conditions for the distribution, promotion, and sale of Fusion
Natural Health's products are outlined in the Contract. The
products sold by Fusion Natural Health's direct sellers are
explicitly marked to indicate that they are being sold by Fusion
Natural Health's business owners, and the direct sellers are
subject to a Code of Ethics. The direct selling business model
provides thousands of individuals with employment
opportunities in addition to ensuring the quality of the items,
particularly during the pandemic when many jobs were lost.
Fusion Natural Health keeps track of all of its Direct Sellers, and
each of its items has a distinctive identifier on the box, making it
simpler to assess responsibility and customer satisfaction.
4. Fusion Natural Health also maintains an efficient mechanism
for resolving complaints. Dissatisfied customers may choose to
return the products along with the sale invoice within 30 days of
their purchase, and a refund will be given based on the product's
saleability. Fusion Natural Health uses a direct selling model, so
its items are only available for purchase through either its official
website or its registered direct sellers. Fusion Natural Health is a
company that is conscientious about protecting its intellectual
property rights. It is the registered owner of a word and device
mark that contains the word "Fusion Natural Health" in
accordance with the relevant classes under the Trade Marks Act,
1999.
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5. From May 2022, NatureCare, a business based in Hyderabad
that sells protein powders and supplements for growing muscle,
has advertised and sold "Fusion Natural Health" items through its
business page on the social media site Instabook. Businesses can
pay to advertise their products in the form of photographs or
videos that show in Instabook users' stories or feeds by
subscribing to the service's paid-promotion function for company
profiles. The cost is dependent on the Cost Per Click (CPC)
mechanism as well as variables like the target audience.
Instabook employs demographic information to target the right
people with its adverts, and this tool is very useful for marketers
trying to target a certain audience.
6. Ms. Seema Singh, a resident of Delhi, viewed NatureCare's
advertisement for a Fusion Natural Health product and placed an
order for that Fusion Natural Health product on 3.11.2022.
NatureCare has subscribed to the aforementioned paid-
promotion service. The transaction involved selecting the "Shop
Now" button on NatureCare's advertisement, which led Ms. Singh
to NatureCare's web platform where she could select the amount,
provide her name, address, and phone number for the shipping,
pay the money, and finish the purchase.
7. On 12.11.2022, when the product was delivered to her house, she
was dismayed to see that the product container was damaged and
the safety seal was broken. When she complained about it to
Fusion Natural Health's grievance forum on November 13, 2022,
she was prompted to provide information about the purchase,
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including the mode of payment, the seller's information, the date
of purchase, the date of delivery, the batch number, and the
Unique Product Code (UPC) printed on the product packaging.
The grievance team at Fusion Natural Health was taken aback
when Ms. Singh returned with the pertinent information because,
to their knowledge, none of their Direct Sellers have been using
the aforementioned platform for the selling of their goods.
8. Without its knowledge or approval, NatureCare has been selling
Fusion Natural Health products on Instabook even though it was
not included in its list of Direct Sellers. Fusion Natural Health
conducted their own research by acquiring Fusion Natural Health
goods from NatureCare via Instabook revealed that the products
are being offered at a significant discount, roughly 70% below the
MSRP. After giving the products a closer look, Fusion Natural
Health saw that even though they had the batch code and UPC,
there was something odd about them, including the lack of safety
seals (as opposed to Ms. Singh's, who had a broken safety seal).
9. A Cease and Desist Letter dated 5.12.2022 was promptly sent by
Fusion Natural Health to NatureCare, alleging product tampering,
trademark infringement, and contravention of the Direct Selling
Guidelines 2016. The Notice also demanded that NatureCare stop
offering any of Fusion Natural Health's items for sale right away
and remove all posts about them from Instabook and other social
media. In its response dated 20.12.2022, NatureCare refuted
Fusion Natural Health's claims and explained that it had simply
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purchased the products from Fusion Natural Health through one
of its authorised Direct Sellers in the free market and sold them
via Instabook. The contested products were still being sold by
NatureCare via Instabook.
10. Fusion Natural Health, who had serious concerns that
NatureCare was selling counterfeit goods in its packaging and
using its trademark, and that these counterfeit goods might have
negative health effects on consumers if consumed, sent a legal
notice to Instabook on February 2, 2023, ordering it to stop
NatureCare from doing so. However, Instabook claimed in its
response dated 12.2.2023, that it is only an online social
networking platform and as such, is an intermediate as that term
is used in the Information Technology Act, 2000.
11. It said that it would not be able to keep an eye on or regulate
the transactions taking place on its platform and that it would
only stop NatureCare from using it for online sales and/or block
or delete the aforementioned company profile if Fusion Natural
Health could show a court order to that effect. Additionally,
Instabook claimed in its response that its platform is just a tool
for businesses to advertise, and it has no direct control over the
sale of goods because it doesn't actively participate in business
dealings between buyers and sellers and is therefore ignorant of
the types of goods traded.
12. Fusion Natural Health has been in the wellness sector for more
than four years and has established a solid reputation and built
up goodwill for its products and brand as one of the top options
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among customers for protein powders and wellness drinks. In
reality, Fusion Natural Health has thousands of followers on its
social media accounts. On the other hand, Instabook views more
than 500 million stories daily thanks to its over 120 million users
in India alone. Instabook's appealing features are essential in
boosting brand recognition to the extent that 80% of its
customers have made a purchase after viewing an advertisement
in their feed or stories.
13. Therefore, the existence of fake goods, especially on one of the
most widely used social media platforms, would not only result in
financial loss for Fusion Natural Health but will also negatively
affect its well-deserved reputation and goodwill. On February 15,
2023, Fusion Natural Health filed a trademark infringement
lawsuit in the District Court of Delhi with the case number CS
31/2023, asking for the appropriate relief. They also requested an
ex parte ad interim injunction against NatureCare and added
Instabook as a defendant.

ISSUES:

1. Whether the suit is maintainable before the District Court of

Delhi.
2. Whether and to what extent the Direct Selling Guidelines,
2016 are enforceable and applicable to NatureCare.
3. Whether NatureCare's use of Instabook to sell fake goods with
the mark " Fusion Natural Health " constitutes an infraction of the
Trade Marks Act, 1999.
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4. Whether Instabook is under the definition of "Intermediaries"

and qualifies for protection under the "safe harbour" clauses
listed in the Information Technology Act of 2000 and the
Intermediary Guidelines of 2011.
5. Whether NatureCare is guilty of tortious interference with the
contractual relationship established with Fusion Natural Health’s
direct sellers/distributors.