Delhi High Court
Taboola India Private Limited vs Eterno Infotech Pvt. Limited on 17 September, 2018
Equivalent citations: AIRONLINE 2018 DEL 2703
Author: Prathiba M. Singh
Bench: Prathiba M. Singh
$~11
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of Decision: 17th September, 2018
+ CS (COMM) 1110/2018
TABOOLA INDIA PRIVATE LIMITED ..... Plaintiff
Through: Mr. Mohit Chadha and Ms. Sukrit
Mago, Advocates. (M:9999413737 &
9871748789)
versus
ETERNO INFOTECH PVT. LIMITED ..... Defendant
Through: Mr. Jayant K. Mehta and Ms. Suveni
Bhagat, Advocates. (M:9650446095)
CORAM:
JUSTICE PRATHIBA M. SINGH
Prathiba M. Singh, J. (Oral)
I.A. 12255/2018 (u/O XXXIX Rules 1 & 2 CPC)
1. This is an application under Order XXXIX Rules 1 & 2 read with 151 CPC. Reliefs prayed for in the application are as under:
"A. Pass an ex-parte ad-interim order restraining the Defendant, its agents, distributors, assigns, nominees, from placing content recommendation services provided by Outbrain or any other third party on its website and app during the pendency of the present suit;
B. Pass an ex-parte ad-interim order directing the Defendant to place on record the content recommendation services provided by the Plaintiff; C. Any further order(s) which this Hon'ble Court may deem fit and proper in the interest of justice and equity be passed in favour of the Plaintiff and against the Defendant."
2. The present suit relates to a claim of exclusivity in providing an CS (COMM) 1110/2018 Page 1 of 9 online form of advertising. With the advent of the internet, the mode of advertising has undergone rapid change. Promotion and advertising is no longer about simply booking physical space in a magazine or a newspaper but ensuring that the visitors on the internet visit the electronic space of the service, which is being advertised.
3. On the internet also known as cyber space there are several websites which publish various materials, disseminate information offer goods for sale, offer services for sale, etc., The internet is an amalgam of all such websites. The source of revenue for these websites is the number of visitors who visit them, just like the number of eyeballs that watch television programmes. In order to ensure that visitors visit these websites, a unique form of promotion of websites through links has developed. Any visitor who clicks on the said links, is directed to the website which provides various services, goods etc. The mere click of the mouse on the link constitutes a stream of revenue. Thus, the more popular websites sell space on their websites to host such links to other websites. Thus, if A‟s website is promoted on B‟s website through a link provided by „C‟, „B‟ and „C‟ are entitled to a share of revenue that is received from „A‟. One such revenue sharing arrangement between two companies which perform the role of „B‟ and „C‟ is subject matter of the present suit. Such links provided by Company C on the website of B, to promote A and several such other websites, are termed in common parlance as widgets1.
4. The Plaintiff is a company which claims to be involved in targeted digital advertising. The Plaintiff avers that it provides codes for its 1 a piece of software that is used on a page of a website to give the user changing information of a particular type in a small area of the computer screen. Definition taken from the Cambridge Dictionary CS (COMM) 1110/2018 Page 2 of 9 proprietary content discovery platform technology, which publishers place on their websites. The Plaintiff recommends articles and advertisements, which are referred to as TABOOLA subsidiary content, to the websites where its content is placed. If any visitor clicks on the said recommended articles and advertisements, provided through Widgets, the visitor is directed away from the publisher‟s website to the website of the third party that paid for the distribution of the recommended Content.
5. In effect, what the Plaintiff provides are specific links to be incorporated in websites and online platforms to enable users to visit the publishers‟ websites whose links are provided. The same are in the nature of sponsored links and advertising links. Every time when a visitor clicks on a particular link, the Plaintiff earns revenue.
6. There was a Revenue Sharing Arrangement entered into between the Plaintiff and the Defendant. The said agreement, which is also termed as `TABOOLA Publisher Agreement‟, was entered into on 10th March, 2016. As per the said agreement, the Defendant was to exclusively display the Plaintiff‟s content on its portal Newshunt, Dailyhunt and was not to engage and/or display the services of any third party content recommendation. If a user to the defendant‟s website clicks on the link provided for by the Plaintiff, the Plaintiff earns revenue which is then shared with the Defendant. The clauses of the said agreement relating to Term and Exclusivity read as under:
"Clause 5 - Term/Termination The term of the Agreement (as defined below) will commence upon the Effective Date and will, unless terminated as set forth herein, continue for a period of eighteen (18) months from the implementation of the CS (COMM) 1110/2018 Page 3 of 9 Widget on all of the [Desktop/Mobile Optimized/Tablet/App] article pages of the Websites ("Initial Term"). During the Initial Term, the Publisher shall have the right to terminate this Agreement effective at the end or the 18th month fallowing the Effective Date by delivering written notice of termination to Taboola no later than the end of the 17 th month following the Effective Date, as the case may be. At the end of the Initial Term, the term of this Agreement will automatically renew for additional, successive twelve (12) months periods (each, a "Renewal Term" and the Initial Term and all Renewal Terms, collectively the "Term"), unless one party notifies the other in writing of its intention not to renew at least thirty (30) days prior to the end of the then- current Term. Publisher or Taboola may terminate this Agreement [(a) for convenience on three (3) days' written notice at any time during the fourteen (14) day period that commences on the day that the Widget is first rendered visible to Visitors on a Website, or (b)] immediately in the event that the other party fails to cure a material breach of this Agreement that is capable of being cured within five (5) days of its receipt of written notice thereof (email shall be sufficient). In addition, in the event of an unauthorized launch of the Widget in violation of Paragraph I of the Terms and Conditions, Taboola will have the option of terminating this Agreement immediately upon written notice.
Clause 6.............
Clause 7. Exclusivity: Publisher agrees that Taboola will be Publisher's exclusive Service provider during the Term and Publisher agrees that it will not engage any third party, including without limitation, any of Tahoola's competitors (e.g., AdBlade, Outbrain, Crowdignite, Gravity, Yahoo! Content Recommendations, Google Content Recommendations, CS (COMM) 1110/2018 Page 4 of 9 Facebook Content Recommendations, Content Ad, YieldMo, Teads, RevContent, ZergNet, Media.net, Plista, Ligatus and BroadSpring) to make recommendations on any websites owned or operated by it, 'including, without limitation the Websites, or to provide a revenue generating content recommendation service that is similar to the Service provided by Taboola. Publisher further agrees that it will not use any services provided by Outbrain (except Publisher shall be permitted to buy traffic from Outbrain), directly or indirectly, at any time during the Term. For clarity, Publisher agrees that any revenue generating content recommendation services provided by a third party prior to the Effective Date will be replaced by Tahoola's Service on or before the Effective Date. It is understood and agreed that the Publisher shall be deemed to be in breach of the foregoing exclusivity clause should it keep the Service on the Websites but divert all of its traffic to a new website."
7. As per the clauses extracted above, the term of the agreement was initially for a period of 18 months with an automatic renewal clause for successive periods of 12 months each thereafter. Either party had the option to terminate the agreement in the manner specified, with 30 days notice, prior to the ending of the current term. The Agreement dated 10th March, 2016, ran through the entire first term of 18 months i.e., till 10th September 2017. There was no termination served during the said first term, hence there was an automatic renewal for a 12 month period, 10th September 2017- 9th September, 2018. However, in December, 2017, the Plaintiff realised that the Defendant was using sponsorship/advertising links/widgets of its competitor `Outbrain‟ on its platforms. This, according to the Plaintiff, was violative of the exclusivity clause 7 extracted herein above. When the CS (COMM) 1110/2018 Page 5 of 9 Plaintiff put the Defendant to notice of the violation of the exclusivity clause, the Defendant wrote an e-mail dated 13th December, 2017 which reads as under:
"Shamair The nature of relationship between us is relevant only till it makes, commercial sense and Taboola widget on Dailyhunt is not making sense at all - We invest heavily behind user acquisition and content and can not let you sell it in the market for pennies anymore- We made $7000 a day from August till December 2016 and currently we were making just $500 a day (93% drop) from Taboola.
It has been highlighted, on multiple occasions, some suggestions were made by Tabodla and implemented by us, but there has-been no positive shift in revenue and-without minimum yield we are not obliged to 'sustain any relationship.
I wrote to Ran in early November to meet up and decide either way to indicate our intent very clearly. We -switched off Taboola widget since last few days and are surprised to see you noticing it now - indicates- the level .of commitment of interest you have for Dailyhunt.
Anyway, you are to decide the course of action but we are dear in our mind that we can not continue with the current arrangement-since it makes no commercial sense unless you have a compelling revenue guarantee offer to make, similar to our arrangement between August to December 2016 Let me know Rajeev"
8. From the above email it is clear that the Defendant no longer wished to continue the arrangement with the Plaintiff. It is the Plaintiff‟s case that after this email was sent, the widgets of the Plaintiff were put back on the Defendant‟s platform, which is however, seriously disputed by the CS (COMM) 1110/2018 Page 6 of 9 Defendant. No printout of the Plaintiff‟s widgets/links posted on the Defendant‟s website after 13th December, 2017, has been placed on record by the Plaintiff to support its stand.
9. There is no doubt that advertising with Widgets, is one of the popular forms of advertising on the internet and enormous revenue depends on the exclusivity clauses for such promotion. The exclusivity clause in the present case is quite explicit in terms of the nature of exclusivity and it also identifies the competitors of the Plaintiff against whom exclusivity is sought. Such an exclusivity clause would be enforceable depending on the facts.
10. The clause prescribing the Term is clear, that the agreement is terminable with 30 days notice prior to the renewed term. A terminable contract cannot be specifically enforced. The injunction sought for is in effect a relief of specific performance. While the exclusivity obligation could have been enforced if the agreement was in force, the fundamental question that arises is as to whether the agreement itself is in force. Plaintiff has approached this Court after the second alleged renewal term also expired. The present suit was first listed on 12 th September, 2018, which is even beyond the second term, i.e., the 12 month renewal period of the agreement. Even if the agreement is deemed to have been renewed for 12 months from 10th September, 2017, it would have come to an end on 9th September, 2018. The email dated 13th December, 2017 may not have been strictly in accordance with clause 3, however, in any event it was prior to 9 th September, 2018. So at best, if the notice of the Defendant is taken to be a notice of termination, the second renewal term would have still come to an end on 9th September, 2018. Between December, 2017 when the email was written and September, 2018 which could be the second term of the CS (COMM) 1110/2018 Page 7 of 9 agreement, there being no evidence on record to show that the Plaintiff‟s widgets/links were actually carried on the Defendant‟s website, and there being no further evidence that there was an automatic renewal after 9 th September, 2018, ad interim injunction sought is not liable to be granted. Thus, at best, the claim of the Plaintiff would only be a claim for damages between 12th January, 2018 to 9th September, 2018, which would be adjudicated after trial of the suit.
11. The Plaintiff seeks two injunctions viz., i) that the Defendant ought to be directed to carry its widgets/links on its website and ii) that the widgets/links of competitors should not be carried. It has been several months since the Defendant has removed the Plaintiff‟s widgets/links. The Plaintiff has not approached the Court immediately upon receipt of the email dated 13th December, 2017. At best the Plaintiff‟s case can be that in addition to the 18 months initial term, the agreement was renewed for a further term of 12 months. But even the said term has expired and clearly the Defendant is not interested in continuing the relationship. The term of the agreement between the parties having, prima facie, come to an end, the Plaintiff is not entitled to either relief sought.
12. The above observations are prima facie in nature and shall not bind the adjudication of the suit. Interim relief as prayed for, is thus, not liable to be granted. I.A. is dismissed.
CS (COMM) 1110/2018
13. Written statement to the plaint shall be positively filed within 30 days. Along with the written statement, the Defendant shall also file an affidavit of admission/denial of the documents of the Plaintiff, without which the written statement shall not be taken on record.
CS (COMM) 1110/2018 Page 8 of 914. Liberty is given to the Plaintiff to file a replication within 30 days of the receipt of the written statement. Along with the replication, if any, filed by the Plaintiff, an affidavit of admission/denial of documents of the Defendant, be filed by the Plaintiff, without which the replication shall not be taken on record.
15. If any of the parties wish to seek inspection of any documents, the same shall be sought and given within the timelines.
16. List before the Joint Registrar for marking of exhibits on 27 th November, 2018. It is made clear that any party unjustifiably denying documents would be liable to be burdened with costs.
17. List before the Court on 17th December, 2018 for case management hearing.
PRATHIBA M. SINGH JUDGE SEPTEMBER 17, 2018/dk CS (COMM) 1110/2018 Page 9 of 9