The Court of Justice of the European Union (CJEU) has in the past been reluctant to find online marketplace operators liable for trade mark infringements as a result of third parties offering products for sale on those operators’ platforms. However, we may have seen a pivot in their approach owing to a preliminary ruling that was heard in December 2022, as between luxury retail brand Christian Louboutin and one of the world’s largest online retail platforms, Amazon. The ruling sends a clear message to online marketplace operators that they cannot simply bury their heads in the sand when it comes to the activities of their hosted retailers.
The case concerned a third-party retailer advertising the sale of shoes bearing the distinctive red sole that is well-known to the be the mark of luxury brand, Christian Louboutin. Alleging its trade mark rights were infringed, Louboutin sought to enforce its IP rights against Amazon by relying upon Article 9.2 of the European Union Trade Mark Regulation (EUTMR), which states that any third party using a trade mark should be authorised by the rights holder, to avoid public confusion and trade mark infringement.
Issues submitted for a preliminary ruling
The issue submitted to the CJEU for preliminary ruling by local courts in Belgium and Luxembourg hinged upon whether an online retail platform (Amazon) as an intermediary could be held directly responsible for third-party trade mark infringement pursuant to Article 9.2 of the EUTMR. Specifically, Louboutin claimed that while Amazon was not directly selling the infringing sign, it had nonetheless infringed its trade mark by:
- displaying on its platform the advertisement for the sale of shoes infringing the Louboutin trade mark (crucially, in the same way it advertised the sale of its own products), and
- handling the infringing products through stocking them and organising and facilitating delivery to customers.
Prior to the decision of the CJEU, the Advocate General gave non-binding guidance to the CJEU, stating that Amazon should not be held liable. This was in line with previous case law which provided that online marketplace operators could not be directly liable for trade mark infringement in respect of products offered by third parties.
The court’s decision
Contrary to the guidance of the Advocate General, the CJEU held that Amazon could in theory be liable for third-party infringement of Louboutin’s trade mark in circumstances in which, in the mind of a well-informed and reasonably observant consumer, a link is formed between the infringing sign and the services provided by Amazon in facilitating that sale. This is on the grounds that “a well-informed and reasonably observant user might believe that the operator is marketing, in its own name and on its own account, the goods for which the sign in question is being used.” This change in approach highlights the court’s willingness to forge a way for trade mark rights holders to obtain redress against online marketplaces who have turned a blind eye to third party retailers selling infringing products on their platforms.
The key issue therefore is whether the average consumer is able to make a distinction between the online retailer’s own products (ie Amazon’s own branded products) and those advertised by third parties. This problem does not arise on platforms such as eBay on which products are offered only by third-party retailers.
Impact on brand owners
This decision will be welcomed by brand owners globally.
From a practical perspective, if a brand is seeking to hold an online retail platform liable for third party trade mark infringement, what should it be looking for?
The principal consideration is perhaps the platform’s method of presenting advertisements on its platforms. Being able to identify the origin of each advert is arguably more crucial now than before this decision. If it is difficult for the average consumer to distinguish between offers originating, on the one hand, from the operator of the platform and, on the other hand, from third party sellers active on the platform, then the brand owner may have a strong case against the platform.
A second consideration is the nature and scope of the services provided by the online retail platform. The CJEU suggested, for example, that services such as dealing with the questions of buyers relating to the relevant goods or to the storage, shipping and management of returns are likely to give the impression to the average buyer that those goods are being marketed by the online marketplace operator.
It’s important to note that this case made no finding of infringement against Amazon. The matter will be referred back to the Belgian and Luxembourg courts which will be guided by the CJEU’s findings. It is also worth noting that, following Brexit, this decision is not binding in the UK. However, it is likely to be influential on future decisions in the UK. Furthermore, there is no doubt that this case is a boost for brand owners seeking to assert their rights against online marketplaces which are selling products which infringe their intellectual property rights.
This publication is a general summary of the law as at the date of publication. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, March 2023