The Court of Justice of the European Union (“CJEU”) has held that online sales websites like Amazon that operate a “hybrid” business model (offering both the operator’s own sales as well as a marketplace for third parties) may be liable for trade mark infringement where a third party sells counterfeit goods on its platform.
The counterfeit goods in question were fake Louboutin shoes, which were being sold by third parties on Amazon’s marketplace. Keen to stop this, Louboutin sued Amazon directly for trade mark infringement in both the Belgian and Luxembourg courts. The claim was brought on the basis of “double identity” (i.e. the use of an identical sign for identical goods and services) under Article 9(2) of the EU Trade Mark Regulation. In its defence, Amazon sought to rely on previous case law to argue that it wasn’t “using” Louboutin’s trade mark and therefore couldn’t be liable for trade mark infringement. Seeking clarification of the position at law, both the Belgian and Luxembourg courts referred various questions to the CJEU.
The questions referred
The questions were long and detailed but, in a nutshell, asked the following:
- Can the operator of an online sales website like Amazon, which offers its own goods for sale alongside those of third parties, be regarded as itself using a sign where third-party sellers offer infringing goods for sale under that sign on the operator’s marketplace? What features of the operator’s website are relevant to that assessment?
- Should the perception of the users of the website in question be taken into account?
- Does it make a difference if the operator offers additional services to its third party sellers, such as providing support in presenting adverts, stocking and shipping the goods offered, and assisting with the management of returns?
The referring courts also pointed to the following specific features of the Amazon website and business for consideration: Amazon uses a uniform method of presenting the offers published on its website; Amazon displays adverts for third party products and its own products together, both on the Amazon website and on external websites; Amazon displays its own logo on all of those adverts; and Amazon describes products for sale as ‘best sellers’, ‘most sought after’ or ‘most popular’ without distinction as to origin.
Advocate General – Amazon not using
Advocate General Szpunar handed down his opinion in June last year and concluded that Amazon were not using the signs in question. He confirmed that “use” in this context requires the website operator at the very least to have used the sign in its own commercial communication. That is to be assessed through the eyes of the reasonably well-informed and reasonably observant internet user and is met when that user establishes a link between the operator and the sign in question. Applying this to the facts in this case, he didn’t believe that such a link would be established - users are aware that Amazon advertises goods for sale by Amazon itself and by third parties; and those adverts always specify who the seller is. As such, the Advocate General couldn’t see anything in Amazon’s activities that he felt was sufficient to distinguish this case from that of previous decisions of the CJEU.
CJEU – Amazon may be using
Whilst the CJEU agreed with the Advocate General’s test of establishing a link, it disagreed with his conclusion. It said that adverts displayed on an online sales website operating a hybrid business model like Amazon, must be presented in a way that enables users to easily distinguish between offers originating from the operator of the site and those originating from third parties. The features pointed to by the referring courts (including uniform methods of presenting offers, displaying adverts from third parties and its own products together, and placing its own logo on all of those adverts) were liable to make a clear distinction difficult and may give the informed user the impression that it is in fact the operator that is marketing the relevant goods. This is exacerbated where the operator also offers third parties various additional services (such as storage and dispatch of products) or describes products for sale as ‘best sellers’, ‘most sought after’ or ‘most popular’ without distinction as to origin. So the CJEU found that the relevant circumstances might establish the necessary link and that Amazon may therefore be using the Louboutin signs.
Whether or not Amazon is in fact using Louboutin’s signs is a question for the referring courts to determine. Whilst we await the outcome of the national courts’ decisions, this judgment makes it clear that online intermediaries are not immune from liability for trade mark infringement where they allow third parties to sell infringing products on their platform (particularly where that platform adopts a hybrid business model). Whilst this decision is not binding on UK courts, it will be persuasive, particularly in light of the recent decisions of the UK Court of Appeal in Lifestyle Equities v Amazon (where Amazon was found to have infringed Lifestyle Equities’ UK and EU trade marks – see our blog) and the High Court in Montres Breguet v Samsung (where Samsung was found liable for trade mark infringement when certain third party digital watch face apps were offered for download to Samsung smartwatches from its Samsung Galaxy app store). Whilst we understand that both of those UK decisions are going to appeal, all of these cases appear to be suggestive of a wider move towards holding larger tech companies to account - an intention that has also been demonstrated in recent content-focussed legislation from the UK and the EU (see e.g. the Online Harms Bill (and our recent post on it) and Article 17 of the Digital Single Markets Directive).
For brand owners on the other hand, this will be seen as a very positive development, giving them a second avenue to tackle infringement and a new target with (likely) deeper pockets.
With thanks to Param Khera for his help in pulling this post together.