In March 2021, the District Court of Luxembourg referred to the Court of Justice of the European Union (hereinafter, the “CJEU”) two matters concerning the liability of online marketplaces for third-party listings of trademark infringing products. Notably, the CJEU was called upon to decide whether, under Art. 9(2) of the EU Trademark Regulation (Reg. EU No. 1001/2017), an online marketplace can be held directly liable if it promotes or ships third-party counterfeit items. It seems appropriate to elaborate on a few additional considerations in light of recent EU and national case law.
The referral: An opportunity to reverse the trend in online marketplace direct liability for trademark infringement?
The referral is the result of proceedings that Christian Louboutin initiated over the promotion, stocking, shipment, and delivery of third-party counterfeit shoes carried out by Amazon through its Fulfillment by Amazon (“FBA”) program.
In March 2019, Christian Louboutin claimed that Amazon infringed his trademark before the Brussels Companies Court. This court held that the ads for counterfeit goods displayed on Amazon’s platform and the subsequent shipment of those goods constituted trademark infringement.
However, in 2020 the Court of Appeals of Brussels reversed this decision, holding that Amazon was not liable for ads related to third-party products, but would incur liability for any ad concerning its own products.
Subsequently, Christian Louboutin brought his claims before the referring judge, who raised two questions of the utmost importance. By answering those questions, the CJEU (hopefully) will finally settle discrepancies between the contrasting answers provided by the national courts with regard to the direct liability of online marketplaces for third-party listings of trademark infringing products. Moreover, that referral might represent an opportunity for the CJEU to address the issue of direct liability of an online marketplace for trademark infringement, potentially reversing the current trend.
EU case law: Coty and L’Oréal
CJEU case law has never affirmed the direct liability of online marketplaces for third-party trademark infringement.
In this regard, the ruling issued by the CJEU in Case C-567/18 (Coty v. Amazon) is noteworthy. Notably, based on the facts of that case, the court held that since Amazon’s conduct was limited to the storage of goods on behalf of third-party infringers, without knowing that such goods were counterfeit nor aiming to offer them or put them on the market, Amazon was not directly liable for trademark infringement under European law (please refer to our previous article here).
However, the opinion delivered by AG Campos in Coty was in sharp contrast with the reasoning followed by the CJEU in its ruling. What is relevant here is that the AG noted that through the FBI program, Amazon did not just stock goods, but also engaged in a wider spectrum of activities, including the delivery and promotion of the stocked goods. Thus, according to the AG, Amazon played an active role and, because of this, the CJEU should have held it directly liable for trademark infringement.
The referring judge in Louboutin also mentioned the ruling issued by the CJEU on July 12, 2011 in Case C-326/09 (L’Oréal and Others v. eBay). In this decision, the court held that ads placed on online marketplaces by third-party sellers do not constitute “use” of the trademark by the operator of the marketplace, as long as they are not part of the operator’s commercial communication. However, the referring judge noted that this ruling is not applicable to Louboutin, given that it concerns the platform eBay, which displays ads to its users as mere intermediary and not as seller or distributor, unlike Amazon.
Italian case law: Shiseido
In the context of an urgent proceeding initiated by Shiseido, the Court of Milan ordered Amazon to cease and desist from selling and advertising cosmetic and perfumery products labeled “Narciso Rodriguez” and “Dolce&Gabbana.”[1] According to the court, as Amazon was not part of the selective distribution networks of those brands, it damaged their prestige, image, and reputation.
Relevant here is that the court classified Amazon as an active hosting provider, given that it took part in the sale of the litigated products both as direct seller and as intermediary. However, even when it acted as intermediary, Amazon played an active role in stocking, shipping, and advertising the products unlawfully listed by third parties, while also managing the customer service concerning these products on their behalf. Thereby, according to the national court, consumers were induced to believe that Amazon and Shiseido were somehow engaged in a commercial relationship, since under par. 4 of the Amazon Conditions of Use, “trademarks not owned by Amazon that appear in any Amazon Service are the property of their respective owners, who may or may not be affiliated with, connected to, or sponsored by Amazon.”
In support of its decision, the Court of Milan referred to the illustrative criteria listed by the Italian Supreme Court to assess whether a hosting provider is active or passive.[2] Notably, the courts should consider “the activities of filtering, selection, indexing, organization, cataloging, aggregation, evaluation, use, modification, extraction, or promotion of content, performed through entrepreneurial management of the service, as well as by adopting techniques for assessing the behavior of users to increase their loyalty: conduct that has, in essence, the effect of completing and enriching in a non-passive way the content provided by undetermined users.”
Therefore, in Shiseido, the Court of Milan deemed Amazon an active hosting provider, but also acknowledged that the eventual active role of such an online marketplace should be assessed by means of a case-by-case analysis. Indeed, the court referred to the judgment issued by the CJEU in Coty, reiterating that the stocking of trademark infringing products on its own is not sufficient to place an online marketplace such as Amazon in the active hosting providers category.
Final remarks
The direct liability of online marketplaces for trademark infringing activities is a hot topic, and one that requires special attention from both European and national courts. Therefore, the developments in Louboutin shall be watched closely, as the ruling of the CJEU on this matter may change the liability framework currently in place for online marketplaces.
Moreover, and foremost, Amazon is proving to be particularly focused on defeating counterfeiting on its platforms by means of different strategies. As a matter fact, in 2020 Amazon blocked more than 10 billion suspected bad listings before they were published on its platform, adopted several powerful tools to help brands curb counterfeiting, and established a new Counterfeit Crimes Unit.[3]
It seems that the winds of change are blowing toward a greater sense of responsibility (and direct liability exposure) for online marketplaces when it comes to trademark infringement activities carried out by third parties.
[1] Court of Milan, order of October 19, 2020.
[2] Court of Cassation, decision of March 19, 2019, No. 7708.
[3] Amazon Brand Protection Report, 2020.
