February 14, 2023
Direct liability of online hybrid marketplaces: the shoe is now on the other foot
Direct liability of online hybrid marketplaces: the shoe is now on the other foot

Before we begin, it's important to set out that it is common practice for national courts to refer questions to the Courts of Justice of the EU on the interpretation of EU law which would be in the general interest of a uniform application of EU law in the Member States. 


Direct liability of ‘hybrid’ marketplaces

The CJEU has ruled on various questions regarding whether, and under what conditions, the operator of an online sales website may be held directly liable for the infringement of the rights of trade mark proprietors on its platform under Article 9(2) of the EU Trade Mark Regulation 2017/1001. The question of direct liability applied to ‘hybrid’ marketplaces is a complicated one in as much as such a platform combines its own retail business with the provision of a marketplace for third party sellers.

In Louboutin v Amazon (joint cases C-148/21 and C-184/21), this was the question the CJEU was tasked with. Christian Louboutin had brought an infringement claim to the Luxembourg and Belgium courts against Amazon for advertising the sale of fake red-soled Louboutin shoes on its platform. It was, however, unclear whether Amazon could be found liable for the display of infringing goods.  This case offered the Court the opportunity to clarify the concept of ‘use’.


The Advocate General’s decision

In its decision of June 2022, the Advocate General held that use of a sign by a hybrid marketplace presupposes, ‘at the very least, that that third party uses the sign in its own commercial communication’. Under these circumstances, the AG had to decide whether the internet use made a specific link between the operator of an online sales website and the sign at issue. Despite the fact that Amazon’s advertisements and third party sellers’ adverts are presented in a uniform and indistinguishable manner, the AG did not consider the reasonably well-informed and reasonably observant user to perceive the TM at issue as an integral part of the operator’s commercial communication.  He concluded that in these circumstances, the operator of an online hybrid marketplace did not use the sign at issue.


The Grand Chamber’s overturning of the decision on appeal 

On appeal, the Grand Chamber reversed the AG’s findings and found that Amazon can be held liable for third party advertisements that infringe a third party's trade mark if the average consumer would be confused as to the origin of the advert (i.e. if a reasonably informed and observant user forms a link between the services provided by the marketplace operator and the trade mark). In this instance, a reasonably observant and well informed user would find it difficult to distinguish the origin of the advertisement and be under the impression that the goods are being marketed by an operator, in its own name and on its own behalf, and may thus establish the requisite link. 


Conclusion and take-away points

The implications of this judgment may have far reaching consequences for operators of online hybrid marketplaces. However, it will be up to the two referring courts to draw conclusions from the CJEU’s ruling as the CJEU did not rule on whether Amazon was itself using the sign at issue to infringe under Article 9(2) EUTMR.

A notable point is that the assessment of whether a reasonably observant and well informed user would believe that the online operator is marketing, in its own name and on its own account, the goods of the sign at issue is being used is open to interpretation given that the perception of internet users is relevant in determining whether there is ‘use’.  

This decision by the Grand Chamber is positive for brand owners in so far as it provides them with another avenue to claim infringement of their rights on online marketplace platforms. Establishing liability on the part of the platform provider can provide more efficient remedies than seeking to establish liability with the third party seller. This judgment is an incentive for operators of hybrid online marketplaces such as Amazon to be more proactive in removing counterfeit goods from the marketplace.

Fashion /  Trademarks /  Advertising

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