Can EU Operators of Online Marketplaces be Held Liable for Trademark Infringement?
In Short
The Situation: The Court of Justice of the European Union ("CJEU") recently ruled that operators of online marketplaces may be held directly liable for trademark infringement in a context where third-party sellers place infringing goods on their marketplace and the user of such a marketplace establishes a link between the services of the marketplace operator and the sign at issue.
The Background: In parallel proceedings before Luxembourg and Brussels courts, a famous French luxury designer brought actions against a well-known operator, alleging infringement of its trademark. The two courts referred the matter to the CJEU to clarify whether an operator of an online marketplace could be held liable for trademark infringement by advertising and/or delivering infringing goods offered on the site by a third-party retailer.
Looking ahead: This decision follows the recent trend of imposing more stringent responsibilities on online marketplaces as to placement and advertising of illicit goods, in particular in Europe through the adoption of the Digital Services Act. This signals an increased opportunity for trademark proprietors to protect their rights online and an increased necessity for marketplace operators to be watchful of third-party goods offered through their websites.
CJEU Decision
In joint cases C-148/21 and C-184/21, the CJEU was asked whether the operator of an online marketplace on which a third-party offers goods bearing a sign identical to a third-party EU trademark for identical goods is 'using' such sign under the EU Trademark Regulation 2017/1001 ("EU Trademark Regulation").
Article 9(2) of the EU Trademark Regulation allows trademark proprietors to prevent third parties from 'using' a registered trademark to commercialize or advertise identical or similar goods. Third-parties selling or advertising infringing goods on online marketplaces are clearly 'using' the registered trademark and can be held liable for trademark infringement. Less clear, however, is whether the online marketplaces are also 'using' the registered trademark and can be held liable for trademark infringement.
In 2020, the CJEU had ruled that online marketplace operators were not deemed to be 'using' a registered trademark in a context where they merely created technical conditions necessary for the use of the registered trademark (including by allowing third-party sellers to advertise goods on their marketplace or by offering storage services) (CJEU, 2 April 2020, C-567/18). However, in both that case and the earlier high profile case of L'Oréal v eBay (CJEU July 12, 2011, C‑324/09), the courts indicated that liability could arise where the online market operator plays a more active role in the promotion, offering for sale and/or putting on the market of the infringing third-party retailer's goods.
In the present case, it was notably contended that the operator grouped advertisements of third-party sellers together with its own advertisements and shipped the third-party sellers' goods with the operator-labeled packages.
In its December 22, 2022 decision, the CJEU ruled that the operator of an online marketplace may be 'using' a registered trademark and liable under Article 9(2) of the EU Trademark Regulation if a well-informed and reasonably observant user of that website establishes a link between the services of the operator and the sign used by the third-party seller. The CJEU specified that this is particularly the case where the user forms the impression that the marketplace operator itself is marketing the goods in question in its own name and on its own account. The CJEU highlighted the following factors as relevant for establishing such a link:
- The use of a uniform method of presenting the offers displayed on the marketplace operator's website by grouping together all advertisements, regardless of whether the goods are sold by the operator in its own name or by third-party sellers;
- The placement of the marketplace operator's own logo as a renowned distributor on all the advertisements, regardless of whether the goods are sold by the operator in its own name or by third-party sellers; and
- the offer, by the marketplace operator, of additional services to third-party sellers, such as the storing and shipping of goods.
The CJEU ultimately left it up to the referring courts to determine the operator's liability. Such decision, however, provides guidance on conditions under which online marketplaces may be held liable for trademark infringement. This follows the recent trend in Europe to put more stringent obligations on online marketplaces to monitor third-party content displayed on their websites, including through the recent adoption of the Digital Services Act.
In the UK, given that: (i) the Digital Services Act was not implemented; and (ii) the Online Safety Bill currently being debated by Parliament excludes IP liability; there is demand by rights holders for new legislation to be enacted specifically to address this issue of the liability of online platforms. However, based on previous relevant CJEU decisions that form part of UK law (CJEU, April 2, 2020, Coty Germany, C‑567/18, EU:C:2020:267; CJEU, July 12, 2011, L’Oréal v eBay, C‑324/09, EU:C:2011:474), it is clear that these cases will be decided very much on their facts and, in particular, whether the online marketplace operator plays an active, or a merely passive, role in marketing and enabling the sale of the infringing third-party goods.
Two Key Takeaways
- The CJEU opens a path for trademark proprietors to, under certain conditions, take actions directly against marketplace operators for third-party infringing goods.
- Operators of an online sales website incorporating an online marketplace, notably the ones operating in the EU and UK, should consider reviewing the way third-party sellers' goods are displayed on their website and delivered to consumers.
