The Authors' Take - Liability for trade mark infringement of online marketplaces in Europe: are they 'caught in the middle'?

Liability for trade mark infringement of online marketplaces in Europe: are they 'caught in the middle'?

by Carina Gommers and Eva De Pauw 

Online marketplaces reach potential customers all over the world, but can also be used for goods infringing intellectual property rights. Even when online marketplace operators do not themselves participate in such transactions, they do draw economic benefit therefrom, e.g. by charging a fee per transaction. So, to what extent can they be held liable for the sale of infringing goods through their platforms? 

Whereas such operators qualify as providers of information society services in the sense of the E-Commerce Directive, they are also intermediaries in the sense of Article 11 of the IP Enforcement Directive. And like any economic operator, they must abide by the trade mark laws and other legislation. 

The interpretation of these distinct sets of rules has given rise to a number of decisions of the Court of Justice of the European Union (CJEU). Certain aspects seem to have been settled by now, but many issues remain open. Absent contributory infringement in EU trade mark law, one of the most pressing questions is if, and to what extent online marketplaces can be held liable for direct trade mark infringement. Another question of concern is whether injunctions can be imposed requiring them to take preventive measures without running afoul of the prohibition of imposing general monitoring obligations as provided for in Article 15 of the E-Commerce Directive. The article focuses on these two questions and also discusses the limits of the liability (‘hosting’) exemption of Article 14 of the E-Commerce Directive. 

The Coty/Amazon case (C-567/18), currently pending before the CJEU, might shed some light over the first question, namely the liability for direct trade mark infringement of online marketplace operators, especially when they engage in additional services like they often do nowadays. Such additional services can include supplying the goods to buyers, assisting sellers in promoting the sale of their goods. 

The teaching to be expected from the Coty/Amazon judgment will largely depend on how the CJEU will interpret the preliminary referral. If it sticks to the facts as presented to it by the German Supreme Court, then it will probably not go as far in its analysis as did the Advocate General, who opened the door to direct liability for trade mark infringement of online marketplace operators, and by extension, online intermediaries in general. Hence, further guidance might be on its way … or not just yet. 

In any event, a comprehensive ‘toolbox’ will probably not be available in the near future. In the meanwhile, to deal with that, the authors think that several considerations made in the Google Adwords and L’Oréal/eBay cases (C-238/08 and C-324/09, respectively) are still relevant today. Liability for direct trademark infringement should not be accepted too soon, at least if online marketplace operators clearly communicate their role to the consumer. After all, establishing a direct trade mark infringement requires an adverse effect on one of the functions of the trade mark. At least as far as the essential origin function is concerned, no impairment thereof can be presumed if the advertising is not misleading as to the nature of the operator. As stated by the Advocate General in L’Oréal/eBay, in 2011, and even more so today, consumers are used to the existence of various intermediary economic activities. 

Of course trade mark owners should not be left without ammunition. An equitable balance between the interests of online marketplace operators and the interests of trade mark owners could be found by imposing higher monitoring duties on online marketplace operators assuming an ‘active’ role. Where such ‘active’ intermediaries cannot benefit from the hosting exemption, they can be liable for tort if they have not been sufficiently diligent and a causal link exists between their lack of diligence and the damage suffered. Requiring them to display a higher degree of diligence could therefore solve a lot. It would make sense to have a proactive monitoring duty the extent this is proportionate to the degree of their involvement. 

The article also discusses some interesting examples of preventive measures imposed on operators of online marketplaces or social media by judges in The Netherlands, Belgium and Germany, as well as the CJEU’s ruling in Eva Glawischnig-Piesczek/Facebook (C-18/18). 

In this area – the prevention of infringements – an important challenge for online marketplace operators lies in setting up more performant technologies to reveal potential trade mark infringement by their customers/vendors. Automated identification and/or enforcement and voluntary, non-judicial takedown mechanisms established between online intermediaries and IP rights owners are bound to become increasingly important.

[This is an Authors' Take post, which provides readers with an insight into current IP scholarship, featuring preliminary comments and thoughts from authors of articles accepted for publication in forthcoming issues of the Journal of Intellectual Property Law & Practice (OUP). The full text of this contribution will be made available on Advance Access soon]