The hybrid marketplace and counterfeiting

If the user of a hybrid marketplace may have the impression that it markets counterfeit products itself, it may then be prosecuted for counterfeiting.

Two questions were referred to the Court of Justice of the European Union for a preliminary ruling in two cases between Christian Louboutin and Amazon.

According to Mr. Louboutin, on Amazon regularly appear sales ads relating to shoes with red soles that concern products whose circulation has not been the subject of his consent.

Since the 1990s, Mr. Louboutin has added to his high heels an outsole in a red colour corresponding to the Pantone colour chart code 18–1663TP. This color, applied to the sole of a high-heeled shoe, is registered as a brand Benelux under the Benelux Convention on Intellectual Property (Trade Marks and Designs) of 25 February 2005, signed in The Hague by the Kingdom of Belgium, the Grand Duchy of Luxembourg and the Kingdom of the Netherlands. The trade mark has also been registered since 10 May 2016 as a European Union trade mark.

On 19 September 2019, Mr Louboutin therefore brought an action for infringement of this trademark against Amazon before the District Court of Luxembourg, requesting that Amazon be held liable for the infringement of the trademark in question, that it cease to use, in the course of trade, signs identical to this trademark, under penalty of a penalty payment, and that it be ordered to pay damages for the damage allegedly caused by these uses.

On 4 October 2019, Mr Louboutin also brought an action for infringement before the Tribunal de l ‘entreprise francophone de Bruxelles.

The two courts submitted two questions for a preliminary ruling concerning the application of Article 9 §2 of Regulation 2017/1001 on the European Union trade mark, which provides that:

“2. Without prejudice to the rights of holders acquired before the filing date or priority date of a European Union trade mark, the proprietor of that European Union trade mark shall be entitled to prohibit any third party, in the absence of his consent, from making use in the course of trade of a sign for goods or services where:

(a) that sign is identical to the European Union trade mark and is used for goods or services identical to those for which the European Union trade mark is registered; […]’

The Court of Luxembourg requested:

– If the use of a sign identical to a trademark in an advertisement displayed on a website is attributable to its operator (in this case Amazon) due to the mixing on this site of the operator’s own offers and those of third-party sellers, by the integration of these advertisements in the operator’s own commercial communication;

– If the use of a sign identical to a trademark in an advertisement displayed on a for online sale is, in principle, attributable to its operator if, in the perception of a reasonably well-informed and reasonably observant Internet user, this operator has played an active role in the development of this advertising or that the latter is perceived as part of this operator’s own commercial communication.

The Court of Brussels also asked whether the dispatch, without the consent of the proprietor of a trademark, to the final consumer of a product provided with a sign identical to the trademark, constitutes a use attributable to the sender only if the latter has effective knowledge of the affixing of this sign on this product.

The Court of Justice recalls that the concept of “making use”, within the meaning of Article 9 (2) of Regulation 2017/1001, is not defined by this Regulation, and that according to the settled case law of the Court, the proprietor of the trade mark is entitled to prohibit the use, without his consent, of a sign identical to the said trade mark by a third party, when such use takes place in the course of trade, is made for goods or services identical to those for which the trade mark is registered, and infringes or is likely to infringe the functions of the trade mark, including in particular the essential function of the trade mark which is to guarantee to consumers the origin of the product or service.

It recalls that its usual meaning, the expression “make use” implies active behaviour and direct or indirect control of the act constituting the use.

The Court had been able to consider in a previous case, in the case of the operator of an online marketplace, that the use of signs identical or similar to trademarks, in offers for sale displayed on a market place, is made only by the selling customers of this operator and not by the latter, since the latter does not use this sign in the context of its own commercial communication (12 July 2011, L’Oréal and Others, C 324/09, 2 April 2020, Coty Germany, C 567/18). Indeed, the mere fact of creating the technical conditions necessary for the use of a sign and of being remunerated for this service does not mean that the person who provides this service makes use of the said sign himself, even if he acts in his own economic interest.

But in these cases the Court was not asked about the impact of the fact that the online sales website in question integrated, in addition to the online marketplace, offers for sale from the operator of this site itself. While in the present cases the referring courts are questioning this impact.

The Court therefore answers the questions referred for a preliminary ruling to this effect:

“the operator of an online sales website integrating, in addition to its own offers for sale, an online marketplace is likely to be considered as making use of a sign identical to another European Union trade mark for goods identical to those for which this trade mark is registered, when third-party sellers offer for sale, on this market place, without the consent of the owner of the said trade mark, such goods bearing this sign, if a reasonably informed and attentive user of this site establishes a link between the services of this operator and the sign in question, which is particularly the case when, taking into account all the elements characterizing the situation in question, such a user could have the impression that it is said operator who markets himself, in his name and on his own behalf, the products bearing said sign.

Relevant in this regard are the facts that this operator uses a uniform method of presentation of the offers published on its website, displaying at the same time the ads relating to the products it sells in its name and on its own behalf and those relating to products offered by third-party sellers on MARKETPLACE, that it displays its own renowned distributor logo on all these advertisements and that it offers third-party sellers, in the context of the marketing of the products bearing the sign in question, additional services consisting in particular of the storage and shipping of these products. “

Under these conditions, a hybrid marketplace could be held liable for acts of infringement when third-party sellers offer infringing products for sale on its site, if the user can make the link between the site and the product.

Thus, marketplace operators will have to pay particular attention to compliance with trademark law on their platforms, including with regard to the advertisements they broadcast, at the risk of being condemned for counterfeiting.

This decision should be read in the context of the entry into force of the Digital Services Act in November 2023, under which marketplaces will have specific obligations in terms of controlling illegal content.

CJEU 22 December 2022 C-148/21 and 184/21 Louboutin/Amazon