The Advocate General delivered an opinion on 2 June 2022 on two joined cases before the Court of Justice of the European Union (CJEU), originating from the national courts of Belgium and Luxembourg, involving Amazon and Christian Louboutin regarding the liability of online marketplaces when selling products that allegedly infringe the intellectual property rights of others. It should be remembered that the opinion of the Advocate General is just that, an opinion and not a final decision, but the CJEU generally follows the reasoning of the Advocate General in around 70% of its cases.
Importance for retailers and those selling in online marketplaces
The cases are important for retailers and brand owners as they will follow a series of cases determining whether an online marketplace can be held liable for third-party infringement on their platforms. These cases often concern the degree of active involvement of the online marketplace in the sale of these products and whether it can be considered to have used the marks concerned. The Amazon/Christian Louboutin cases relate more specifically to the situation where a hybrid service is provided by the online marketplace that provides logistics and fulfillment services to the marketer, beyond a simple product listing. Does such use push the online market over the line on the issue of primary infringement?
Joint business is important for all online marketplaces that sell third-party products, which provide some form of support beyond simply hosting a range of products for a third party, which has generally been considered not to be a primary infringement in the past, if sufficient takedown procedures are in place, as well as to intellectual property owners who wish to stop the potential infringement of their rights by taking action against the marketplace itself, a business often easier than the seller himself, who can often be difficult to pin down.
Christian Louboutin brought an action against Amazon for having proposed the online sale of shoes with red soles, the mark “red sole” having been marketed by Christian Louboutinand where the affected products are alleged to have infringed Christian Louboutin Intellectual Property Rights.
The Belgian and Luxembourg national courts submitted to the CJEU the following questions in general terms and on which the Advocate General gave his opinion on June 2:
- The operator of a hybrid marketplace, such as Amazonbe held directly liable for infringement as opposed to secondary infringement, where third party or vendor listings constitute trademark infringement?
- Does consumers’ perception of the role of a market in advertising and distribution influence the decision whether or not to use a brand?
- Should delivery to consumers by an online marketplace be considered as use of the mark?
The liability of online platforms in the event of trademark infringement by third parties is a recurring problem in the digital market. Indeed, the Advocate General in his Opinion noted that it is often easier to challenge the online marketplace than the individual marketer, which has been one of the drivers of the actions taken against the marketplace online market. However, if this were to become common practice, the capacity of online marketplaces could be jeopardized if too heavy obligations were imposed on them in the fight against counterfeits and counterfeits. Essentially, courts must observe a fine line in this respect and, generally speaking, EU and UK case law has held that online marketplaces are not directly liable for the infringing activities of their merchants, provided that they play no active role in the counterfeiting activity and that they have a sufficient withdrawal. procedures in place to combat any counterfeiting activity brought to its attention.
Generally, an online marketplace must have actual knowledge of illegal activity or information to be held liable or must be aware of the facts or circumstances from which illegal activity or information is apparent and also not acting on that knowledge. Thus, the mere existence of an infringement on the platform of an online marketplace is not sufficient for the online marketplace to be held liable for the infringement.
Furthermore, a key consideration in these cases has often been whether the online marketplace can be said to have used the infringing mark in question. Article 9(3) of the EU Trademark Regulation details the situations which would be considered as use of the mark, including “the affixing of the sign to the goods or to the packaging of such goods” or ‘offering the products, placing them on the market or storing them’. However, the activities of online marketplaces do not fall easily within such examples of use and indeed there is no overarching definition of what constitutes use.
However, in the cases examined here, Amazon went further than just hosting online sellers, as its “Fulfilled by Amazon (FBA)” structure ensured Amazon were more involved, as this service includes receiving, packaging and shipping for sellers. Christian Louboutin argued that these actions could be considered to have prompted Amazon on the infraction line. Indeed, Advocate General Campos argued in the Coty case that “if a platform actively contributes to the distribution of infringing goods, then it should be concluded that such a platform stores (at least) the goods within the meaning of Article 9(3)(b) EUTMR’.
Usually via cases such as Google France, L’Oréal against eBay and the side aforementioned decision, for the online marketplace to be required to use the mark concerned, it had to use the mark in its own commercial communications and the mere fact of hosting another’s product sheet was not sufficient for a such finding. However, there is the question of the boundary between the use of the online seller and the use of the online market place.
What did the attorney general find?
The opinion of Advocate General (AG) Szpunar was generally favorable to Amazonstating that their actions, including delivery and storage, do not constitute use of Christian Louboutin the infringing third party trademark and advertisements are not from Amazon own “commercial communications” from the perspective of platform users. Although the AG considered that the presumption of the platform user should be taken into account when determining whether use in its own commercial communication had taken place.
Counsel argued that the Filled By Amazon did not allow the court to deviate from the principles set out in previous cases, including L’Oreal apparently arguing that this increased involvement beyond just hosting a product listing hasn’t pushed Amazon on the wrong side of the primary offense line. Therefore, Amazon should not be held liable for direct infringement, although he did not exclude that a national court could find Amazon liable for secondary infringement.
It is now up to the CJEU to decide
As indicated above, the lawyer’s opinion is of an advisory nature only and it is up to the CJEU to answer the questions posed by the national courts, and then to the national courts to actually rule on the cases in question. It is not uncommon for the CJEU to deviate from an Advocate General’s opinion or to “pick and mix” parts of the opinion. However, is the CJEU likely to deviate from the Advocate General’s fundamental conclusions?
We suspect the answer is no. The opinion of the Advocate General is generally in line with previous case law on the subject of the liability of online marketplaces and, as mentioned above, the opinions of the AG are followed in more than 70% of decisions of the CJEU. The interesting dynamics of Christian Louboutin case was specifically the ‘Completed by Amazon (FBA)’ which guaranteed Amazon more involvement in the SEO process than just a product listing. However, it does not appear that the involvement pushed Amazon on the wrong side of the primary offense line. The question then becomes, what pushes an online market beyond the main counterfeit line?
Awareness of counterfeit activity appears essential, and provided there are sufficient takedown procedures in place to allow the market to be aware of such activity and to act accordingly, it still does not appear that it There is a general duty of care in the market to monitor the activities of all sellers in a third market.
Moreover, in a post-Brexit world, it should be remembered that the Advocate General’s opinion and indeed the CJEU’s final decision will no longer have a direct impact on the UK, perhaps be that the UK could start to go its own way in this important area of retail. trademark law?