Shortly before Christmas 2022, the Court of Justice of the European Union (CJEU) ruled that Amazon is directly liable for trademark infringement caused by third-party products offered on its online marketplace if Amazon advertises such products as if they were its own sales offers.
From the consumer's perspective, it was not clearly recognisable who these offers originated from, and the platform operator capitalised on the third party's unlawful use of the trademark by integrating it into its own commercial communication and intermingling it with its own offers.
The CJEU thus clears the way for trademark owners not only to compel platform operators to delete the corresponding advertisements, as was already the case, but also to claim damages directly from the platform operator for trademark infringements.
Especially in the Sisyphean battle against plagiarism, this represents an important new instrument for trademark owners to protect themselves against product counterfeiting. But the ruling is also likely to encourage platforms to check more strictly the legality of the product offers of third parties on their online platforms.
These boots are made for litigatin’
The judgment of the CJEU (December 22 2022 – Louboutin, C-148/21 and C-184/21) was given in the preliminary ruling proceedings in the matter of Christian Louboutin v Amazon. The French designer sued Amazon in the original proceedings and demanded, in addition to injunctive relief, damages for trademark infringement.
According to Louboutin, the platform operator was using the trademark without Louboutin's consent, in particular by advertising trademark-infringing, red-soled shoes from third-party sellers on the Amazon online marketplace.
CJEU: the perspective of the platform user matters
According to established case law of the CJEU, the concept of trademark use presupposes an active involvement and direct or indirect control over the act of use in the course of trade (CJEU, Coty Germany, C-567/18, paragraph 39f).
In the ruling recently handed down, the CJEU establishes that the connection between trademark-infringing products of third-party providers giving rise to liability and the respective platform operator would also exist if advertising of third-party products is an integral part of the platform operator's commercial communication (paragraph 39f). In this case, the platform operator is using the trademark within the meaning of Article 9, paragraph 2a of the European Union Trade Mark Regulation.
The manner of presentation in the advertising and the scope of the services provided by the platform operator have to be taken into account. These can convey the impression that the platform operator is offering the trademark-infringing products in its own name and on its own account (paragraph 48 et seq.).
In its judgment, the CJEU (paragraph 42 et seq.) explicitly refers to the L'Oréal decision, according to which there is an obvious association between the trademark infringement of third parties and advertising by the platform operator (L'Oréal v eBay, C-324/09, paragraphs 93 and 97).
According to the CJEU, the obvious association in the Louboutin case resulted from the identical presentation of third-party products under Amazon's logo for advertising purposes, and from the fact that the platform operator gives the products designations such as "bestseller", "most frequently requested" or "most frequently given as a gift" without making any distinction as regards their origin (paragraph 51f). The impression given to users can be reinforced by the fact that additional services are provided by a platform provider, from dealing with users' questions about the goods, to storage, shipping and handling returns (paragraph 53).
Old rules, new trend?
Although the judgment in question is based on well-known principles of CJEU case law (Google France and Google, C-236/08 to C-238/08; L'Oréal, C-324/09; Coty Germany, C-567/18), it confirms the tendency of the CJEU to attribute more extensive liability to intermediaries. This will always apply if they assume an active role that enables them to have knowledge of, or control over, third-party content (see Erfurth, GRUR-Prax 2021, 217, 218). In such cases, they cannot invoke the liability privileges in Article 12 et seq. of the E-Commerce Directive.
Although the CJEU in Louboutin had to deal with the application of trademark law, the liability standards of platform intermediaries can be relevant for infringement cases regarding other intellectual property rights, such as design law (see Hofmann, GRUR 2023, 238, 241f).
A German source of inspiration?
The previous objective concept of trademark use seems to be supplemented by the component of users’ perception. This is reminiscent of the German doctrine of ‘making one's own’; in German, ‘sich zu eigen machen’ (see Hofmann, GRUR 2023, 238, 241).
In a 2020 judgment regarding customer reviews on Amazon (BGH judgment of February 20 2020 – I ZR 193/18), the German Federal Supreme Court held an intermediary automatically responsible for third-party content if it assumes responsibility for third-party content or creates the impression that it is responsible for same. An intermediary integrating third-party information into its offer speaks in favour of ‘making it its own’.
Trademark owners’ appetite for litigation may grow
Trademark owners can claim injunctive relief as well as damages against the platform operator, especially if they highlight trademark-infringing products on an online marketplace for advertising purposes. Because, as users perceive it, such a form of advertising constitutes an integral part of the platform operator's commercial communication.
The CJEU suggests that shipping or storage services provided by the platform operator, for example, may also be indicative of such a situation (paragraphs 32 et seq., 53). Admittedly, it is easier to bring an action against platform operators because they usually have an address for service of proceedings, whereas third-party providers are often not very attractive litigants, because they frequently lack liquidity or conceal their identity.
Online marketplaces are risky business
Platform operators are well advised to indicate clearly the origin of the products offered and advertised on their online marketplace. As the CJEU points out, transparency is key in electronic commerce (CJEU, Louboutin, paragraph 50). This applies especially to companies that pursue a hybrid business model consisting of their own sales offers and offers from third-party providers.
‘Online gatekeepers’ have a strong economic interest in ensuring that end customers and third-party sellers use their online marketplace and that they do so on a recurring basis over a longer period. Amazon, for example, had a total turnover of €467.66 billion (about $496.4 billion) in 2021, of which approximately 22% came from third-party commerce.
Trademark-infringing products from third-party sellers are part of the business risk of such platform operators, which they should mitigate by taking appropriate measures; for example, by restricting the display of advertisements for third-party sellers using keywords corresponding to protected trademarks (CJEU, Louboutin, paragraph 41f). Otherwise, they should expect lawsuits from trademark owners that may have reasonable prospects of success.
