Retail brand protection – another string to the bow

July 2016

A recent decision of the CJEU (Tommy Hilfiger Licensing LLC and Others v Delta Center a.s. C-494/15 ) has helped widen the options for many retailers seeking to curb brand infringements. 

The decision itself relates to market stalls and establishes that operators of physical marketplaces can be forced to take active steps to curb trade mark infringements made by market traders using their facilities. However, in order to understand the wider implications of the case it is first necessary to look at an earlier decision of the CJEU in 2011 involving proceedings brought by L’Oreal and others against eBay (Case C-324/09L’Oréal and Others).

The L’Oreal case concerned litigation brought by a number of brand owners in order to establish that operators of online marketplaces, such as eBay, had obligations in certain circumstances to prevent sellers using their facilities to infringe third party intellectual property rights.  As part of its decision the CJEU determined that national courts must be allowed to order that operators of online markets take measures that, first, contributed effectively to bring an end to infringements to intellectual property rights committed through that marketplace and, second, helped prevent further infringements.

The significance of Tommy Hilfiger is that the CJEU determined that the same principles in relation to online markets also applied to the specific form of offline market which was under consideration;  namely stalls in market halls. But it is clear from the reasoning adopted by the court that the principle of both L’Oreal and Tommy Hilfiger will apply to any scenario in which a party is in control of a physical environment which is made available to third parties who have or may infringe a brand owner’s rights.  So, for example, the principles involved could conceivably relate  to department store leasing concessions, retail parks, shopping centres, airport shopping,  outlet villages and so on.

It is fair to say that the more likely scenarios in which the principles will be of application are where the overall dynamics of the arrangements suggest that intellectual property infringements will be prone to occur.  These would tend to be where occupation by the actual or potential infringers is on a comparatively short term basis (such as market stalls).  Accordingly, the impact of the decision may not percolate through into long-term contractual arrangements such as shop leases.  However the Hilfiger decision could readily impact on the operation of concessions within stores.  Accordingly,  department stores whose business model involves the operation of multiple concessions within the store should certainly assess the implications of the decision.

From a brand owners’ perspective the Tommy Hilfiger decision is welcome news.  Not only does it provide assistance in relation to the specific form of physical market in issue and others which share similar characteristics, but it also reinforces a more general line of argument that it is not only infringers who are potentially liable for their infringing acts; others who provide an infrastructure (physical or virtual) which facilitates them doing so may be liable as well. 

In the light of recent evidence which suggests a huge proliferation in the nature and volume of counterfeiting in the UK (see, for example, the BBC News Article at http://www.bbc.co.uk/news/uk-england-35925119) this is a particularly timely decision.  Let’s hope that, whatever twists and turns there are in the future Brexit negotiations which may impact on the future status of CJEU decisions in the UK, retailers continue to get the benefit of the Tommy Hilfiger case.

This update was prepared by Antony Gold, Partner and Head of Retail in our Manchester Office.  If you would like further advice on this or any other matter please contact Antony or your usual HGF representative or visit our Contact page to get in touch with your nearest HGF office.