Christian Louboutin and Amazon: cases of marketplace liability
The Advocate General provided an Opinion on 2nd June 2022 on two joined cases going before the Court of Justice of the European Union (CJEU), originating from the Belgium and Luxembourg national courts, involving Amazon and Christian Louboutin concerning the liability of online marketplaces when selling products which allegedly infringe the IP rights of others. It should be remembered the Opinion of the Advocate General is just that, an Opinion and not a final decision, but the CJEU generally follow the reasoning of the Advocate General in around 70 percent of its cases.
Importance to retailers and those that sell on online marketplaces
The cases are important for retailers and brand owners alike, as they will follow in a line of cases determining whether an online marketplace can be held liable for third party infringement on their platforms. These cases often centre on how actively involved the online marketplace is in the sale of such products and whether they can be held to have used the trade marks concerned. The Amazon/Christian Louboutin cases more specifically concerned with the situation where a hybrid service is provided by the online marketplace which provides logistics and fulfilment services to the marketeer, beyond simply a product listing. Does such use push the online marketplace over the line on the question of primary infringement?
The joined cases are of importance to any online marketplaces which sell third party products, who provide some form of support beyond simply hosting a product line for a third party, which has generally been held not to be primary infringement in the past, if sufficient takedown proceedings are in place, and also to IP owners who wish to stop the potential infringement of their rights via taking action against the marketplace itself, often an easier endeavour, than the seller itself, which can often be hard to pin down.
Christian Louboutin brought a claim against Amazon for offering online sales of red-soled shoes, where the ‘red-sole’ mark has been trade marked by Christian Louboutin, and where the products concerned are alleged to have infringed Christian Louboutin’s IP rights.
The Belgium and Luxembourg national courts referred the following questions in broad terms to the CJEU and on which the Advocate General provided his opinion on 2nd June:
- Can the operator of a hybrid marketplace, like Amazon, be held directly liable for infringement as opposed to secondary infringement, where a third party’s or seller’s listings constituted trade mark infringement?
- Does the consumer perception of a marketplace’s role in advertisement and distribution, influence a decision on whether there is use of a trade mark?
- Should delivery to consumers by an online marketplace be considered trade mark use?
The liability of online platforms for third party trade mark infringement has been an ongoing issue in the digital marketplace. Indeed the Advocate General in his Opinion commented that it is often easier to challenge the online marketplace, than the individual marketeer and this was a driving force behind actions being taken against the online marketplace. However, if this were to become standard practice, the ability of online marketplaces could be put in jeopardy if too onerous obligations were placed on them with regards the fight against counterfeits and infringing activity. Essentially the courts have to tread a fine line in this regard and generally EU and UK case law has held that online marketplaces are not directly liable for the infringing activities of its traders, provided it takes no active role in the infringing activity and has sufficient takedown procedures in place to tackle any infringing activity if brought to its notice.
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 to have not acted on that knowledge. As such, the mere existence of infringement on an online marketplace’s platform is not sufficient for the online marketplace to be held liable for infringement.
Further, a key consideration in these cases has often been whether the online marketplace can be held to have used the infringing trade mark at hand. Article 9(3) of the EU Trade Mark Regulation details situations, which would be deemed trade mark use, including ‘affixing the sign to the goods or to the packaging of those goods’ or ‘offering the goods, putting them on the market or stocking them’. However, online marketplaces activities do not easily fall into such examples of use and indeed there is no over-arching definition of what constitutes use.
However, in the cases under consideration here, Amazon went further than simply hosting online sellers as its ‘Fulfilled by Amazon (FBA)’ structure ensured Amazon had a greater involvement, as this service includes receiving, packaging and shipping for sellers. Christian Louboutin argued that these actions could be argued to have pushed Amazon over the line on infringement. 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 (at least) stocks the goods with the meaning of Article 9(3) (b) EUTMR’.
Generally via cases such as Google France, L’Oréal vs eBay and the Coty decision referred to above for the online marketplace to be held to use the trade mark concerned it had to use the trade mark in its own commercial communications and simply hosting a product listing of another was not sufficient for such a finding. However, there is question of the border between the online seller’s use and the online marketplace’s use.
What did the Advocate General find?
Advocate General (AG) Szpunar’ s Opinion was generally in favour of Amazon, stating that their actions, including delivery and stocking do not constitute use of Christian Louboutin’s trade mark and infringing third party advertisements are not Amazon’s own ‘commercial communications’ from the perspective of platform users. Although the AG did hold that the presumption of the platform user should be considered when considering whether use in its own commercial communication has occurred.
The Advocate held that the Fulfilled by Amazon did not allow the court to depart from the principals laid down in previous cases most notably L’Oréal seemingly holding that this increased involvement beyond simply hosting a product listing did not push Amazon to the wrong side of the primary infringement line. Therefore, Amazon should not be held liable for direct infringement, although he did not rule out that a national court could find Amazon liable of secondary infringement.
Now for the CJEU to decide
As stated above the Opinion of the Advocate is merely advisory and it is for the CJEU to answer the questions referred by the national courts and then for the national courts to actually decide the cases at hand. It is not unheard of for the CJEU to depart from an opinion of the Advocate General or to ‘pick and mix’ parts of the Opinion. However, is it likely that the CJEU will depart from the fundamental findings of the Advocate General?
We suspect the answer is no. The Advocate General’s Opinion is generally in line with previous case law on the subject of the liability of online marketplaces and also as mentioned above AG Opinions are followed in over 70 percent of CJEU’s decisions. The interesting dynamic of the Christian Louboutin cases was specifically the ‘Fulfilled by Amazon (FBA)’ structure which ensured that Amazon had a greater involvement in the listing process than a simple product listing. However, it does not seem that involvement pushed Amazon to the wrong side of the primary infringement line. The question then is what pushes an online marketplace over the primary infringement line?
Knowledge of infringing activity seems key, and providing that there are sufficient takedown procedures in place which allows the marketplace to be made aware of such activity and act on, it still does not seem there is a general duty of vigilance on the marketplace to monitor the activities of all sellers in a third party marketplace.
Also in a post Brexit world it should be remembered that the Advocate General’s Opinion and indeed the ultimate decision of the CJEU will have no direct affect on the United Kingdom anymore, maybe the UK could start to take its own path on this important area of retail trade mark law?
This article was prepared by HGF’s Partner & Trade Mark Attorney Lee Curtis.