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Marketplace operators face increased liability risks when advertising counterfeit goods

The Court of Justice of the European Union (CJEU) has ruled that Amazon could be held liable for potential trade mark infringements by third party vendors.

In the case of designer Christian Louboutin, who owns the trade mark for the red soles of his shoes in the EU and Benelux, the CJEU ruled that online marketplace operator Amazon could be held responsible for counterfeit goods sold on its platform. Louboutin had sued Amazon in Belgium and Luxembourg, claiming that because Amazon regularly advertises red-soled shoes offered by third party sellers, it has infringed that trade mark.

"Christian Louboutin's shoes are identified by their red sole, a unique and characteristic trademark. He objected to different offers on Amazon of fake shoes with red soles", said trade mark law expert Dr. Fabian Klein of Pinsent Masons. "These shoes were not sold by Amazon but by third parties via the Amazon platform, but shipping and handling was done by Amazon."

The Belgian and Luxembourg courts referred the case to the CJEU for guidance on the interpretation of the applicable EU law. Their question revolved around whether Amazon was making use of the Louboutin trademarks, or whether it was only the third party seller who was infringing the trademark. The referring courts asked, in particular, whether it is relevant in that regard that Amazon presented the potentially trade mark infringing goods on its platform in the same manner as goods sold in its own name and on its own account and that it offers the third-party sellers additional services, for example in assisting them in the presentation of their advertisements and in storing and dispatching the goods.

"In its decision, the CJEU gave relatively clear guidance as to when a platform like Amazon is responsible for third party offerings", said Dr. Klein. "In general, this will be the case if the user gets the impression that the platform is linked to the third-party offering, especially where the third-party offering appears to be an integral part of the own undertakings of the platform. Put simply, the CJEU asked whether the average consumer would consider the offer to be 'from Amazon' or from a third party."

Dr. Klein explained that, although platforms like Amazon are required by law to give sufficient information about the identity of the "real" offering party, the way this is done in practice often makes it hard for consumer to make that identification, especially where the third-party offerings are designed in the same look and feel as the offerings of the platform itself. If the platform also takes care of warehousing and especially shipping, it will become even harder for consumers to differentiate between third party offers and Amazon offers.

These were exactly the tests applied by the CJEU although, as always, the CJEU only answered the abstract question put before it in general. According to experts, the decision gave clear indication that the CJEU sees an infringement on the part of Amazon, since the offering would tick a sufficient number of the relevant boxes: the third party offering looked the same as official Amazon offerings; the Amazon brand was shown and its reputation used for the third party offerings just like for own offerings; and Amazon provided additional services such as warehousing and shipping.

The CJEU therefore did not let Amazon off the hook. Franziska Mauritz, a trade mark law expert at Pinsent Masons, said that the decision would also have consequences for other operators. "Platform providers should review the layout of their platform to ensure that it is clearly identifiable to the public which offers originate from the platform provider and which from third parties. This applies in particular if the platform provider is involved in the distribution of the products, such as by shipping the goods. Otherwise, they may become liable for infringements by the third parties using their platfom."

Dr Klein said that the CJEU's ruling could pave the way for brand owners to attack the "prominent" sales platforms rather than having to chase after the individual infringers. "With the CJEU ruling, life got tougher for online marketing platforms that do not differentiate clearly between their own offerings and those of third parties. But it also gives indication as to how such a responsibility could be avoided, namely by clearly and prominently identifying the third party as the real offering party. We might therefore see 'shop-in-shop' differentiations in online platforms more often in the future."

The final decision in the Louboutin vs. Amazon case is up to the national courts in Belgium and Luxembourg. The CJEU's function was to assess the case in terms of EU law and to provide guidance to the national courts.

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