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Retailers and logistics companies could be considered as intermediaries in IP rights infringements, says European Commission

Out-Law News | 01 Dec 2017 | 12:18 pm | 2 min. read

It is open to rights holders under EU law to pursue retailers and logistics companies as intermediaries in the infringement of their intellectual property (IP) rights, the European Commission has said.

Retailers, logistics companies, and postal and parcel service providers could be considered as an intermediary to infringement in the same way as "internet service providers, social networking platforms, online marketplaces and tenants of market halls" can be, as the Court of Justice of the EU (CJEU) has already confirmed, the Commission said.

Iain Connor of Pinsent Masons, the law firm behind Out-Law.com, who specialises in IP litigation and dispute resolution, said: "While at first glance the statement from the Commission may seem to place a somewhat onerous burden on intermediaries in the supply chain between infringer and customer, the reality is that there are already circumstances where these parties can be found liable." 

"Also from a practical standpoint, logistics companies must maintain records of the goods they are transporting pursuant to various pieces of legislation whether as a formal bill of lading or by way of a customs declaration. Therefore, given that such companies already have information which could assist IP rights owners enforce their rights, where they go further and are wilfully blind to the infringing nature of the goods they carry, it seems only fair that they could be liable for their role in getting these goods to market," he said.

The Commission set out its opinion in new guidance it has published which is aimed at clarifying its views on aspects of the EU's IP rights enforcement directive which have been interpreted differently across the EU.

The IP rights enforcement directive provides for the possibility for rights holders to apply to courts for injunctions against "any intermediary whose services are used by a third party to infringe" their rights.

"The CJEU has specifically stated that internet service providers, social networking platforms, online marketplaces and tenants of market halls should be seen as intermediaries in the circumstances of the facts at issue in the legal proceedings at hand," the Commission said in its guidance. It said it does not believe that that list of potential intermediaries that the CJEU has identified is "exhaustive".

"A range of other economic operators which provide services capable of being used by other persons to infringe IPR can also fall within the scope of the Directive's notion of intermediary, which is to be determined on a case-by-case basis," the Commission said. "In the Commission's view, such economic operators can, depending on the case, potentially include for instance providers of certain information society services, postal and parcel services providers, transport and logistics companies and retailers."

Some of the measures that can be applied under the IP rights enforcement directive to address infringement can only be applied where infringement has been committed on "a commercial scale".

For example, the directive provides that courts can order the seizure of assets of alleged infringers, including the blocking of their bank accounts, in cases where "the injured party demonstrates circumstances likely to endanger the recovery of damages".

However, the concept of 'commercial scale' is not defined in the directive. The Commission said, though, that case law requires that the term have "autonomous and uniform interpretation throughout the EU".

In its guidance, the Commission said that whether or not a business has engaged in 'commercial scale' infringement should be determined with reference to more than just "quantitative elements, such as the number and extent of the infringements". It said consideration should also be given to "qualitative elements, such as the economic or commercial advantage which may be pursued by the infringements in question".

The guidance also addressed a number of other issues, including the Commission's views on the options open to national courts in determining the level of damages that can be awarded to businesses whose IP rights have been infringed, as well as issues concerning the reimbursement of legal costs.

The Commission also confirmed that it will be up to each individual EU member state to decide whether to apply the provisions of the IP rights enforcement directive to the infringement of trade secrets under new EU trade secrets laws.