Image: Louboutin

Is it a trademark infringement to advertise, offer and/or stock and ship goods that bear a sign identical or similar to another’s registered trademark without that party’s authorization? The answer is not a difficult one to determine: These activities amount to prima facie infringement under Articles 10 TMD and 9 EUTMR. Things get more complicated, however, when the same question is asked in reference to an online marketplace, such as Amazon. Can an entity like Amazon be considered as playing an active role – and be directly liable for trademark infringement – if the product that is being promoted, sold, stocked and shipped by way of its platform and corresponding services is a counterfeit?

This is the key issue at the heart of an ongoing case initiated by Christian Louboutin (Louboutin, C-148/21) that was recently referred to the Court of Justice of the European Union (“CJEU”). The referral, which came in March by way of Tribunal d’arrondissement in Luxembourg, was made in the context of proceedings that Louboutin – the holder of the famous red (Pantone 18-1663TP) sole trademark – filed against a number of Amazon entities, including Amazon EU Sàrl, over third-party listings of counterfeit shoes on its third-party marketplace platform, and the stocking and delivery of these goods by Amazon through its corresponding Fulfilment by Amazon program.

The referral is important for two main reasons: First, because national litigation has given contrasting answers to the question of whether an online marketplace, such as Amazon, may bear direct liability for trademark infringement in relation to third-party listings; and secondly, because to date, the CJEU has not explicitly gone as far as holding that the operators of an online platform may be directly liable for trademark infringement together with users of its services. Against this background, the situation appears to be different from copyright, for instance, where the direct liability of platform operators for infringing activities has been well established, first, by the CJEU in its Pirate Bay decision and has since been “codified.” (Although, we will know more about the latter when the CJEU releases its YouTube/Cyando judgment next month). 

Louboutin … Again

Back in August 2019, just months after Louboutin waged its suit against Amazon, a ground-breaking decision was issued in Belgium, with the President of the Brussels Companies Court holding that Amazon was directly liable for the infringement of Louboutin’s red sole trademark. Specifically, the court determined that Amazon could be held liable for the use of the red sole mark in third-party advertisements for counterfeit goods that were displayed on Amazon’s marketplace. The display of such ads constituted direct infringement by the platform itself, according to the court, as did the subsequent shipment of such items by Amazon through its Fulfillment by Amazon venture. 

The decision was partially reversed on appeal in June 2020, with the Brussels Court of Appeal ruling that while Amazon was not liable for ads for third-parties’ products, it was on the hook for ads promoting its own products. In regards to the services that fall under its Fulfillment by Amazon program, the appeals court applied previous CJEU determinations – including the high court’s decision in the Coty Germany GmbH v Amazon Services Europe Sàrl case (which was the most recent judgment at the time) – and ruled out any direct liability on the part of the $1.6 trillion retail titan.

The Non-Liability of Online Marketplaces

In the Coty v. Amazon case, the CJEU limited itself to answering the question referred by Germany’s Federal Court of Justice: “Does a person who, on behalf of a third party, stores goods which infringe [another’s] trademark rights, without having knowledge of that infringement, stock those goods for the purpose of offering them or put them on the market, if it is not that person himself but rather the third party alone which intends to offer the goods or putting them on the market?” 

In that case, the court held that the answer is no, but what is more interesting than the ruling, itself, is the previously-issued Opinion of Advocate General Campos in which he considered that if a platform actively contributes to the distribution of infringing goods, then it should be concluded that such a platform (at least) stocks those goods within the meaning of Article 9(3)(b) EUTMR. As such, it would be irrelevant whether the platform has knowledge – or awareness – of the infringing nature of the goods sold by its users, as long as it could be reasonably expected the platform operator to act to detect such infringing activity.

AG Campos lamented the lack of information provided regarding the relevant factual scenario in the background proceedings: in a context like the one described by the referring court, Amazon would not stock goods for sale within the meaning of Article 9(3)(b) EUTMR. However, based on the parties’ observations and the hearing, the reality might be that Fulfillment by Amazon is more complex than how the referring court indicated: the model could actually be characterized as an “integrated store” in connection with which Amazon plays an active role in the selling process. 

The corollary would, thus, be that Amazon has absolute control over the process.

Within the Fulfillment by Amazon program, the Amazon-affiliated companies, such as its logistics partners, do not merely stock and transport the goods in a neutral fashion. Rather, they undertake a much broader range of activities, including preparing the goods for delivery and delivering them; carrying out advertising and promotional activities; providing information to customers in the process; and handling the refunds of faulty goods. Still yet, Amazon also takes payment for the goods sold, which it then transfers to the seller’s bank account.

AG Campos concluded that in such a context, Amazon would be playing an active role, and thus, be directly liable for infringing activities, having satisfied the requirements under the proviso. Importantly (and correctly), he also noted that, in the event that Amazon was found directly liable for trademark infringement, the safe harbor in Article 14 of the E-commerce Directive would not apply. This is nothing new, the Advocate General asserted, noting that this point was clarified by the CJEU in its 2011 decision in L’Oréal SA v. eBay International

With the foregoing in mind, the new Louboutin referral to the CJEU is one to watch. The resulting judgment will not only be meaningful for the brand and its enduring fight against fakes (one that dates back to the headline-making case that it filed against Yves Saint Laurent in a New York federal court in 2011), it may help shed further light on the thorny question of how far the services provided to sellers by an online marketplace, such as Amazon, can go without translating to infringement liability. 

Even if no specific question is asked on this point, it would be a welcome clarification on the side of the CJEU to address whether a platform that does directly undertake trademark-restricted acts may, nonetheless, remain eligible for the hosting safe harbor. This is particularly important considering the ongoing discussion around the proposed Digital Services Act, which has been presented as a “crystallization” of CJEU case law: on the one hand, the Proposal refers the safe harbor protection to “any type of liability” (recital 17); on the other hand, it excludes the applicability thereof to “any service that is not an intermediary service” (Article 1(4)). 

Eleonora Rosati is Professor of Intellectual Property Law and Director of the Institute for Intellectual Property and Market Law (IFIM) at Stockholm University. (This article was initially published by IPKat).