The Court of Justice of the European Union (“CJEU”) has issued a highly anticipated decision in two cases centering on the advertisement and sale of fake Louboutin footwear on Amazon, finding that Amazon, itself, may be deemed to be “using” another party’s trademark in connection with the advertisement of infringing goods and thus, be liable for infringement as a result. The combined cases, which were initiated by French footwear brand Christian Louboutin in district-level courts in Luxembourg (C-148/21) and Belgium (C-184/21) back in 2019, asked the CJEU to determine whether – and, if so, in what conditions – the operator of an online marketplace may be found liable under Article 9(2) of the EU Trade Mark Regulation 2017/1001 for the display of advertisements of infringing goods.
In a decision dated December 22, the CJEU found that an online sales platform – like Amazon – may, in fact, be liable for trademark infringement based on its “use” of another’s trademark in advertisements promoting third-party infringing goods displayed on its site. Primarily, the court found that a party’s unauthorized use of a trademark that is identical to the mark of another “implies, at the very least, that the [party] makes use of the sign.” Beyond that, the court stated that such use may prompt “users of the online marketplace to have the impression that the advertisements for the products in question come not from third-party sellers, but from the operator of the marketplace,” thereby, giving rise to “use” of the mark by the marketplace operator.
Addressing the potential for consumer confusion, the court states that Amazon operates a “hybrid business model,” in furtherance of which it acts as a marketplace operator and a provider of logistics services for third parties, and given that it displays its own “well known” trademarks on the advertisements for third-party sellers’ offerings on its sweeping marketplace site, consumers may be confused about the source of the infringing goods. These circumstances “may make a clear distinction [as to the source of the goods] difficult, and give the impression to the normally informed and reasonably attentive user that it is Amazon that markets [the goods] — in its own name and on its own behalf,” according to the CJEU.
The two red-sole-centric cases will now land back before the respective district courts, which will be tasked with interpreting the CJEU’s guidance and determining the likelihood of consumer confusion.
In a statement on Thursday, a spokesman for Louboutin said that the footwear brand “initiated these proceedings to obtain recognition of Amazon’s responsibility for the offering for sale of counterfeit products on its platforms by third parties.” The company says it “also brought this case to encourage Amazon to play a more direct role in the fight against counterfeiting on its platforms.”
The decision follows from the release of a non-binding opinion in June from an advisor to the CJEU, who found that Amazon “cannot be held directly liable for infringements of the rights of trademark holders taking place on its platform as a result of commercial offerings by third parties.” Reflecting on the two cases this summer, Advocate General Maciej Szpunar of the CJEU stated that he is “of the opinion that, in [such] circumstances, the operator of an online platform, such as Amazon, does not use a [trademark],” and therefore, cannot be directly liable for infringement. This does not mean, however, that Amazon is necessarily off the hook for infringement on the basis of contributory liability.
THE BIG PICTURE: The importance of these referrals (and the CJEU’s ultimate opinion on the matter) to trademark law – and intellectual property, more generally – “cannot be overstated,” Director of the Institute for Intellectual Property and Market Law (IFIM) at Stockholm University Eleonora Rosati states. The answer to the question of whether the operator of an online marketplace, such as Amazon, may be held directly liable for trademark infringement because of advertisements of third-party infringing goods displayed on such a marketplace and delivery of those goods to end customers will define who can be held liable for trademark infringement and on what basis (primary/direct or secondary/indirect).