A March 2021 referral to the Court of Justice of European Union (“CJEU”) from Luxembourg’s Tribunal d’arrondissement (C-148/21) – which pits French footwear brand Christian Louboutin against e-commerce titan Amazon and asks whether the operator of a hybrid marketplace could be considered directly liable for trademark infringement due to the presence of third-party listings for infringing goods on its platform – has now been joined to another one (C-184/21). The new referral comes by way of separate but highly similar proceedings pending between the same parties (French footwear brand Christian Louboutin and e-commerce titan Amazon), which were playing out before the Tribunal de l’entreprise francophone de Bruxelles.
In a nutshell, these newly-joined cases ask 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 (“EUTMR”) for the display of advertisements of infringing goods and for the delivery of those infringing goods that are offered for sale and placed in the market upon the initiative and under the control of independent sellers that make use of the marketplace operator’s services.
The Broader Relevance of the Referrals
The importance of these referrals to trademark law – and intellectual property, more generally – cannot be overstated. 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). The CJEU might also clarify whether the approach recently adopted under copyright law with regard to the right of communication to the public and the liability of internet platforms should be applied to other areas of IP, as well.
In any event, it would be inappropriate to draw any superficial parallels between a case over YouTube and the ones that pit Louboutin against Amazon. While the former required the CJEU to determine liability under copyright law arising from the breach of duties of care of platform operators (YouTube and Uploaded) relating to specific user uploads, the latter cases relate to the question of whether direct liability under trademark law could arise not because of specific acts or omissions of a platform operator, but rather because of the economic model behind the hybrid marketplace at issue in the background proceedings.
The Trademark Framework
Insofar as trademark law is concerned, Article 9(3) EUTMR refers to a non-exhaustive list of situations that are to be regarded as trademark use. What they have in common is the direct undertaking of those acts, that is – in the words of the CJEU – a comportement actif, which consists of affixing the sign, advertising under it, etc. That said, a distinction is to be made between independent sellers, who advertise and sell goods that bear a third-party trademark by way of the services of online marketplace operator, on the one hand, and on the other hand, the operator itself:
– As far as the sellers are concerned, there is no doubt that they use such a trademark in accordance with Article 9(3) EUTMR. Their ultimate objective is to realize the full value underlying the economic operation that consists of offering goods for sale and placing them on the market.
– As for the operator of the online marketplace and the type of liability that could be imposed on it because of such third-party sellers’ own uses of a registered trademark without authorization, a distinction is to be made between primary (or direct) liability and secondary (or indirect) liability: While the former is formally harmonized at the EU level, the latter is not.
The CJEU has already had the opportunity to consider whether certain information society service providers (“ISSPs”), including online marketplaces, could be held directly liable for trademark infringement and so far, has refused to extend the scope of primary liability for trademark infringement to acts undertaken by ISSPs that might contribute to trademark infringements committed by users of their services. In the broader IP context, situations falling under the scope of secondary liability have been brought, in certain conditions, within the application of primary liability rules solely in relation to copyright and, more specifically, the exclusive right of communication/making available to the public.
To sum up: The distinction between different types of liability for IP infringements is still very much alive and well. Such a distinction and the core principles of the safe harbor regime (including for hosting providers) are also being maintained in the proposed EU Digital Services Act, which is currently undergoing trilogue negotiations.
The Referred Questions
It is against this background that the CJEU must undertake its assessment of Louboutin/Amazon, namely, the specific issues on which the national courts have sought guidance from the CJEU, which include …
(1) Whether the operator of an online marketplace uses a third-party trademark itself when it displays advertisements of independent sellers’ listings
In light of consolidated CJEU case law, to determine whether there is trademark use at play when the relevant sign is used in advertising and, therefore, where there is potential infringement when such use is unauthorized, two conditions need to be satisfied: (1) it is necessary that a person exercises an active behavior/conduct (comportement actif) and exerts a direct or indirect control over the act constituting use; and (2) such a situation must entail that the use takes place under that person’s own initiative and in their own name, that is: as their own commercial communication.
While there is no doubt that sellers who use an online marketplace to offer for sale and place on the market infringing goods fulfil both requirements above, such a conclusion cannot be automatically extended to the marketplace operator.
What is required under Article 9(2) EUTMR is that the activities referred to therein are carried out by a person themselves and for themselves, not as aid/support to third-party uses. The rationale of that provision is to allow the trademark proprietor to prohibit any unauthorized use of their trademark by a third party that is effectively able to stop such use and therefore comply with that prohibition. It follows that the operator of an online marketplace shall be regarded as using a third-party trademark itself if the advertisements that it hosts of independent sellers’ goods are something over which that operator has direct/indirect control and qualify as its own commercial communication.
Applying the guidance above to the factual circumstances as presented by the referring courts, an operator like Amazon would not be using a third-party trademark itself when it displays advertisements, including sponsored ones that serve to enhance the visibility of sellers’ own advertisements, relating to independent sellers’ listings on the online marketplace that it operates.
(2) Whether the perception of internet users/consumers is relevant in determining whether there is use of a trademark
The referring courts have asked the CJEU if “the perception of a reasonably well informed and reasonably observant internet user” is relevant to determining whether there is use of a trademark by the operator itself in the context of advertisements of independent sellers’ goods on the online marketplace that it operates. Established case law indicates that the infringement test requires, first, to decide whether there is use of a trademark in the course of trade. If that is the case, the next step is to assess whether the use is liable to have an adverse effect on the trademark’s functions. It is during this second phase that the perception of the relevant internet users/consumers should be taken into account to determine, for example, whether the use at hand creates a risk of confusion/association on the side of such consumers.
On the contrary, determination of whether there is use of a trademark must be carried out on an objective basis. In other words: the perception of internet users and consumers is irrelevant to the first prong of the infringement analysis. It follows that the referred question relating to the relevance of the perception of internet users/consumers must also be answered in the negative.
(3) Whether the operator of an online marketplace uses a trademark itself when it delivers goods to end customers at the request of independent sellers
Existing CJEU case law already provides an answer – in the negative – to the question whether the same marketplace operator that is at issue in Louboutin/Amazon is to be regarded as using a third-party trademark itself when it stores infringing goods at the request and on behalf of independent sellers who intend to offer such goods or put them on the market. Since the operator of an online marketplace does not use a third-party trademark itself – whether when it displays advertisements on behalf of such sellers (in accordance with what has been stated above), stores infringing goods on behalf of third-party sellers or transports them – the question of whether it uses such a trademark when it delivers such goods to end customers must be also answered in the negative.
In the circumstances described by the referring courts, at the request of sellers themselves, the marketplace operator assists them in fulfilling the commercial operation that consists of putting goods on the market. It is not the operator that uses the third-party trademark affixed on such goods. As a result, the question whether the operator of an online marketplace, like the one described by the referring courts, uses a trademark itself when its delivers third-party goods to end customers, also needs to be answered in the negative.
The Louboutin/Amazon calls upon the CJEU to determine what the foundational requirement for establishing prima facie trademark infringement – i.e., use of a trademark – entails and how far the bounds of primary liability can be pushed, including on the internet. These joined cases also present an opportunity to the Court to reflect on whether the boundaries between harmonized primary/direct and unharmonized secondary/indirect liability under trademark law should be blurred up to the point that the former is to encompass situations that ordinarily would fall within the remit of the latter.
With specific regard to the questions raised by the referring courts, the CJEU should answer all of them in the negative: the operator of an online marketplace like the one considered by the referring courts does not in itself use the trademark in relation to advertisements and delivery of infringing goods that are offered for sale and placed on the market by unrelated third-party sellers who avail themselves of the services of such a marketplace. As such, Article 9(2) EUTMR does not find application in a situation like the one described by the referring courts in Luxembourg and Belgium.
All the above is without prejudice to the circumstance that the operator of a hybrid marketplace would qualify for the application of Article 9(2) EUTMR in relation to the goods that it directly offers for sale and places on the market (that is, its own listings in accordance with the hybrid marketplace model), as well as the circumstance that liability might be established on a secondary basis in relation to third-party listings. The latter would be however a matter of national, not EU, law. Hence, it would be for the referring courts, not the CJEU, to undertake such an assessment.
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). She has written a longer article on these referrals, which will be published later this year by European Intellectual Property Review and can be read on SSRN here.