A review of the case law of both the European Union Intellectual Property Office and the European Union courts issued over the period between 2020 and 2022, alone, reveals a conclusion that is likely not too shocking to anyone: less conventional trademarks remain (very) difficult to register, including when it comes to fashion. One issue on this front is the growing relevance of the absolute ground for refusal/invalidity concerning signs that consist exclusively of a shape or another characteristic that gives substantial value to the goods (Article 7(1)(e)(iii) EUTMR/4(1)(e)(iii) EUTMD). Such a ground, which was considered quite niche if not altogether meaningless for a long time, is on the rise in both frequency of application and importance.

In the fashion sector, for example, French footwear brand Christian Louboutin risked losing its red sole trademark registration due to a substantial value claim (Louboutin, C-163/16). More, recently, in Gömböc, C-237/19, which centered on an application to register a three-dimensional element for use on decorative items, decorative items made of glass and earthenware, and toys, the Court of Justice of the European Union (“CJEU”) clarified that substantial value is not just about being “pretty.” Factors like the story of the creation of a shape, its method of production, the materials, or even the identity of the designer can also lead to the application of this absolute ground. 

In addition to the rise of the substantial value ground, another issue that is statistically still dominant for less conventional signs is distinctiveness under Article 7(1)(b) EUTMR/4(1)(b) EUTMD. For marks consisting of patterns or shapes, the threshold that trademark registration-seeking parties must meet is not an insignificant one. While the test of distinctiveness is (in principle) the same across different types of marks, for less conventional marks, consumers are not taken as being in a position to consider patterns or shapes as indicators of commercial origin, per se. As a result, as the General Court stated in a case over Louis Vuitton’s Damier pattern (i.e., a “figurative mark representing a chequerboard pattern”) only a mark that “departs significantly from the norm or customs of the sector of the goods and services at issue, and thereby, fulfills its essential function of indicating origin is not devoid of any distinctive character” (Vuitton, T-105/19).

Over the past two years, the following marks failed to satisfy the “significant departure” test … 

Fashion Trademarks

A notable – though rather isolated – exception is, of course, Guerlain, T-488/20, a case concerning trademark of the shape of Guerlain’s Rouge G de Guerlain lipstick case as a trademark for “lipsticks” in class 3. The EU General Court concluded in July 2021 that the shape is unusual for a lipstick in that it reminds one of a boat hull or a baby carriage, and thus, it differs from any other shape on the market. Moreover, the court determined that the relevant public with a level of attention ranging from medium to high will be surprised by Guerlain’s easily-memorizable shape and is likely to perceive it as significantly deviating from the norms and customs of the lipstick sector. As a result, trademark registration would be available.

There is clear public interest justification underpinning both the substantial value absolute ground (as well as the other functionality grounds) and the approach to distinctiveness of marks consisting of things like patterns and shapes. First, there is a clear concern that allowing certain registration would pose the risk of unduly restricting competition (see, eg, Philips, C-299/99; Opinion of Advocate General (“AG”) Ruiz-Jarabo Colomer in Linde, C-53/01 to C-55/01; Opinion of AG Wathelet in Nestlé, C-215/14, and resulting CJEU judgment). 

Secondly, trademark law should not become a means to extend unduly and potentially perpetually the protections available under other intellectual property rights, notably design rights and copyright (see, e.g., Opinion of AG Szpunar in Hauck, C-205/13, and resulting CJEU judgment; see also Opinion of AG Szpunar in Simba Toys, C-30/15 P). All the above said, it is possible to rely on different intellectual property rights simultaneously or at a different time to protect valuable “objects.” Again in Gömböc, the CJEU acknowledged that nothing prevents the overlap of intellectual property rights, provided that the relevant requirements under the respective regimes are fulfilled.

The fashion sector provides some recent examples in which one could successfully obtain or enforce trademarks but not copyright protections, or vice versa:

In 2020, the Italian Supreme Court found that the layout of the KIKO make-up stores would be protectable by copyright. A few years prior, seeking to follow on the footsteps of Apple, C-421/13, KIKO sought to obtain a trademark registration for its store layout but failed on ground of lack of distinctiveness. Meanwhile, in late 2021, the Milan Court accepted that Longchamps could enforce its trademark registration relating to the shape of its iconic Le Pliage bag, but refused to consider such a design as protectable under copyright.

Ultimately, like the fashion sector always strives to be creative, so should be the lawyers setting up protection and enforcement strategies. 


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).

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.

Conclusion

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.

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).