Insights

In Joined Cases C-148/21 and C-184/21, Christian Louboutin vs Amazon Europe Core Sàrl et, decided on the 22December 2022, the Court of Justice of the European Union (the “CJEU”) provided a preliminary ruling on a request made by the Luxembourg District Court and the Brussels Business Court (the “Referring Courts”), wherein they requested the CJEU to interpret whether Article 9(2)(a) of Regulation (EU) 2017/1001 (the “EU Trade Mark Regulation”) must be interpreted as meaning that the operator of an online marketplace integrating, in addition to its own products for sale, third party’s sales is likely to be considered as infringing a European Union Trade Mark (“EUTM”) itself; even though the third party sellers are the ones selling the counterfeit products on the marketplace.

Case Background

On the 19 September 2019 and 4 October 2019, Christian Louboutin brought an infringement action against Amazon Europe Core Sàrl et (“Amazon”), before the Referring Courts, wherein the brand sought a declaration that Amazon is liable for infringement resulting from the use of its ‘Chinese red’ sole EUTM, which has become synonymous with the brand’s identity, and which has been registered as a EUTM since the 10 May 2016. Moreover, the French-owned luxury brand also requested damages for the harm allegedly caused.

Christian Louboutin submitted that Amazon had displayed advertisements using a sign which is identical with the EUTM at issue, whilst also stocking, shipping and delivering those same goods. Although Amazon relied on previous judgements of the CJEU, whereby it was decided that online marketplace operators, such as eBay, cannot be held liable for the use of a trademarked sign by third party sellers who use its online marketplace; Christian Louboutin argued that Amazon cannot simply be regarded as an intermediary that provided an online marketplace for its sales, since it provided assistance to third party sellers, and played an active role in the advertisements relating to the counterfeit products.

The Preliminary Reference

In making a preliminary reference, the Referring Courts were mainly in doubt as to whether the public’s perception as to the source of the goods will vary according to the active role played by the operator of the website in the publication of advertisements relating to such goods. Moreover, the Referring Courts were also uncertain as to whether such an operator should be considered to have infringed the trademarked sign if they undertook to ship these goods without having any knowledge of the infringement. In view of the above, the Referring Courts referred the following questions to the CJEU:

1. “Is Article 9(2) to be interpreted as meaning that the use of a sign identical with a trade mark in an advertisement displayed on an online store is, in principle, attributable to its operator […] if, in the perception of a reasonably well-informed and reasonably observant internet user, that operator or an economically linked entity has played an active role in the preparation of that advertisement or if that advertisement is perceived as forming part of that operator’s own commercial communication?”

2. “Must Article 9(2) be interpreted as meaning that the shipment, in the course of trade and without the consent of the proprietor of a trade mark, to the final consumer of goods bearing a sign identical with the mark, constitutes use attributable to the shipper only if the shipper has actual knowledge that the sign has been affixed to the goods?”

Interpretation and Decision of the Court of Justice of the European Union

Article 9(2)(a) of the EU Trade Mark Regulation clearly states that the proprietor of a EUTM is entitled to prohibit the use by a third party, without his consent, of a sign which is identical with that EUTM. However, the extent of such ‘use’ is not defined. The CJEU held that, as was determined in the judgement of the Court (Fifth Chamber) of 2 April 2020 in ‘Coty Germany GmbH v Amazon Services Europe Sàrl and Others’ (C‑567/18) (the “Coty Case”), the term ‘use’ refers to active behaviour on the part of the third party, who has direct or indirect control over the infringing act and is able to comply with that prohibition.

The CJEU had decided in the Coty Case that offers for sale displayed on an online marketplace, made by third party sellers, are to be considered as being made by the third party and not the marketplace operator itself. It continued by holding that where the online marketplace offers storage services to the third-party sellers, without being aware of the infringing nature of the goods at issue, the sellers alone would be held responsible for the infringement. It is worth noting that in the Coty Case, the CJEU had ruled that online intermediaries were not to be held liable for trade mark infringement in respect of counterfeit products sold by third party sellers. However, the CJEU makes an important distinction, as while in the present case Amazon had taken care of both the shipping and storage of the counterfeit goods, the online operator in the Coty Case had the goods dispatched by external service providers.

In delivering his opinion on the current case in June 2022, the Advocate General had concluded that “an online intermediary cannot be held directly liable for infringements of the rights of trade mark owners taking place on its platform as a result of commercial offerings by third parties”. In order to determine whether the operator of an online marketplace makes use of a trademarked sign, the Attorney General opined that it is necessary to assess whether a well-informed and reasonably observant user would be able to establish a link between the website operator and the trademarked sign.  The Advocate General had concluded that an average consumer would be able to differentiate between the advertisements of third-party sellers and those of Amazon. However, the CJEU made a different interpretation, and it noted that a link may be easily established, in the eyes of consumers, between the counterfeit goods and Amazon, in view of the factors below:

1. Using the website operator’s own logo on the goods being advertised, including on those products offered by third party sellers;
2. Using of a uniform method of presenting the products published on the website, without being able to distinguish between those goods sold by third party sellers and the website operator itself;
3. Using the terms ‘bestsellers’ or ‘most popular’ for the purpose of promoting the various offerings, from the website operator itself or a third party, without distinguishing them as to their origin;
4. Offering services relating to the storage, shipping and management of returns of goods, by the website operator; and
5. Using an internet referencing service, whereby the website operator would advertise the trademarked goods in question on its website, resulting in an association between those trademarked goods and the possibility of buying them through that marketplace.

In the light of the foregoing considerations, the CJEU ruled that Article 9(2)(a) of the EU Trade Mark Regulation “must be interpreted as meaning that the operator of an online sales website marketplace may be regarded as itself using a sign which is identical with an EU trade mark of another person […] if a well-informed and reasonably observant user of that site establishes a link between the services of that operator and the sign at issue.” The CJEU ultimately decided that it is likely that a well-informed and reasonably observant viewer would be given the impression that the Christian Louboutin shoes are being sold in Amazon’s name and for its own account.

Concluding remarks

Whilst it is yet to be seen what the Referring Courts decide in their respective cases, it is noteworthy that the CJEU has made a departure from the Advocate General’s opinion and from previous jurisprudence on similar issues; leaving online marketplaces who incorporate a hybrid model more vulnerable to potential liability for the sales made by third parties on their platform. In contrast, this ruling should bring a level of comfort to brand-owners seeking to protect their intellectual property, as it allows them to bring claims directly against the online marketplace, instead of individual counterfeiters.

The article was first published on The Malta Independent (15 February 2023).