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Thursday, 3 March 2016

No strict liability for infringement in online advertising, says the CJEU

Having your own advertising spread all around the internet is every company's dream. A dream that might become less pleasant, though, if that advertising starts infringing another company's trade mark and you can't manage to take it down, whilst the trade mark owner is breathing down your neck. In a nutshell, this is the factual scenario of the decision that the Court of Justice of the European Union (CJEU) issued today in Daimler AG Együd Garage Gépjárműjavító és Értékesítő Kft (C-179/2015). The ruling addresses the notion of "use of trade mark" in on-line advertising and explores possible remedies against infringements on the internet that may be very useful in the era of viral marketing.

The story starts in Budapest. Együd Garage is a company specialised in the sale and repair of Mercedes cars. Among other things, Együd Garage supplies after-sales services in partnership with Daimler, the German manufacturer of Mercedes cars and the owner of the ‘MercedesBenz’ trade mark in Hungary. As per the supply contract with Daimler, Együd Garage describes itself as an 'authorised Mercedes-Benz dealer', also in its own on-line advertising. After some years, the contract terminates, and so does the chance for Együd Garage to lawfully use 'Mercedes-Benz' in a distinctive fashion on its own advertising. Diligently, Együd Garage requests the advertising operator to remove the contents including the definition 'authorised Mercedes-Benz dealer'. For some reason, the advertising operator disregards Együd Garage request. Daimler is not really happy with that and sues Együd Garage for trade mark infringement. The District Court of Budapest stays the proceedings and asks the CJEU whether 

Article 5(1)(b) of the trade mark Directive 2008/95/EC means that the trade mark proprietor is entitled to take action against a third party named in an advertisement on the internet "even though the advertisement was not placed on the internet by the person featuring in it or on his behalf, and it is possible to access that advertisement on the internet despite the fact that the person named in it took all reasonable steps to have it removed, but did not succeed in doing so". 

In a nutshell: is the person who initially ordered an advertisement always to be considered liable for possible trade mark infringement caused thereby? Not at all, say the Court. Indeed, "using" a trade mark in the meaning of Article 5(1)

"involves active behaviour and direct or indirect control of the act constituting the use. However, that is not the case if that act is carried out by an independent operator without the consent of the advertiser, or even against his express will".

Whilst publishing an advertisement that includes a trade mark may amount to "use" of that trade mark by an advertiser who has ordered it, that use keeps existing only inasmuch as the advertiser keeps consenting thereto. By contrast,

Not as good as one may think.
"that advertiser cannot be held liable for the acts or omissions of such a provider who, intentionally or negligently, disregards the express instructions given by that advertiser who is seeking, specifically, to prevent that use of the mark. Accordingly, where that provider fails to comply with the advertiser’s request to remove the advertisement at issue or the reference to the mark contained therein, the publication of that reference on the referencing website can no longer be regarded as a use of the mark by the advertiser", which " cannot be held liable for the independent actions of other economic operators, such as those of referencing website operators with whom the advertiser has no direct or indirect dealings and who do not act by order and on behalf of that advertiser, but on their own initiative and in their own name".

Under EU Law, then, the use of a trade mark by an advertiser ceases when the latter, after ordering the advertisement, seeks to take it down. As a consequence,

"the proprietor of the mark is not entitled, under Article 5(1)(a) or (b) of Directive 2008/95, to take action against the advertiser in order to prevent [third parties unrelated to the advertiser from] publishing online the advertisement containing the reference to its trade mark".

This said: what should the poor trade mark owner do to protect its trade mark from an indiscriminate use on the internet? According to the CJEU, two options remain available.

First, the trade mark owner can still bring proceedings against operators of websites that infringe the rights connected with its trade mark, being them the sole "users" of that trade mark under EU Law after the original advertiser withdrew his consent by seeking the removal thereof.

Secondly, although no longer liable for the trade mark infringement, the person who initially ordered the advertisement is not completely out of the picture, as the infringing advertisement may still be promoting his activity. That might matter, the CJEU notices, as there could still be chance

It's strict liability, Mario.
"for the proprietor to claim from the advertiser, where appropriate, reimbursement of any such financial advantage on the basis of national law"

[I sense the Court refers to "ingiustificato arricchimento", or "enrichissement sans cause", a general civil-law action aimed to obtain the reimbursement of whatever one had received by mistake, without due cause or justification].  
The CJEU decision seems fairly consistent with trade mark law and general liability's principles. It seems fair that the notion of "trade mark use" and related liability for infringement be strictly connected to a person's consent, as well as to active, actual, and current involvement and control over the circulation of infringing content.

Whilst what advertisers could reasonably be expected to do in order to halt operator's infringements remains an open issue, the CJEU's decision firmly excludes that strict liability regimes may apply in cases where advertising involve different persons. This is key in the current online advertising scenario, whose balkanised mechanisms often reduce control over where, how, and by whom contents are spread and displayed. New world - good, old rules: "ad impossibilia nemo tenetur" ["nobody is held to the impossible"], "nulla poena sine culpa" ["no punishment without guilt"], and a bunch of other Latin phrases that Italian jurists would never know the meaning of without googling them. 

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