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Thursday, 7 July 2016

BREAKING: CJEU says that operators of physical marketplaces may be forced to stop trade mark infringements of market-traders

Can operators of physical marketplaces be considered "intermediaries whose services are used by a third party to infringe an intellectual property right", so that "rightholders are in a position to apply for an injunction" against them, pursuant to the third sentence in Article 11 of the Enforcement Directive? Put it otherwise: how does the landmark decision of the Court of Justice of the European Union (CJEU) in L'Oréal v eBay [noted here, here, and here] apply in an offline context?

This - in a nutshell - were the issues on which the Nejvyšší soud České rep (Czech Supreme Court) had sought guidance from the CJEU in its reference for a preliminary ruling in Tommy Hilfiger Licensing and Others, C-494/15.

This morning the CJEU delivered its judgment [without a prior Opinion of the Advocate General in this case (Melchior Wathelet)], holding that the operator of a physical marketplace may be forced to put an end to trade mark infringements committed by market-traders.

The judgment is not yet available on Curia, but this is what the press release states:

"The company Delta Center is the tenant of the marketplace ‘Pražská tržnice’ (Prague market halls). It sublets to market-traders the various sales areas in that marketplace.

Manufacturers and distributers of branded products discovered that counterfeits of their goods were regularly in Prague market halls. On that basis, they asked the Czech courts to order Delta Center to stop renting sales areas in those halls to people who committed such infringements. The [Enforcement] Directive allows trademark holders to bring an action against intermediaries whose services are used by a third party to infringe their trademarks.

The trademark holders consider that, like the operators of online marketplaces covered by the judgment in L’Oréal, the operator of a physical marketplace may, pursuant to the directive, be forced in law to bring trade mark infringements committed by market-traders to an end and to take measures in order to prevent new infringements.

The Nejvyšší soud (Supreme Court, Czech Republic), before which the case is now pending, asks the [CJEU] whether it is actually possible to order the operator of a physical marketplace to put an end to trademark related infringements committed by market-traders and to take measures seeking to prevent new infringements.

Looking for some counterfeit
food to confiscate ...
for the sake of IP protection
In today’s judgment, the Court finds that an operator which provides a service to third parties relating to the letting or subletting of pitches in a marketplace, and which thus offers the possibility to those third parties of selling counterfeit products in that marketplace, must be classified as an ‘intermediary’ within the meaning of the directive. 

The Court states that whether the provision of a sales point is within an online marketplace or a physical marketplace is irrelevant because the scope of the directive is not limited to electronic commerce [in my opinion this conclusion is correct, as nothing in the Enforcement Directive (and similarly in the InfoSoc Directive) suggests that injunctions are limited to 'online' intermediaries].

Consequently, the operator of a physical marketplace may itself also be forced to put an end to the trade mark infringements by market-traders and to take measures to prevent new infringements.

Similarly, the Court states that the conditions for an injunction issued by a judicial authority against an intermediary who provides a service of letting sales points in market halls are identical to those applicable to injunctions addressed to intermediaries in an online marketplace.

Thus, not only must those injunctions be effective and dissuasive, but they must also be equitable and proportionate. They must not therefore be excessively expensive and must not create barriers to legitimate trade. Nor can the intermediary be required to exercise general and permanent oversight over its customers. By contrast, the intermediary may be forced to take measures which contribute to avoiding new infringements of the same nature by the same market-trader. In addition, the injunctions must ensure a fair balance between the protection of intellectual property and the absence of obstacles to legitimate trade."

A more detailed analysis will be provided when the judgment is made available: stay tuned!

8 comments:

Anonymous said...

And this, ladies and gentlemen, is why the UK has seen the light and voted for it.

Anonymous said...

This is going too far. Makes you want to brexit even when you want to remain. Under what rule of intepretation of a provision designed for the online environment does this arise? Makes a mockery of the deliberate and laboured way the jdugment handed down yesterday by the Court of Appeal (online trade mark infringements)has proceeded.And once again warmly applauded by the copyright part of this blog. The CJEU does not think too hard when it comes to counterfeiters. Does this mean if I rent premises to a company (and I never see them again)and it turns out they are running a dodgy IP business from there I can be drawn into it?

Eleonora Rosati said...

@Anonymous at 11:34: Thanks for your comment, but neither Article 11 of the Enforcement Directive now Article 8(3) of the InfoSoc Directive are specifically designed for online environment (Recital 59 in InfoSoc Directive refers to particular case of 'digital environment' but is not limited to it).

I have yet to read judgment in full, but also Arnold J (whose Cartier judgment - that you mention - was praised by Kitchin LJ) has said that the notion of intermediary is hardly limited to online ones: http://ipkitten.blogspot.co.uk/2015/09/who-is-intermediary-for-sake-of-article.html

Anonymous said...


forgive me if I continue to disagree with your "analysis" and your adulation of Arnold. There have many misgivings expressed about this approach to EU law and poorly argued lower court English judgments won't help -no fan of Arnold.Some of us might like to live in a world where the jack boot approach to IP rights enforcement is confined to the English mainland (as others hopefully learned their lesson). Don't export it and I regret the CJEU decision and hope there is an opportunity to disapply it now that precedent will be on the way out.

Anonymous said...

I agree. This is going too far. The whole economic basis for giving incentives to trade mark owners is so that the state (and others) are absolved from the cost of supporting the trade marks system in some respects. If we do not incentivise private trade mark owners to enforce by placing the obligation of enforcement on others (and forcing them to do so - I note that neither the police nor trading standards are so forced) then we are effectively making their advertising work for them - a free ride I think they call it. Why cannot trade mark owners do their own dirty work?

I have defended a number of market cases over the years in the criminal courts and all of which have failed because it is impossible for a market owner to know what is and what is not infringing - the say so of the brand owner has, time and time again, proven to be invaluable to the defence case in this regard.

A nonny mouse

Anonymous said...

Having now read this judgment, it is a full application of L'oreal. No conditions, no knowledge test, and no hearing and no AG's opinion either.However, at para 33 et seq, there is a reference to national law -so a knowledge test may be applied.

Anonymous said...

We ask businesses of all types to take on all sorts of societal obligations as part of their social license. Lawyers do AML checks on their clients. Sellers and shippers check they are not breaking sanctions, stock markets monitor traders for suspicious trades. Compliance is a fact of business life. Why? because unregulated spaces are taken over by cheats and bullies - denying freedoms to everyone else.

These same tools will be adopted to stop other rights abuses as the UN guiding principles on business and human rights and the related national action plans take root.


This is basic due diligence, notably in dealing with those that have already been found to have dealt in fakes.

The obligations are not open ended. They must be equitable and proportionate. They must not be excessively expensive and must not create barriers to legitimate trade. That is a pretty heavy caveat.

Many intermediaries have a care that their services are not abused. When was the last time you saw OneDrive or DropBox used for piracy, or fakes in a department store of concessions like Selfridges?

We already learned from financial markets what happens when no one is responsible. Don't expect the real economy to allow itself to be experimented on to destruction through platforms without basic responsibilities to society.

It is precisely because criminal liability is generally not the right model, both in finance and here, that such civil court orders exist.

Jani Ihalainen said...

The judgment can now be accessed here, in case anyone is interested.

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