It is not always immediately clear whether an offer is made by a third-party seller or by Amazon itself on its online marketplace. In the absence of clear differentiation and when the trade mark is used in its own commercial communication, the online marketplace is also liable for trade mark infringements committed by third parties, the CJEU has ruled. Gabriele Engels of the MARQUES Cyberspace Team explains.

Louboutin v Amazon

On 22 December 2022, the CJEU issued a judgment in two joined referrals from the courts in Belgium and Luxemburg (Cases C-148/21 and C-184/21).

Both proceedings were initiated by the famous luxury shoe brand Christian Louboutin, which rose to fame with the help of its iconic, red-soled stilettos. It had brought the issue before national courts after third-party offers illegitimately using its trade mark were discovered on the online marketplace Amazon.

The CJEU in Luxembourg

The Court was faced with the question whether the display of such third-party trade mark infringements by an online marketplace could be deemed a “use” of that trade mark by the platform within the meaning of Article 9(2)(a) EUTMR (Regulation 2017/1001), thereby leading to direct platform liability.

Uniform presentation and “own” commercial communication

As often in cases of trade mark infringement, consumer confusion lay at the heart of this case. It had to be determined whether the hosting of trade mark-infringing third-party offers could be mistaken for the online marketplace itself “using” those trade marks in its own “active” commercial communication.

In its evaluation of which factors contribute to such a finding, the Court focused on host providers that not only allow third parties to operate on their platform, but also offer their own, competing products and services alongside third-party offers.

To determine whether the average consumer might be confused as to the origin of the goods in question, the situation must be evaluated from the perspective of a normally informed and reasonably attentive user.

The presentation on the platform of advertisements for third-party products, as well as the nature and scope of the services provided by its operator were of particular importance to the CJEU. Multiple factors are listed as examples which can tip the scales in favor of platform liability.

• Uniform presentation of all offers by displaying own advertisements together with those of third parties and adding own logo to those advertisements as a reputable distributor.
• Platform operator offers additional services to its third-party sellers, such as assistance with the presentation of their advertisements, or the storage and despatch of their goods.
• Customer care services, such as dealing with questions or handling the return process of goods for their third-party sellers, may also give the impression to a normally informed and reasonably attentive user that those goods are being marketed by the operator on its own behalf.
• The indiscriminate labelling of both platform, as well as third-party, goods as 'bestseller', 'most wanted' or 'most frequently gifted’, without distinguishing according to origin can further enhance this impression.

A ground-breaking decision

This judgment by the CJEU is ground-breaking for EU trade mark law. It establishes that an online marketplace which offers third-party products in addition to its own products can be held liable for trade mark infringing products sold on its platform by these third parties.

This is particularly true where the services rendered by the platform regarding the offer may lead the average consumer to believe that the platform is acting on its own behalf and account, especially due to its uniform presentation and use of the trade mark in its own communication. This decision is also interesting as the CJEU did not follow the Advocate General’s opinion, which is quite rare.

Due to the ambit of the questions referred to it, the Court establishes this without resorting to the concept of host provider privilege pursuant to Article 14 of the E-Commerce Directive (Directive 2000/31/EC).

Remarkably, it adopts a liability regime similar to the liability distribution provided by Article 6(3) and Recital 24 of the Digital Services Act (Regulation 2022/2065, DSA)). Although not yet applicable, this provision essentially stipulates that online marketplaces are liable where the product is provided in such a way that the average consumer would believe that it is provided either by the online platform itself or by a third party acting under the platform’s authority or control. However, Article 6(3) only applies to violations of consumer protection laws and not trade mark law.

The DSA is aimed at online platforms to remove illegal content quickly.

We must now wait to see how the referring courts and other national courts will apply and interpret this decision regarding trade mark use by online platforms. The actual likelihood of consumer confusion in a specific case must now be determined by the national courts considering the factors listed by the CJEU.

It remains to be seen whether this decision will clarify the extent of liability of online marketplaces for third-party content. This will likely not be the case and it will remain a highly debated topic.

Further reading

The MARQUES Cyberspace Team has published a paper on platform provider liability across the EU, which can be found here.

Gabriele Engels is Counsel with DLA Piper in Cologne and a member of the Cyberspace Team.