A recent ruling from the high-profile case of Christian Louboutin v Amazon has highlighted the potential pitfalls of allowing third-party sellers to advertise and sell counterfeit products via online commercial marketplaces. This judgment is of particular importance as online marketplaces become more popular.
As a result of counterfeit, red-soled shoes being sold by third-party sellers on Amazon, Louboutin brought an action against Amazon for infringement of their registered trademark for their signature red-soled shoes. Louboutin claimed that whilst Amazon was not selling the counterfeit products themselves, they were involved in the distribution, storage and advertising of those products and, in particular, presenting the trademark infringing products on its platform in the same manner as products sold in Amazon's name.
The courts of Belgium and Luxembourg (where the action was originally brought) referred the matter to the Court of Justice of the European Union (CJEU) to consider whether Amazon could be held directly liable for using the trademark where a third-party seller places an advert for counterfeit products on their platform.
The CJEU held that operators of online marketplaces could be held directly liable for third-party advertisements. The CJEU confirmed that users could mistakenly think Amazon themselves are selling shoes on behalf of Louboutin, particularly when Amazon displays its own logo on the third-party sellers' advert and stores and ships the shoes in question.
This preliminary ruling departs from previous case law and is likely to be welcomed by all brand owners (specifically for luxury products). It may also encourage brand owners to now pursue large online marketplaces for infringement as opposed to individual third-party sellers on the basis that they are much easier to pursue in terms of tracking down and are also more likely to be able to pay any fines or damages awarded, as opposed to small third-party sellers.
The ruling also serves as a warning for online marketplaces that must differentiate between their own and third-party offerings. It also provides helpful indicators for avoiding such risks and liability.
Have a verification process for goods being listed and the third party listing the goods.
If you have any questions or would like more information regarding the case and how this may affect your marketplace business or would like marketplace terms drafted, please do contact our Commercial Solicitors, who would be happy to assist.
