FABRIZIO MONCALVO Case analysis

Case Analysis  Where the services of an intermediary, such as an operator of a website, have been used by a third party to infringe a registered trademark, can the trademark owner obtain an injunction against the intermediary to prevent further infringements of the said trade mark?

EU Court of Justice (Grand Chamber), Judgement, July 12,2011 Case C ‑ 324/09 PRELIMINARY INFORMATION  L. is a manufacturer and supplier of perfumes, cosmetics and hair-care products.  L. operates a closed selective distribution network, in which authorised distributors are restrained from supplying products to other distributors.

PRELIMINARY INFORMATION  E. operates an electronic marketplace that allows private sellers to list goods they wish to sell, either through auction or at a fixed price.

PRELIMINARY INFORMATION  The private sellers have registered for that purpose with e. and have created a seller’s account with it.  E. enables prospective buyers to bid for items offered by sellers.  E. charges a percentage fee on completed transactions.

PRELIMINARY INFORMATION  ‘ Buy It Now’ : Sellers can also set up online shops on E. sites.

PRELIMINARY INFORMATION  ‘Sellers and buyers must accept E.’s online-market user agreement: one of the terms of that agreement is a prohibition on selling counterfeit items and on infringing trademarks.

The E. case  L. sent E. a letter expressing its concerns about the widespread incidence of transactions infringing its intellectual property rights on E.’s European websites.  L. brought actions against E. in various Member States, including an action before the High Court of Justice (England & Wales), Chancery Division.

The E. case L.’s action before the High Court of Justice sought a ruling: 1. FIRST, that E. and the individual defendants (Private Sellers) are liable for sales of 17 items made by those individuals through the website

The E. case L. considers that the sale of the items infringed its trade mark rights, since those items were: (a) either goods that were not intended for sale (such as tester products) or

The E. case (b) goods bearing L. trademarks intended for sale in North America and not in the European Economic Area (‘EEA’); (c) some of the items were sold without packaging.

The E. case SECOND, L. submits that E. is liable for the use of L. trademarks where A. those marks are displayed on E.’s website B. where sponsored links triggered by the use of keywords corresponding to the trademarks are displayed on the websites of search engine operators, such as Google.

when an internet user entered the words ‘ L. ’ – L.’s national word mark ‘L.’ – as a search string in the G. search engine, the following E. advertisement was displayed in the ‘sponsored links’ section: Advertise: ‘L. Great deals on L. Shop on E. and Save!

THIRD, L. has claimed that, even if E. was not liable for the infringements of its trade mark rights, it should be granted an injunction against E..

The high Court of justice remarks the High Court of Justice noted that: E. has developed a system that is intended to provide intellectual property owners with assistance in removing infringing listings from the marketplace. L. has declined to participate in the above programme, contending that the programme is unsatisfactory.

The high Court of justice remarks E. applies sanctions, such as the temporary – or even permanent – suspension of sellers who have contravened the conditions of use of the online marketplace. The High Court of Justice concluded that a number of questions of law first required an interpretation from the Court of Justice of the European Union.

The legal matter  Where the services of an intermediary, such as an operator of a website (E.), have been used by a third party to infringe a registered trademark, can the trademark owner obtain an injunction against the intermediary (E.) to prevent further infringements of the said trade mark?’

Considerations on questions referred A. it is not disputed that the individual defendants (Private Sellers) have, via the website, offered for sale, and sold, to consumers within the European Union (‘EU’): (a)goods bearing L. trademarks which L. intended for sale in third States; (b)goods not intended for sale, such as tester and dramming items. (c)Nor is it disputed that a number of those goods were sold without packaging.

Considerations on questions referred B. E. denies that there can be any infringement of trade mark rights when such offers for sale are displayed on its online marketplace. C. the owner of a trade mark exclusive rights entitling him to prevent any third party from importing goods bearing that mark, offering the goods, or putting them on the market or stocking them for those purposes, D. L. had clearly indicated to its authorised distributors that they could not sell such items and bottles, which in any case were often marked ‘not for sale’.

Considerations on questions referred E. The High Court of Justice held that: A. the operator of the online marketplace is an advertiser; B. where sales are made through online marketplaces, the service provided by the operator of the marketplace includes the display, for its customer-sellers, of offers for sale originating from the latter; C. in order for an internet service provider to be kept liable, it is essential that such provider plays an “ active role” of such a kind as to give it knowledge of, or control over, those data

The E. role E. processes the data entered by its customer-sellers. The sales in which the offers may result take place in accordance with terms set by E.. In some cases, E. also provides assistance intended to optimise or promote certain offers for sale. the operator of an online marketplace stores offers for sale on its server, sets the terms of its service, is remunerated for that service and provides general information to its customers Sometimes, the operator provides assistance which entails, in particular, optimising the presentation of the offers for sale in question or promoting those offers

 Has E. played an “active” or a “neutral” role regarding such sales ?

The EU Court of Justice’s ruling on E. Case  the trade mark owner may prevent that sale, offer for sale or advertising  testers or samples (intended for demonstration to consumers) are not considered as “put in the market”  the trade mark owner may oppose the resale of an unboxed

The EU Court of Justice’s ruling on E. Case  the owner of a trade mark is entitled to prevent an online marketplace operator from advertising (on the basis of a keyword which is identical to his trade mark) goods bearing that trade mark  Exemption from liability applies only to the operator of an online marketplace where that operator has not played an active role

The EU Court of Justice’s ruling on E. Case  The operator plays such a role when it provides assistance which entails optimising the presentation of the offers for sale in question or promoting them  operators of the online marketplace not playing an active role cannot rely on the exemption from liability if it was aware of facts or circumstances on the basis of which a diligent economic operator should have realised that the offers for sale were unlawful  measures which contribute, not only to bringing to an end infringements of those rights by users of that marketplace, but also to preventing further infringements of that kind.

The EU Court of Justice’s ruling on E. Case  Those injunctions must be effective, proportionate, and dissuasive and must not create barriers to legitimate trade