28 February 2023

The recent decision of the Court of Justice of the European Union in Louboutin v Amazon raises a number of different issues for platforms facilitating sales by third party vendors.

The decision represents a significant shift in the approach to the liability of intermediaries for trade mark infringement and, unusually, did not follow the opinion of the Advocate General issued in June of last year.

While the decision is a post-Brexit decision of the EU court and is not binding on the UK courts, the nature of trade mark law and intellectual property law generally in the UK remains closely bound with Europe and the ruling is likely to influence decisions in the UK.

Online use of a trade mark

The case concerns proceedings raised by the luxury shoe maker, Christian Louboutin, against three Amazon group companies concerning the alleged unlawful use of a registered EU trade owned by Louboutin in connection with the sale of identical products (red soled shoes) not manufactured by Christian Louboutin.

When proceedings were raised, earlier case law indicated that intermediary websites which simply provided a platform for sales by third parties, would generally be found liable for any infringement by those third parties and simply displaying the adverts of third parties (which adverts may be infringing) would not give rise to liability for the platform.

However, in a departure from previous case law, the court held that by displaying on its website a mark identical to that owned by Louboutin, in connection with the sale of red soled shoes (by virtue of displaying the third party adverts) that action could be attributed to Amazon. The role played by Amazon was, therefore, such that it could not be considered to be a mere website host or intermediary. This was particularly evident as Amazon actively provides assistance to third party sellers, including support as to how best to present their offers.

Acting as an intermediary

The court did not accept Amazon’s argument that use of the trade mark in this way could not be attributed to it and that Amazon’s ancillary services offered to its third party sellers did not justify the third party’s offerings being regarded as forming part of Amazon’s commercial operations.

The fact, Amazon argued, that a service provider creates the technical conditions necessary for the use of a mark which is identical to a registered trade mark and receives payment for doing that, does not mean that the service provider itself makes use of the registered trade mark. However, in its judgment the court explained that in assessing whether the trade mark had been used for the purposes of establishing infringement, it was necessary to assess whether a well informed and reasonably observant user of the website would establish a link between the website operator’s business and the mark in question. If so, infringement would occur.

The court went on to explain that online adverts must be presented in such a way as to enable a well informed and reasonably observant user to easily distinguish between offers originating from the website operator and from third party sellers.

The court held that it would be difficult for users to make a clear distinction where the operator of an online sales website incorporating an online market place (such as Amazon) uses its logo on both the website and all adverts displayed on the website.

The court also commented on the nature and scope of the services provided by operators like Amazon, for example, dealing with the questions from users, are also likely to give the impression to a well-informed and reasonably observant user that those goods are being marketed by that operator on its own behalf.

What now?

It is important to note that a finding of infringement was not established in the case against Amazon. Instead, the CJEU set out the parameters within which infringement will occur if it is established that users are likely to be confused.

The case has now been referred back to the national courts which sought an initial ruling from the CJEU to determine the issue on the evidence. However, the test which has been set down by the CJEU sets out the conditions for online sales platforms to be found liable by virtue of acting as an online marketplace, even if they have not directly placed a registered trade mark on their website.

The standard of care required by these operators has been raised significantly and will undoubtedly require some platforms to undertake a greater degree of policing the content which is used on their websites.

The Intellectual Property & Technology Team at BTO Solicitors LLP has considerable experience in IP infringement claims and advising service providers and brand owners. For further information please get in touch.

Lynn Richmond, Partner lyr@bto.co.uk / 0131 222 2939