Audi and VW's feud with Fruugo: a matter of facts that leaves law in flux
Last year, 2022, the ruling in the case of Louboutin v Amazon (C-148/21 and C-184-21) was issued by the Court of Justice of the European Union (CJEU).
It was held that Amazon could be held liable for trademark infringement linked to counterfeit shoes sold by third-party retailers on Amazon Marketplace.
The ruling was greeted by brand owners as a long-overdue shift in the law that would require online marketplaces to play a greater role in stemming the tide of counterfeit goods online.
The District Court of the Hague has now issued a decision along similar facts in the case of Audi and Volkswagen v Fruugo (C/09/622304 /1-lA ZA 21-1 105).
As discussed below, this decision suggests that the ruling in Louboutin may not represent a sea change in the law, so much as serving as a signpost for national courts when considering the factual circumstances of a particular case.
Counterfeits concern
Audi and Volkswagen are well-known car manufacturers, and each of them owns myriad trademarks (both EU and national marks) in respect of their logos—four interlinked circles for Audi, and a styled ‘VW’ for Volkswagen.
Fruugo is an online marketplace, based in the UK, but operating across 42 countries. It provides more than 2,000 third-party retailers with, amongst other things, data processing services in exchange for a percentage value of each transaction.
Audi and Volkswagen were concerned about counterfeit products, including hubcaps and badges, which were being sold on the Fruugo platform, and advertised on third-party websites including Google.
The car manufacturers conducted a number of trap purchases in order to confirm that the products in question were counterfeit. Analysis of the products purchased revealed that they had incorrect markings, and were of inferior quality.
Audi and Volkswagen demanded that Fruugo cease infringement of their trademarks, which swiftly blocked access to the specific counterfeit items complained of, but refused to agree to any compensation for the alleged infringement.
Fruugo reasoned that it was merely hosting the infringing content, asserting that it did not have any control over the items, and was not itself offering those goods for sale. It was not, therefore, using the Audi and Volkswagen trademarks in the course of trade, and could not be held directly liable for trademark infringement, it argued.
Having been rebuffed, Audi and Volkswagen brought a claim in the Dutch court seeking injunctive relief, Fruugo’s sales information, and corresponding damages.
The court’s decision and reasoning
It was common ground between the parties that the products sold via Fruugo bore unlicensed copies of Audi and Volkswagen’s logos. The questions for the Dutch court were, therefore:
1) Could Fruugo be held directly liable for the infringing products under Art. 9(2) of the EU Trade Mark Regulation 2017/0001 (‘EUTMR’) (equivalent to s. 10(1) – 10(3) of the UK Trade Marks Act 1994 (‘TMA’))?; and
2) Could Fruugo rely on the hosting exemption under Art. 14(1) of the e-Commerce Directive 2000/31/EC (‘ECD’)?
With regard to the first question, the court focused on the concept of ‘use’. The term ‘use’ is not defined in the EUTMR, but has been developed in case law, notably in the decision in L’Oréal v eBay (C-324/09.), and Coty v Amazon (C-567/18.).
Those cases established that for a third party to use a party’s trademark, it must do so in its own ‘commercial communication’. The question then follows: what constitutes a third party’s own commercial communication?
Commercial communication
In Louboutin v Amazon, the CJEU found that consumers perceived the relevant sign (the red sole registered by Louboutin) as forming a part of Amazon’s commercial communication. This created a link in the mind of the ‘well-informed and reasonably observant user’ between Amazon’s services and the sign at issue.
According to the court, consumers believed that Amazon used the sign in its own commercial communication. The factors leading the court to that finding were:
