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A ruling in July from the Court of Justice of the European Union has given brand owners an extra weapon in their fight against counterfeit goods, as WIPR reports.
Anyone who has ever shopped at or simply strolled around a busy market in Europe or beyond will know all about the various stalls proudly displaying all types of goods from foods to gadgets and clothes to accessories.
Alongside the fancy cheeses, meats and fishes are often display cabinets and hangers full of products claiming to be authentic Gucci handbags, high-quality Ray-Ban sunglasses and the latest Manchester United football shirt.
Of course, many buyers will be well aware that the products are fakes; they are simply out to pick up products at a lower price than found on the high street.
For the rights owners whose brands are counterfeited a recent ruling from the highest court in Europe will have provided comfort.
In a judgment handed down on July 7, the Court of Justice of the European Union (CJEU) said that operators of physical markets may be forced to put an end to trademark infringements committed by traders and that they should be considered as intermediaries.
The case, Tommy Hilfiger Licensing and Others v Delta Center, stems from the Supreme Court of the Czech Republic (Nejvyšší soud), where it is pending.
Brand owners including Tommy Hilfiger discovered that various counterfeits were being sold at Pražská tržnice, a market in the Czech Republic’s capital city Prague. The brands asked the Czech court to order Delta Center, a company that sub-lets spaces to market tenants, to stop renting sales areas to people who committed infringements.
The court sought the CJEU’s clarification on whether it is possible to order the operator of a physical market to put an end to infringements committed by traders, as is currently the case with online marketplaces.
In its judgment, the CJEU said that an operator that provides a service to third parties, and which then offers the possibility of selling counterfeits, must be classified as an intermediary in the same way as it would be online.
The ability to target intermediaries is currently afforded to IP owners under article 11 of the EU’s enforcement directive.
Antony Gold, partner at law firm HGF, says that in order to understand the wider implications of the case it is necessary to look at the CJEU’s 2011 decision in L’Oréal and Others v eBay, which clarified article 11.
That case concerned a claim brought by a number of brand owners to establish that operators of online marketplaces had obligations to prevent sellers using their facilities to infringe IP rights.
The court ruled that national courts must be allowed to order operators of online markets to take measures to bring an end to IP infringements and help prevent further violations.
"Extending the intermediary obligation to physical marketplaces seems a logical step but the practicalities of putting the ruling into practice have yet to be established."
Gold says the reasoning adopted by the CJEU shows that the principle of L’Oreal and Tommy Hilfiger can apply to “any scenario in which a party is in control of a physical environment made available to third parties”.
“The principles involved could conceivably relate to department store leasing concessions, retail parks, shopping centres, airport shopping, outlet villages and so on. These would tend to be where occupation by the actual or potential infringers is on a comparatively short-term basis (such as market stalls).”
Jeremy Blum, partner at law firm Bristows, says the decision “comes as little surprise”, as article 11 does not stipulate any limitations, but he says there should be a question about whether injunctions are “necessary and proportionate”.
He adds: “The circumstances when this type of injunction should be made is a separate issue. The reason for article 11-type injunctions is because of enforcement difficulties or because the infringers are unknown and outside the jurisdiction. With respect to physical world marketplaces, the infringers are known, in the jurisdiction and identifiable.
“The court must take a balancing exercise and consider the proportionality of the injunction in such circumstances and whether it is proportionate to order an intermediary to take steps, given that action could be taken against the infringer with relative ease.”
Gold adds: “From a brand owner’s perspective the decision is welcome news. It also reinforces a general line of argument that it is not only infringers who are potentially liable for their infringing acts; others who provide an infrastructure which facilitates them doing so may be liable as well.”
Extending the intermediary obligation to physical marketplaces seems a logical step but the practicalities of putting the ruling into practice have yet to be established.
Those practicalities aside, brand owners will likely be relieved at being granted an extra string to their bow in the fight against counterfeiters, particularly when faced with the thought of their brand being splashed across some of the continent’s busiest shopping hubs.
counterfeit, Bristows, Court of Justice of the European Union, brand, trademark, L'Oreal, Tommy Hilfiger,