7 July 2016Trademarks

CJEU: physical marketplace operators may be forced to police counterfeits

Operators of physical markets may be forced to put an end to trademark infringements committed by traders and should be considered as intermediaries, Europe’s highest court has said.

In a judgment handed down today, July 7, the Court of Justice of the European Union (CJEU) said operators of marketplaces may be forced to bring trademark infringements committed by market traders to an end and take measures to prevent new infringements.

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 clarification from the CJEU on whether it is possible to order the operator of a physical market to put an end to infringements committed by traders, as is the case with online marketplaces.

In today’s judgment, the CJEU said that an operator that provides a service to third parties, and which then offers the possibility to those third parties of selling counterfeits, must be classified as an intermediary.

The court, which has yet to release its full judgment, said that whether the sales point is online or offline is irrelevant and conditions for an injunction against an intermediary in this instance should be identical to those handed out to online intermediaries.

The court said that not only must those injunctions be effective and dissuasive, “but they must also be equitable and proportionate”.

It added: “They must not therefore be excessively expensive and must not create barriers to legitimate trade.”

Arthur Artinian, partner at law firm K&L Gates, said this was a significant development as “until now establishing liability for market owners had always been dealt with under national law”.

“This judgment certainly appears to be a stake in the ground for the legal framework to say you can obtain relief and injunctions against those that are behind the operation of a marketplace. While the case specifically includes trademarks it may open the door for copyright and design cases as well.

"Though it depends on how the national courts will interpret it, this is certainly a welcome development and brand owners will look carefully at how they can use it.”

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