It has been accepted for some time (following the decision L’Oréal v eBay) that operators of online marketplaces can be forced to take action to remove listings that infringe trade mark rights and put in place procedures to prevent future infringements. The Court of Justice of the European Union (CJEU) has today issued guidance as to how the decision in L’Oréal v eBay should be applied in the physical world. This decision could have a major impact on those who operate marketplaces.
Delta Center is the operator of ‘Pražská tržnice’ (Prague market halls). It sublets pitches and sales areas to various traders within the marketplace.
Brand owners discovered that counterfeit products were being sold in Prague market halls. They took action against Delta Center and asked the Czech court to order that this company stop renting sales areas to traders selling counterfeit goods.
The Enforcement Directive allows trade mark holders to bring an action against intermediaries whose services are used by a third party to infringe their trade marks. The Brand owners argued that, like the operators of online marketplaces covered by the judgment in L'Oreal v eBay, the operator of a physical marketplace may, pursuant to the directive, be forced in law to bring trade mark infringements committed by market traders to an end and to take measures in order to prevent new infringements.
The Nejvyšší soud (the Czech Supreme Court) sought guidance from the CJEU as to whether it could order the operator of a physical marketplace to put an end to trade mark infringements committed by traders and to take measures seeking to prevent new infringements.
The Court has held that an operator of a marketplace must be classified as an intermediary within the meaning of the Enforcement Directive. This is on the basis that the operator provides a service to third parties involving the letting or sub-letting of pitches in a marketplace and, therefore, creates an environment in which those third parties can sell counterfeit products in that marketplace. The Enforcement Directive is not limited to electronic commerce.
The consequences of this decision could be far-reaching for operators of physical marketplaces. It follows that operators can be forced to take action to put an end to the trade mark infringements by market traders and to take measures to prevent new infringements. This could include taking steps to put in place procedures to ensure that traders are not selling counterfeit goods; to remove counterfeit products from sale; and to take action to prevent traders who have sold counterfeit goods from being able run pitches.