Court of Justice of the EU – Amazon may be found liable for marketing third-party counterfeit products

The question

Can online marketplaces be held directly liable for trade mark infringement when marketing counterfeit, third-party products on their online marketplaces?

The key takeaway

The Court of Justice of the European Union (CJEU) has ruled that Amazon may in certain circumstances be held accountable for trade mark infringement for the marketing of third-party counterfeit, red-soled Louboutin shoes on its platform. The issue is now with the Belgian and Luxembourg national courts to decide.

The background

In 2019, Christian Louboutin initiated a claim for trade mark infringement against Amazon in the national courts of Brussels and Luxembourg. The legal action aimed to establish that Amazon is liable for displaying advertisements for third-party counterfeit, red-soled shoes sold through its online marketplace. In June 2022, the Advocate General gave an opinion that features of Amazon’s business practices did not support the finding that the sign had been “used” by Amazon for the purposes of establishing trade mark infringement.

The development

Departing from the reasoning in the Advocate General’s opinion, the CJEU concluded that Amazon, and any other operator of an online marketplace that utilises a similar sales model, may be held liable for trade mark infringement when marketing counterfeit third-party goods. 

The CJEU outlined that the key test for establishing whether Amazon might be in breach was where a “well-informed and reasonably observant user” of the website would establish a link between Amazon’s services and the sign at issue. Important factors when determining a connection between the online marketplace’s services and the offerings included:

• The online marketplace’s logo being used when displaying advertisements, including on those relating to goods offered by third-party sellers.
• Where services (such as shipping the product and handling returns, storage and dealing with customer queries) are offered for the third-party products and its own goods.
• Offerings from the online marketplace and third parties being described as “bestsellers” or “most popular”.

Next steps

Now that the CJEU has issued its preliminary ruling, the case has been sent back to the national courts in Belgium and Luxembourg to decide whether Amazon has infringed Louboutin’s trade mark.

Why is this important?

The implication of this ruling leaves operators of online marketplaces who utilise a hybrid model (such as Amazon) more vulnerable to being held directly liable for third-party sales of counterfeit products on their platforms. In turn, it will make it easier for brand owners to safeguard their intellectual property rights by allowing them to pursue legal action against the online marketplace itself for trade mark infringement instead of targeting individual counterfeiters.

Any practical tips?

In light of this ruling, online marketplaces should exercise caution in the way that they promote the products sold on their platforms. It is important for them to clearly differentiate between their own product listings and those of third-party vendors, to enable consumers to easily identify the actual seller of the goods.

Spring 2023