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Online Marketplaces can be held liable for third-party trademark infringements - CJEU decides

The CJEU has issued a decision in two joined referrals, stipulating which factors should be considered in determining whether an online marketplace is liable for third-party trademark infringements (judgment of 22 December 2022, cases C-148/21 und C-184/21). The evaluation focuses on host providers which not only allow third parties to operate on their platform, but also offer their own, competing products and services alongside third-party offers.

Liability where brand is used in own commercial communication of online marketplace

Both proceedings were initiated by a luxury shoe brand, famous for its red-soled stilettos, after third-party offers illegitimately using its trademark were discovered on an online marketplace. The Court had to answer whether the display of such third-party trademark infringements by an online marketplace could be deemed a “use” of that trademark by the platform within the meaning of Art. 9(2)(a) EUTMR (Regulation 2017/1001) and therefore lead to direct platform liability. This is the case where the portrayal of third-party content constitutes an own “active” commercial communication, so that customers might think, the online marketplace is actually the seller.

On an online marketplace, it may not always be immediately clear whether an offer is made by a third-party seller or by the platform itself. Therefore, it must be evaluated from the perspective of a normally informed and reasonably attentive user whether the average consumer might be confused as to the origin of the goods. Multiple factors are listed as examples which can indicate platform liability:

  • Uniform presentation of all offers by displaying operator advertisements together with those of third parties and adding its own logo to those advertisements as a reputable distributor.
  • Platform operators offer additional services to their third-party sellers, such as assistance with the presentation of their advertisements, or the storage and dispatch of their goods.
  • Customer care services, such as dealing with questions or handling the return process of goods for their third-party sellers.
  • Indiscriminate labelling of both platform as well as third-party goods as 'bestseller', 'most wanted' or 'most frequently gifted’, without distinguishing according to origin.

Key Takeaways

This decision is groundbreaking to EU trademark law. It establishes that an online marketplace featuring own and third-party offers, can be held liable for trademark infringing products sold on its platform by third parties. This is particularly true where the services rendered by the platform regarding the offer may lead the average consumer to believe that the platform is acting on its own behalf and account, in particular due to using the brand in its own commercial communication.

Without resorting to the concept of host provider privilege pursuant to Art. 14 E-Commerce Directive (Directive 2000/31/EC), the adopted liability regime is reminiscent of the liability distribution provided by Art. 6(3) and Recital 24 DSA (Digital Services Act (Regulation 2022/2065)). Although not yet applicable, this provision essentially stipulates that online marketplaces are liable where a product is provided in such a way that the average consumer would believe that it is provided either by the online platform itself or by a third party acting under the platform’s authority or control. However, Art. 6(3) DSA is only applicable to violations of consumer protection laws and not trademark law.

It remains to be seen how the referring courts and other national courts will apply and interpret this decision regarding trademark use by online platforms. The actual likelihood of consumer confusion in a specific case must now be determined by the national courts under consideration of the factors listed by the CJEU. It remains to be seen whether this decision will clarify the extent of liability of online marketplaces for third-party content. This will likely not be the case but remain a highly debated topic.

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