BREAKING: CJEU says that operators of physical marketplaces may be forced to stop trade mark infringements of market-traders

Can operators of physical marketplaces be considered "intermediaries whose services are used by a third party to infringe an intellectual property right", so that "rightholders are in a position to apply for an injunction" against them, pursuant to the third sentence in Article 11 of the Enforcement Directive? Put it otherwise: how does the landmark decision of the Court of Justice of the European Union (CJEU) in L'Oréal v eBay [noted here, here, and here] apply in an offline context?

This - in a nutshell - were the issues on which the Nejvyšší soud České rep (Czech Supreme Court) had sought guidance from the CJEU in its reference for a preliminary ruling in Tommy Hilfiger Licensing and Others, C-494/15.

This morning the CJEU delivered its judgment [without a prior Opinion of the Advocate General in this case (Melchior Wathelet)], holding that the operator of a physical marketplace may be forced to put an end to trade mark infringements committed by market-traders.

The judgment is not yet available on Curia, but this is what the press release states:

"The company Delta Center is the tenant of the marketplace ‘Pražská tržnice’ (Prague market halls). It sublets to market-traders the various sales areas in that marketplace.

Manufacturers and distributers of branded products discovered that counterfeits of their goods were regularly in Prague market halls. On that basis, they asked the Czech courts to order Delta Center to stop renting sales areas in those halls to people who committed such infringements. The [Enforcement] Directive allows trademark holders to bring an action against intermediaries whose services are used by a third party to infringe their trademarks.

The trademark holders consider that, like the operators of online marketplaces covered by the judgment in L’Oréal, 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 (Supreme Court, Czech Republic), before which the case is now pending, asks the [CJEU] whether it is actually possible to order the operator of a physical marketplace to put an end to trademark related infringements committed by market-traders and to take measures seeking to prevent new infringements.

Looking for some counterfeit
food to confiscate ...
for the sake of IP protection

In today’s judgment, the Court finds that an operator which provides a service to third parties relating to the letting or subletting of pitches in a marketplace, and which thus offers the possibility to those third parties of selling counterfeit products in that marketplace, must be classified as an ‘intermediary’ within the meaning of the directive. 

The Court states that whether the provision of a sales point is within an online marketplace or a physical marketplace is irrelevant because the scope of the directive is not limited to electronic commerce [in my opinion this conclusion is correct, as nothing in the Enforcement Directive (and similarly in the InfoSoc Directive) suggests that injunctions are limited to 'online' intermediaries].

Consequently, the operator of a physical marketplace may itself also be forced to put an end to the trade mark infringements by market-traders and to take measures to prevent new infringements.

Similarly, the Court states that the conditions for an injunction issued by a judicial authority against an intermediary who provides a service of letting sales points in market halls are identical to those applicable to injunctions addressed to intermediaries in an online marketplace.

Thus, not only must those injunctions be effective and dissuasive, but they must also be equitable and proportionate. They must not therefore be excessively expensive and must not create barriers to legitimate trade. Nor can the intermediary be required to exercise general and permanent oversight over its customers. By contrast, the intermediary may be forced to take measures which contribute to avoiding new infringements of the same nature by the same market-trader. In addition, the injunctions must ensure a fair balance between the protection of intellectual property and the absence of obstacles to legitimate trade."

A more detailed analysis will be provided when the judgment is made available: stay tuned!

[Originally published on The IPKat on 7 July 2016]