CJEU finds that Amazon may be liable for infringing third party ads

In a highly anticipated decision dated 22 December in relation to the advertisement of fake Christian Louboutin shoes by third party vendors on Amazon, the Court of Justice of the European Union (CJEU) has held that Amazon may indeed be held accountable for trade mark infringement based on their "use" of trade marks in advertisements promoting fake third-party goods. 

The main question to be answered by the Court was whether, and under what conditions, online marketplaces such as Amazon could be held liable for trade mark infringement in relation to the advertisement of infringing goods offered for sale by third parties on their platforms. 

The short answer is "yes" - online marketplaces can be held liable for third party advertisements that infringe registered trade marks if there is confusion as to the source of the advert. 

The CJEU's guidance for a finding of marketplace liability in essence turns on whether an informed and reasonably attentive user would be under the impression that advertisements for fake products bearing another's registered trade mark originate from the operator of the marketplace themselves and whether consumers would form a link between the marketplace's services and the trade marks appearing on infringing products in the advertisements. The Court noted that the method of displaying product adverts on marketplaces such as Amazon (whereby Amazon's own products and those of third party sellers are advertised alongside each other under the Amazon logo) makes it difficult for consumers to clearly distinguish the origins of each advert. 

Therefore, it will also be difficult for consumers to distinguish the source of infringing goods and this may give the impression that Amazon is marketing infringing products themselves, and thereby "using" another party's registered trade mark. The risk of confusion is increased by the fact that Amazon is often involved in the storage, shipping and management of returns for third party products on its sites. 

On this basis, the CJEU has opened the door for national Courts to hold marketplaces such as Amazon liable for trade mark infringement in relation to the advertisement of fake products by third parties on their sites. The Louboutin cases will now be passed back to their respective national courts in Belgium and Luxembourg, whose role will be to interpret the CJEU's decision and determine whether the advertisement of the infringing Louboutin shoes in question will cause consumer confusion. Following the decision, Thierry Van Innis (Louboutin's lawyer) told Reuters that "Amazon can be held accountable for the breaches as if the platform was itself the seller", meaning that "Amazon will be forced to change their model and stop misleading the public by mixing up their own and third-party offers". A spokesman for Louboutin also said that they "brought this case to encourage Amazon to play a more direct role in the fight against counterfeiting on its platforms". 

The decision contradicts the Advocate General's non-binding opinion issued in June 2022, in which Maciej Szpunar stated that he is "of the opinion that, in [such] circumstances, the operator of an online platform, such as Amazon, does not use a [trademark]" and therefore "cannot be held directly liable for infringements of the rights of trademark holders taking place on its platform as a result of commercial offerings by third parties". Those who agreed with the Advocate General's opinion will no doubt consider the CJEU's decision to be going too far in attributing liability to online marketplaces for the actions of third party sellers, over whom the marketplaces ultimately have very little control.

It seems that hybrid marketplaces such as Amazon (offering both their own and third party products) will need to review their platforms and the manner in which products are advertised to try to ensure that consumers can more easily identify the origins of the various adverts in order to avoid falling victim to the new parameters set out by the CJEU. Whether or not the requirements for marketplace liability set out in the CJEU's decision are clear enough in practice remains to be seen and we will await the decisions of the national Courts in relation to the Louboutin cases with interest.