A fuzzy target: revisiting the enforcement of trademark infringement against online platforms. The opinion of the Advocate General in the Louboutin vs Amazon case before the CJEU.

July 2022

Introduction

Trademark rights grant their owners the right to exclude third party users of identical or similar signs to distinguish identical or similar products or services. If trademarks are well-known, then the right of exclusion of their owners extends to the use by third parties of identical or similar signs to distinguish any product or service.

This right of exclusion of trademark owners has some exceptions, as it cannot be exercised, for example, in certain circumstances against a manufacturer or service provider that uses its name, or against a prior non-registered user of a well-known trademark sign.

The exclusion rights, and their exceptions, are aimed at structuring the function of trademarks, which is essentially to give a guarantee to clients and consumers on the origin of the goods or services purchased or contracted[1].

The irruption of online platforms with their worldwide impact and pervasive use by internet users has required a fresh analysis of what constitutes their use of third-party registered trademarks, for the purposes of figuring out if infringing uses carried out by third parties using those platforms amount to an infringing use by the internet platform themselves.

The Louboutin vs Amazon case before the Court of Justice of the European Union (“CJEU”)[2] is again (as earlier CJEU case law has been) an excellent opportunity to refine the concept of what is an infringing use and to test additionally what are the functions of trademark rights, under the EU Trademark Regulation currently in force.

Background of the Louboutin Case

Mr Louboutin most famous products are high heel shoes with their sole in red (Pantone 18.1663 TP). Such red colour in the sole is protected as a European Union trademark for high heel shoes. Amazon has been showing (and having them available for sale) high heel shoes with the same red sole not produced and commercialized by Mr Louboutin, but by a third party.

Mr Louboutin sued Amazon for direct trademark infringement in the Courts of Luxembourg (where Amazon has its registered address in Europe), and Brussels (specific action within the Benelux area). Both Courts (in Luxembourg and in Brussels), at the perspective of deciding upon an issue that had full European Union impact, and in the absence of a clear-cut precedent, have addressed a request for a preliminary ruling before to the CJEU, to seek clarification on whether in accordance with EU law, Amazon is infringing Mr Louboutin trademark in the above context.

In a case before the CJEU, after the main hearing and before the CJEU issues its Judgement, an opinion from a high officer of the CJEU (a prestigious jurist) is publicized: the opinion of the Advocate General, which is not binding on the Court, but the Court normally tends to follow its reasoning.

In this case, Advocate General Mr Maziej Szpunar has issued his Opinion dated 2 June 2022, which we are going to comment below.[3]

Infringement of a trademark as stated in the EU Trade Mark Regulation

The EU Trade Mark Regulation currently in force (Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark) states, at his article 9.2, as follows:

“…the proprietor of that EU trade mark shall be entitled to prevent all third parties not having his consent from using in the course of trade, in relation to goods or services, any sign where:

  • the sign is identical with the EU trademark and is used in relation to goods or services which are identical with those for which the EU trade mark is registered; …

Then, in art. 9.3:

The following, in particular, may be prohibited (…):

 (b)  offering the goods, putting them on the market, or stocking them for those purposes under the sign, or offering or supplying services thereunder…

The all-encompassing expression “to prevent all third parties (…) from using it the course of trade” of article 9.2 would seem to include Amazon when showing the infringing goods in its platform, as article 9 establishes that “all third parties” are included: no distinction is made as to whether a party manufactures, imports, exports, offers or commercializes the infringing products, and no rule is specified that if one of the third parties is sued, the others are excluded from responsibility. And it is also clear that the behaviour that Mr Louboutin challenges is “in the course of trade” (Amazon obtains a benefit from displaying the infringing goods to the public from its platform).

So all the literal requirements in article 9.2 and 9.3 seem to be met to allow Mr Louboutin to prevent Amazon from showing the infringing shoes to consumers (and claim the corresponding actions: damages, ceasing orders, etc.): Amazon was a third party (one of “all third parties”), Amazon displayed to the public the infringing shoes available to be purchased ((“in the course of trade”), and the sign of the infringing products was identical (red sole), to distinguish the same products (high heel shoes), without consent from Louboutin.

So, is there any room for discussion?

Earlier decisions

In fact, there is. The Advocate General starts by reminding us that this current case is not totally orphan from earlier decisions affecting online platforms offering or dealing with third party products with signs which could infringe the trademark rights of IP owners (CJEU Judgements Google France, L’Oreal/eBay, Coty Germany, and others). In fact, from these decisions, what needs to be analysed is what is meant by “using the trademark in the course of trade”.

What is as stake, therefore, is what does the verb “use” mean in article 9, i.e. when, for an internet platform, dealing with third party trademark signs amounts to using them in order to trigger the application of article 9. It is obvious that when a third party manufactures and sells products identifying them with an identical sign that has been registered as an EU trademark by another party for those products, this behaviour amounts to literal infringement under EU trademark law.

However, two decades ago the CJEU already stated that an infringing use is such only if it affects, or is able to affect, the functions of the trademark, in particular its essential function of guaranteeing to consumers the origin of the goods (ARSENAL Judgment, 2002, paragraph 51[4]). In other words, not every use (no matter how broadly the EU Trademark Regulation is drafted) will amount to infringing use – a restrictive thesis consolidated by the CJEU.

In this line of reasoning, in relation to online platforms, only in the event that the origin of the goods cannot be ascertained from being from the trademark owner or from a third party, an infringing use will emerge. And such analysis need be attributed to “a normally informed and reasonably attentive internet user[5]. Only if this standard person is in doubt, or considers that the goods origin is from the trademark owner where in fact their origin is from a third party, a trademark infringement can be found (L’OREAL and others vs EBAY Judgement, 2011[6]: eBay could not be considered as the origin of L’Oreal goods offered for sale in its platform: the infringement was carried out by the sellers, individuals using the eBay platform.

In fact, the GOOGLE FRANCE Judgement (2010)[7] was the first big step by the CJEU in analyising online platforms’ ways of utilizing third party signs registered as trademarks, in order to ascertain whether such utilization amounted to “use in the course of trade”, as infringement is defined under EU trademark law.

The CJEU described Google as a provider of a paid referencing service which allows the placing of third-party ads in the event of a correspondence between one or more of those words of the advertisers contracting with Google, and that /those entered as request in the search engine by an internet user. Once the sign is introduced by the an internet user, it allows these third-party advertisers (very often, competitors of the trademark owners) to include their publicity, generally at the top of the list of the natural results of the search (as “sponsored links”), after the Google users typed the trademark signs of trademark owners.

The CJEU did not find that Google was using the trademarks, as it “did not use the signs in its own commercial communication”. The CJEU went on to state that the fact of creating the technical conditions necessary for the use of a sign and being paid for that service did not mean that the party offering the service itself (Google in this case) is using the proctected sign.

Such use had to be derived from an active behaviour (DAIMLER Judgement, 2016[8]). Only a party with direct or indirect control of the act constituting the use is able to stop that use, as otherwise no one can be legally obliged to do the impossible (in the DAIMLER case, third parties of a Mercedes Benz dealer in Hungary would not stop presenting it in the internet as an authorized dealer of Mercedes Benz, even after its agreement with Daimler ended, even though the dealer tried to stop those internet advertisers from continuing to present it as such dealer).

This requirement of an active behaviour being necessary to find an infringing use was confirmed in the COTY GERMANY Judgement (2020)[9]. Coty Germany, a perfume distributor, claimed that Amazon was storing infringing “Davidoff” branded goods for a third party. However, the CJEU found that the unknowingly storing of infringing products did not amount to warehousing “for those purposes” (for Amazon to commercializing them) and, therefore, holding infringing goods in those circumstances was not found to be infringing.

The CJEU, in the Coty Germany decision, reminded also that only a third party that has direct or indirect control of the act constituting the use is effectively able to stop that use (quoting specifically the Daimler case). Also, following the Google case, only parties that use the sign in their own commercial communication can be found to be trademark infringers.

So, the utilisation of a trademark in an online platform is not sufficient for the CJEU to consider that the online platforms are directly infringing, but it has to be at least a use of the trademark signs in the context of their own commercial communications, or with an active behaviour that is the core of the subject-matter of the right of exclusion of the trademark owners.

The Advocate General analysis of “use” by Amazon of Mr Louboutin red sole trademark

What the national Courts (Luxembourg and Belgium) acknowledge, in their preliminary ruling request to the CJEU, is that there is no specific decision from the CJEU addressing online sales with the business model of Amazon, a distributor of its own products through the internet, which also exploits an online market, that includes third party offers of products or services.

The Advocate General states that the key element is whether Amazon uses third-party signs in the context of its own commercial communications (as the CJEU test to consider an “infringing use”). For example, in the Google case, it was considered that Google merely allowed its clients to show their sign as part of their advertising when the allegedly infringed trademark sign was typed by an internet user. Or in the Coty Germany case, the mere storing services of infringing products for a third party, does not constitute a use of such sign by Amazon.

In his analysis, the Advocate General proceeds to examine whether an online intermediary such as Amazon uses a third party’s trademark sign in a manner that the addressee of Amazon’s communications establishes a specific relationship between Amazon and the trademark sign identifying the goods offered.

To this end, the Advocate General concludes that it is essential that the nature of the use of the trademark signs by an online intermediary be considered from the perspective of the addressee of the commercial communications, to see if such addressee will consider that the products distinguished with the trademark sign reveal that the intermediary (in this case, Amazon) is showing a connection with the products offered with such the trademark sign. However, this addressee has to be considered as a normally informed and reasonably attentive internet user.

From this perspective, the Advocate General reaches the conclusion that a normally informed and reasonably attentive internet user will find that Amazon is acting only as an intermediary, and not as the owner of the trademark sign, and that Amazon is not using the trademark signs in the context of its own commercial communications. This is because, in Amazon’s business model, it is possible to distinguish between products offered from third party vendors, or directly from Amazon. In fact, Amazon is not only very well known as an international on-line distributor, but also as an on-line market of goods and services. So, for the Advocate General, there is not a direct infringement by Amazon of Mr Louboutin’s trademark.

This conclusion is not affected by the circumstance that Amazon not only offers those third party products in its on-line market, but also distributes and delivers the product to consumers (which was an additional issue at the preliminary ruling addressed to the CJEU by the national Courts of Luxembourg and Belgium). The Advocate General, whilst concluding separately that neither of the two behaviours (offering the products in its on-line market, distributing them to end clients) amount to “use” of the trademark sign, specifically adds that two actions that are not “use” as defined by trademark law and corresponding case law, cannot be considered differently merely because of being jointly analysed.

However, a different matter would be to consider that Amazon had an indirect liability (for example, for collaborating with the acts of infringement by the vendor of the high heel shoes using the trademark sign of Mr Louboutin). For the Advocate General, this distinct matter is subject to the national laws of the Courts dealing with the claims filed by Mr Louboutin. For example, Directive 2004/48 inter alia requires that states include the possibility that national Courts issue judicial mandates against intermediaries the services of which are being used by third parties to infringe an intellectual property right.

Consequently, the Advocate General only deals with the issue of whether the intermediary (Amazon) is committing a direct infringement of Mr Louboutin’s trademark when showing on-line goods infringing Mr Louboutin’s trademark, which the Advocate General denies, but also acknowledges the possibility that the intermediary is indirectly responsible, a matter that has to be left to the national Courts.

Conclusions and pending issues to be clarified or confirmed by the CJEU in its Judgement

A close reading of the Advocate General proposal shows that the Advocate General is not exempting on-line intermediaries such as Amazon from liability out of trademark infringement by sellers via its on-line market, but rather that its behaviour does not amount to direct trademark infringement. This is because in analysing the nature and function of trademarks and the rights of trademark owners, the concept of (infringing) use has to be attributed only to an act which generates the perception of a connection between the products and the trademark sings AND the on-line intermediary. This perception has to be attributed to a normally informed and reasonably attentive internet user (as set out by previous case law), not just any internet user, so that the standard for perception is a fair one.

Denying such character of direct infringement by Amazon is not the end of the matter, for the Advocate General: Amazon may still incur in indirect liability, not because of direct trademark infringement, but because of collaborating with the infringement by not taking any measures when informed and requested by the trademark owner, etc. But this indirect liability is under the competence of the national Courts.

Some questions remain to be clarified or confirmed by the CJEU: what is exactly the importance of the distinction made by the CJEU in earlier cases, which is that for a non-infringing use of third party trademarks by an internet platform, such use of the trademarks is not to be carried out “in the course of the platform’s own commercial communications”? Is this a necessary criterion? Would it not be sufficient to simply adhere to the test that the specific use does not affect, or is not able to affect, the essential function of the trademark, i.e. that a normally informed and reasonably attentive internet user can clearly ascertain the origin of the goods or services?

Also, will the CJEU maintain the opinion of the Advocate General that the combination of both displaying the infringing products in its on-line market and distributing them/dispatching them to the end client should not convert the total behaviour by Amazon a direct infringement? Will the CJEU confirm the opinion of the Advocate General that the mere juxtaposition of two separate non infringing behaviours does not change the non-infringing nature of Amazon’s behaviour? Or, rather, would the depth of Amazon’s involvement really turn its activity into becoming direct infringement? Will the capacity of Amazon’s global reach and quasi monopolistic stance be taken into consideration by the CJEU in its decision in defining Amazon use of third-party trademarks, when considering both the display of infringing goods in its platform and its remarkably efficient distribution to end clients?

In particular, will Amazon’s theoretically immense capacity to offer counterfeit goods and deliver them almost overnight to clients, from evanescent sellers from any part of the world, be considered eventually direct infringement, as the only means to protecting otherwise in practice defenceless trademark owners? Will volume, reach, and trade impact of an online platform in the eyes of the CJEU alter what is to be considered as an infringing “use”, thus complementing earlier decisions on this issue and modifying the Advocate General’s opinion in this case?

We shall wait the decision of the CJEU for the outcome of this extraordinarily interesting case.

Carlos Valls (Partner, GIRÓ MARTÍNEZ SLP, Barcelona)

Image: Ricardo Arce on Unsplash


Notes

[1] The CJEU has stated that those functions include not only the essential function of the trademark, which is to guarantee to consumers the origin of the goods or services (‘the function of indicating origin’), but also its other functions, in particular those of guaranteeing the quality of the goods or services in question and the functions of communication, investment or advertising (L’Oréal vs eBay, paragraph 58).

[2] Opinion of the Advocate General, Mr. MACIEJ SZPUNAR, presented on 2 de June, 2022, Christian Louboutin vs Amazon Core Sàrl and others (Joint Cases C‑148/21 and C‑184/21, EU:C:2022:422).

[3] Incidentally, Mr Szpunar is Polish and has drafted his Conclusions in French. There is not yet an English translation available (at the time of writing this note; he last check was on 7 July 2022).

[4] CJEU Judgment of 12 November 2002, Arsenal Football Club (C-206/01, EU:C:2002:651).

[5] The Advocate General Szpunar expressly states that he borrows the concept « a normally informed and reasonably attentive internet user » from the 84 paragraph of the Google France case (see note 7. below).

[6] CJEU Judgement of 12 July, 2011, L’Oréal and others against eBay International AG and others (C-324/09, EU:C:2011:474).

[7] CJEU Judgement of 23 March, 2010, Google France SARL and Google Inc against Louis Vuitton Malletier SA, Google France SARL against Viaticum SA and Luteciel SARL, and Google France SARL against Centre national de recherche en relations humaines (CNRRH) SARL and others (C-236/08 to C-238/08, EU:C:2010:159).

[8] CJEU Judgement dated 3 March, 2016, Daimler AG against Együd Garage Gépjárműjavító és Értékesítő Kft (C-179/15, EU:C:2016:134).

[9] CJEU Judgement dated 2 April, 2020, Coty Germany GmbH against Amazon Services Europe Sàrl and others (C-567/18, EU:C:2020:267).