Louboutin vs Amazon

On the 22nd of December 2022, the Court of Justice of the European Union ruled on some interpretative questions posed by the referring court in the case brought against Amazon Europe, the operator of the renowned e-commerce platform, by the well-known French footwear fashion designer, Christian Louboutin, owner of the positional trademark of the red bottom sole applied to women’s high-heeled shoes.

The dispute originated in 2019, when Christian Louboutin initiated two legal proceedings before the national courts of, respectively, Belgium and Luxembourg, alleging infringement of his EU trademark of the “red sole”. Specifically, the designer claimed that although the products infringing his trademark were sold on Amazon’s marketplace by third parties, nevertheless the peculiar way in which Amazon had operated in the specific case implied direct liability of the latter for infringement. In fact, according to Laboutin, Amazon on its platform sells and promotes its own products and those of third parties in a uniform manner, providing all the technical means necessary to sell and market the items. This hybrid mode of operation results in users not being able to easily tell products sold by Amazon from those sold by third parties through Amazon, since in both cases the online offerings are nonetheless made and appear under Amazon’s distinctive sign, not allowing the consumer to understand when the platform is simply operating as a marketplace or as a direct seller.

Invested in the dispute, the national judicial authorities of Belgium and Luxembourg made a reference for preliminary ruling to the Court of Justice of the European Union to indicate the correct interpretation of Article 9(2)(a) of Regulation 1001/2017 on the European Union trademark. The CJEU, having joined the cases, issued a single judgment in which it answered the questions submitted to it, departing from the conclusions proposed by Advocate General Szpunar. In particular, the referring judges had asked the Court to clarify whether the operator of an e-commerce platform, which also performs the function of a marketplace, can be held directly liable for the infringement of third-party products when that operator:

• uniformly advertises products sold under its own name and counterfeit products sold by third parties on the platform;
• displays its logo on advertisements;
• offers additional services to third parties to market products, such as, but not limited to, storing or shipping products.

In addition, the referring courts asked whether the perceptions of platform users should be considered when assessing the platform operator’s behavior.
The CJEU answered the above questions in the affirmative and identified the principles in the light of which national judicial authorities will have to judge Amazon’s conduct.

In this regard, the Court pointed out that although Article 9(2)(a) does not define the concept of “use” of the trade mark, it is against the law when it “…takes place in business life, and is made for goods or services which are identical with those for which the trade mark is registered, and infringes or is likely to infringe the functions of the trade mark“. Given this, it specified that the latter can occur when a person uses a sign that is identical or similar to another trademark in its own commercial communication. Specifically, the term “commercial communication” should be understood as (meaning) “any form of communication to third parties designed to promote its activity, goods or services or to indicate the exercise of such an activity”.

Therefore, although operators of an e-commerce platform cannot be held liable for infringement in the case where they merely allow third parties to use a sign that is identical or similar to another person’s trademark, however, the same cannot be said in the case where they promote infringing products of the latter. Indeed, according to the Court such liability must be assessed by taking into consideration the perception of the online platform by a “well-informed and reasonably observant user.” If, therefore, on the basis of this criterion it can be assumed that the public perceives the existence of a link between the counterfeit product and the business carried out by the operator of the e-commerce site, then the operator of the online platform can be held directly liable for the infringement of another’s trade mark.

This is, in my opinion, a standpoint that expands the hitherto known traditional limits of the indirect liability of Internet Service Providers (ISPs) for infringement of the intellectual property rights of others, disregarding the ascertainment of the actual upstream involvement and awareness of the ISP with respect to the hypothetical infringement, and instead declares its potential exposure to direct liability whenever, due to the concrete manner in which the product is offered for sale, the consumer is unable to discern the role of the ISP from that of the third-party seller, hosted on the platform.