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A hybrid provider is a portal that offers both its own products and those of other sellers through a dedicated platform: what happens if counterfeit goods are offered for sale? The Court of Justice, in the recent case of Louboutin v. Amazon (C-148/21 and C-184/21), shed light on the infringement liability of so-called hybrid providers.
In this article:
Louboutin is a French designer known primarily for the trademark depicting a women’s shoe with a red sole (on this subject, we refer to the article Position trademark and shape trademark: the Louboutin case).
Amazon is the well-known e-commerce platform that offers various products for sale, either directly on its own behalf or by making its marketplace available to third-party sellers (so-called hybrid provider).
Precisely on Amazon, Louboutin had found ads for the sale of shoes depicting the well-known trademark (red sole) marketed without his consent, thus complaining of its counterfeiting.
Conversely, Amazon (also citing the Court’s recent decision in Coty v. Amazon) argued that it could not be held liable because the Louboutin trademark was used by third-party sellers and not directly by the e-commerce platform.
Well, should Amazon be held jointly liable for infringement, or not?
Within the EU, trademark protection is guaranteed by Article 9 of EU Regulation 2017/1001, which provides that the owner of an EU trademark has the right to prohibit third parties the exploitation within the territory of the EU of trademarks identical or similar to the registered trademark in commerce.
The issue of provider liability is, by contrast, dealt with within Articles 12, 13 and 14 of EC Directive 2000/31.
More specifically, the provider cannot be held liable if, upon receipt of the report, it promptly removes the data from the platform so that it is impossible to reach it (Article 14 of the directive makes this clear).
Given this normative introduction, the case law of the European Union over the years has provided some clarifications regarding the application of the above rules.
In the well-known L’Oréal v. eBay decision, the CJEU introduced the concept of a neutral provider, that is, a service provider that merely acts as an intermediary between customers and third-party sellers.
In that decision, the CJEU stated that eBay cannot be considered a neutral provider because it plays an active role in the optimization and bidding of sellers who use that platform to market their products.
In light of that decision and using the same arguments as the Court, Louboutin now argues (we will see this in the last paragraph) that Amazon cannot be considered a neutral provider and, as such, more stringency would be needed against it.
In the Coty v. Amazon decision, the Court had already made it clear that the provider also uses the trademark and, therefore, must do so with due care.
Nevertheless, the term “use” (referred to in Article 9 of the EU Regulation) would mean exploitation of another’s identical sign if, with a view to marketing, the trader imports or remits to a depositary goods bearing the trademark of which he is not the owner.
While there could be no “use” of the trademark in the case of the provider/depositary who merely provides a storage (warehousing) service for goods bearing someone else’s trademark.
According to the Court, in absolving Amazon the Article 9 had to be interpreted to mean that a person who merely stores products on behalf of third-party sellers, without knowledge of the infringement, should be deemed not to be storing such products for the purpose of offering or placing them on the market.
The purpose of the provider who merely stores, according to the Court, would appear to be different: in light of these considerations, Amazon was held not liable.
Despite the previous cases, the Court of Justice of the European Union (CJEU), in joining Lawsuits C-148/21 and C-184/21, ruled in the Louboutin case that since Amazon is a hybrid platform (integrating both an online marketplace and the direct sale of its own products), it is not possible for the average user to understand whether the trademark-infringing products are marketed by Amazon itself or by a third-party seller.
This circumstance is due to the fact that Amazon products and those of third-party sellers are presented interchangeably and offered, in both cases, with the Amazon logo.
In addition to this, the fact that Amazon offers additional services to sellers (such as stocking their products) leads consumers even more to believe that the products come from the well-known e-commerce company.
In light of the above, Amazon was held potentially liable for counterfeiting the Louboutin trademark, despite the fact that the ads were posted by its seller users. The decision was ultimately referred to the Courts.