EU Court of Justice's Louboutin decision guides luxury brands on online infringement
Freeths partner Martin Noble looks at where the court has drawn the line between trademark owners and online marketplaces
The tug of war between Louboutin and Amazon continued with the Court of Justice of the European Union (CJEU) handing down its judgment in December last year (initially only in French).
Louboutin is a French designer of luxury footwear and handbags, well known for the high-heeled shoes with a red outer sole. As Europe’s highest judicial authority on EU law, the CJEU’s decision is of particular interest to luxury brand owners who are faced with policing masses of counterfeit products sold through online platforms such as Amazon.
The CJEU decision stems from two cases originally started back in 2019 before the courts in Luxembourg and Belgium. Notably, the Advocate-General (as an advisor to the CJEU), wrote an opinion that the court chose not to follow.
Louboutin argued that Amazon should be liable for use of its trademark within its online marketplace by third parties selling counterfeit goods. The Amazon modus operandi is a hybrid one, because it sells products on its own behalf but also acts as a service provider that allows third parties to sell their products using its platform. That can be distinguished from sites such as eBay, which only act as an intermediary for sellers.
Amazon argued that it did not ‘use’ the Louboutin trademark (a fundamental ingredient of trademark infringement) when it published the offers of third-party sellers, including when it also acted as a fulfilment provider and shipped them too.
This guidance should give some comfort to luxury brands who have perhaps felt that the law has not supported their trademark investment
The law in this area is not settled, largely because each case turns on its own facts and is jurisdiction dependant. In addition, the CJEU does not make any final decisions, which is the job of local courts. There have been previous decisions involving online platforms, but not on the same facts. For example, LMVH succeeded in the commercial court in Paris against eBay in 2008. Across the Atlantic, Tiffany failed in the United States to hold eBay liable in 2010 as an intermediary. Back in Europe, the liability pendulum appeared to favour L’Oréal in front of the CJEU in 2011. In the Coty v Amazon case in 2020, the ECJ said Amazon was not liable if it innocently stored a third-party seller’s infringing goods – but it did not cover off the position where Amazon did more to help sellers than just storage, as here.
The questions for the CJEU in Louboutin were distilled down to the issue of whether Amazon could be regarded as itself ‘using’ Louboutin’s trademark where, for example, it grouped its own adverts with those of third parties and it assisted the third-party sales by virtue of helping with the adverts, setting prices and stocking and shipping items. In addition, did the perception of Amazon users matter?
The problem for Amazon was the blurred line between its own sales and those of third parties. The court found that if it is difficult for the “well-informed and reasonably observant user” to draw a clear distinction between those two lines of sales, then there may be enough of a link between the infringing third-party sales and Amazon, so that Amazon was liable. In the words of the CJEU:
“....where the operator of an online sales website describes the various offerings, from itself or a third party, without distinguishing them as to their origin, as ‘bestsellers’ or ‘most sought after’ or ‘most popular’ for the purpose inter alia of promoting some of those offerings, that presentation is likely to strengthen the impression of the well-informed and reasonably observant user that those goods thus promoted are being marketed by that operator, in its own name and on its own behalf.”
It is now for the national courts to decide.
This guidance should give some comfort to luxury brands who have perhaps felt that the law has not supported their trademark investment enough in the past. It may lead to further cases against online platforms, rather than brand owners having to pursue the counterfeit sellers direct. Whether this guidance will be sufficient for Amazon and other online marketplaces to redesign their websites remains to be seen and of course we await the interpretation of the decision in the national courts.
Freeths partner Martin Noble is a member of the firm’s IP & Media team. He can be reached at firstname.lastname@example.org.