IP Enforcement Directive: injunctions against intermediaries

Background

EU member states must provide for the measures, procedures and remedies necessary to ensure the enforcement of the intellectual property rights (IPR) covered by the Directive (Article 3, the Directive) (Article 3). Those measures, procedures and remedies must be fair and equitable and not be unnecessarily complicated or costly, or entail unreasonable time-limits or unwarranted delays. They must also be effective, proportionate and dissuasive and applied so as to avoid the creation of barriers to legitimate trade.

Member states must ensure that IPR-holders can apply for an injunction against intermediaries whose services are used by a third party to infringe an IPR (Article 11, the Directive) (Article 11).

The Directive is intended to ensure a high, equivalent and consistent level of protection of IPR in the internal market (recital 10, the Directive) (recital 10).

In L'Oréal SA v eBay International AG, the ECJ applied Article 11 in order to bring intermediaries to account for infringing activity taking place in an online marketplace (see News brief " L’Oréal v eBay: good news for brand owners", www.practicallaw.com/9-507-0026).

Facts

D, the tenant of a marketplace in Prague, sublet sales areas in the marketplace to market-traders. 

H manufactured and distributed branded products. H established that counterfeits of its goods were sold in the marketplace and issued proceedings against D in the Prague City Court seeking to stop D from agreeing contracts with persons involved in the infringement of H's IPRs. D appealed.

The Czech Supreme Court referred questions to the ECJ on the interpretation of Article 11.

Decision

The ECJ ruled that Article 11 must be interpreted as meaning that:

• The tenant of market halls who sublet the sales points situated in those halls to market-traders, some of whom used their pitches to sell counterfeit branded products, fell within the concept of an intermediary whose services were being used by a third party to infringe an IPR within the meaning of Article 11.
• The conditions for an injunction within the meaning of Article 11 against an intermediary who provided a service relating to the letting of sales points in market halls were identical to those set out in L'Oréal in relation to intermediaries in an online marketplace.

Whether the provision of sales points concerned an online marketplace or a physical marketplace such as a market hall was irrelevant. The scope of the Directive was not limited to electronic commerce. The objective stated in recital 10 would be substantially weakened if an operator that provided third parties with access to a physical marketplace, in which those third parties offered the sale of counterfeit branded products, could not be the subject of the injunctions referred to in Article 11.

Although L’Oréal involved an online marketplace, the ECJ had interpreted the provisions in the light of the general provisions formulated in Article 3, without specifically considering the nature of the marketplace. The scope of Article 3 was not limited to situations which occurred in online marketplaces. It followed from the wording of Article 3 that it applied to any measure referred to by the Directive, including those in Article 11.

Comment

This decision is in line with the objectives of the Directive and the provision on injunctions is not limited to electronic commerce and online intermediaries. Confirmation of the Directive's application against intermediaries in the context of physical marketplaces is a useful, possibly unexpected, tool for practitioners against counterfeits.

As a result of this decision, the operator of a physical marketplace may be ordered to withdraw services from market traders who are infringing trade marks and, following L'Oréal, to take measures to prevent new infringements of the same nature by the same market-traders. Since injunctions must be equitable and proportionate, the intermediary cannot however be required to exercise general and permanent oversight over its customers.

Case: Tommy Hilfiger Licensing LLC and others v Delta Center a.s., C 494/15. 

First published in the September 2016 issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.