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Brand owners gain another tool in the war against counterfeits (Brands & IP Newsnotes - issue 3)

23 October 2016

Brand owners will welcome a ruling from the CJEU over the summer that an operator of a physical marketplace can be an ‘intermediary’ for the purposes of Article 11 of the IP Enforcement Directive.

This means that national courts may order injunctions against operators of physical marketplaces whose services are being used by third parties (such as stall holders) to infringe IP rights.

Tommy Hilfiger (and others), found various stalls at a large market in Prague had been selling counterfeit goods. They sought an injunction against the market operator to refrain from:

  • entering into or extending contracts with market traders who were selling counterfeit goods; and
  •  entering into or extending contracts with market traders that did not contain an obligation on the market trader to refrain from infringing IP rights.

The ruling

The Court held the distinction between an online operator and an offline operator of services is irrelevant in determining whether or not an operator is an intermediary. Whilst the conditions that had to be satisfied to obtain an injunction was a matter for national law, the Court provided a helpful reminder that injunctions must be: equitable and proportionate; not excessively expensive; not a barrier to legitimate trade; and not require a general and permanent oversight of intermediaries’ customers.

What next?

The judgment makes sense given the purpose of the IP Enforcement Directive was to achieve a high, equivalent and homogeneous level of protection for IP across the EU. It is good news for brand owners who have difficulty in tackling physical sales of counterfeit goods in large markets. However, it will be interesting to see what steps the English courts will be prepared to order an operator of a physical marketplace to take to avoid its services being used to infringe third party IP rights.

This article was first published in the Brands & IP newsnotes publication - issue 3

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