IP & Technology

Today the Court of Justice of the European Union (CJEU) has issued a judgement which will be welcomed by brand owners as a new weapon to tackle the sale of counterfeit goods in physical marketplaces.

A number of leading fashion brands including Tommy Hilfiger, Lacoste and Burberry requested that the Czech Court order Delta Centres, the tenant of a market place which sub let stalls to tenants, to take steps to stop trade mark infringement and essentially not allow traders selling counterfeit goods to have stalls in the market.

A reference was made by the Czech Court to the CJEU asking whether Delta Centres as could be classified as a third party intermediary and so be ordered to stop existing infringements and police the same future infringements against tenant stall holders in terms of the 2004 European IP Enforcement Directive.

Article 11 of the Directive provides that ‘Member States shall ensure that, where a judicial decision is taken finding an infringement of an intellectual property right, the judicial authorities may issue against the infringer an injunction aimed at prohibiting the continuation of the infringement… Member States are also to ensure that rightholders are in a position to apply for an injunction against intermediaries whose services are used by a third party to infringe an intellectual property right”

In 2009 the CJEU ruled in the L’Oreal v Ebay case that on-line selling platforms such as Ebay were intermediaries. Today the CJEU has also confirmed that physical marketplaces are also caught and that providing or renting physical spaces to tenants makes you an intermediary who can be ordered to stop infringement of IP. There is no distinction between online and physical market spaces.

This means that the operator of physical market places can be ordered to stop and police infringements. The judgement stresses that any injunction/interdict must be effective and dissuasive, equitable and proportionate, not excessively expensive or a barrier to legitimate trade.

It will be up to national courts in member states to apply the new CJEU ruling, but it will be welcomed by brand owners as a potential threat and weapon for use against markets which have a reputation for selling large volumes of counterfeit goods. It should encourage operators to assist with requests to take action against counterfeit traders as otherwise the operator could be ordered by a court to stop the existing infringements and even police against the same infringements in future.

There is no reason why the same reasoning would not be applied in relation to copyright and design rights. Today could well be the start of clamp down against notorious counterfeit markets and just in time for the holiday season.

As ever there is no such thing as a bargain that is too good to be true and this is a positive step for brand owners in the fight against counterfeits.

Robert Buchan

Robert Buchan

Partner at Brodies LLP
Robert has extensive experience in dealing with and resolving all types of IP, IT and technology related disputes across a wide variety of sectors with particular in depth expertise in luxury brands, food and drink, fashion, oil and
gas technologies and pharmaceuticals.
Robert Buchan