Responsibility of online marketplaces for IP infringements

Purchasing behavior has changed fundamentally. Whereas consumers used to go to bricks-and-mortar retail shops alone, online shops have become indispensable. Online marketplaces are an additional and common option for online shopping. In contrast to online shops, it is not the operator of the online marketplace who places the sales offers. The online marketplace merely provides a platform for third parties to offer their products for sale. However, when a third party’s offer (allegedly) infringes an IP right, the question arises whether the online marketplace itself could be held directly liable too. In the “Louboutin” decision of 22 December 2022, the CJEU considered a direct liability for a trademark infringement to be possible under certain circumstances (case no. C-148/21, C-184/21), and the Higher Regional Court of Düsseldorf just recently adopted this “Louboutin” ruling in a case of a design infringement (case no. 14c O 67/23).

Hence, the question of responsibility of online marketplaces for IP infringements is highly topical and the subject of this year’s AIPPI General Study Question (AIPPI = Association Internationale pour la Protection de la Propriété Intellectuelle). As the General Study Question, the various IP law regimes had to be taken into account, in particular patent law, design law and trademark law. Copy­right law, however, was outside the scope of the Study Question since specific rules are often already in place here to govern online use of copyrighted works, including use on online platforms and the host provider’s responsibility.

The national groups’ contributions are the basis for further discussion during the upcoming AIPPI World Congress, which will be held on 22–25 October 2023 in Istanbul (Turkey). The final aim of these further discussions is to draft and adopt a resolution on the subject matter of the Study Question. The Study Question consisted of three parts, namely a complex on the current legal situation, a further part on policy considerations and proposals for improvements of this current legal situation, and a final part on the question of harmonization. The German national group of the AIPPI is grateful for the opportunity to outline the main findings of its contribution here in IntellectualPropertyMagazine and its larger platform.

“Safe Harbor” exemption and general IP law regimes

In addition to General IP Law regimes, meaning pa-tent, design and trademark laws, the Study Question also covered Special Digital Laws as well as General Civil Laws and alternative/different law regimes. The term Special Digital Law was defined as “special legislation applicable to internet actors, such as online marketplaces”. In the German national group’s view, the provisions pursuant to the Sections 7 et seqq. TMG (German Telemedia Act), which is the national implementation of Art. 12 to 15 of Directive 2000/31/EG, were considered to be a Special Digital Law in the meaning of the Study Question.

However, a potential responsibility where online marketplaces operate an online shop, and thus where the online marketplace itself offers and sells products, was outside of the scope of the Study Question. The latter was limited to a situation where online marketplaces provide a platform for third parties to offer their goods and services only. In such a situation, the online marketplace acts as a service provider so that the provisions pursuant to Sections 7 et seqq. TMG are generally applicable.

In this context, the first essential observation was that Sections 7 et seqq. TMG do not govern when an online marketplace can be held responsible, but only when it is exempt from any liability. Here, the default rule follows from Section 7 TMG, which states, first, that a services provider is responsible for its own information only, and second, that there is no obligation to monitor the information they transmit or store, or to investigate circumstances that indicate illegal activity. However, this default rule indicates that an online marketplace is not generally responsible for third-party offers which are put on their platform.

This default rule has exemptions, however. The second essential observation was that the exemption pursuant to  Sections 7 et seqq. TMG does not apply to “cease and desist” claims. To this extent, an online marketplace’s ­responsibility must be assessed in accordance with the ­a­pplicable General IP Law regime in any case.
Moreover, online marketplaces cannot be held responsible for third-party information, but they remain responsible for their own information. Therefore, the crucial question is whether there might be a situation where a third-party offer becomes an online marketplace’s own information. This question can be answered in the affirmative if an online marketplace, in relation to a specific sales offer, leaves its “neutral position” and takes an “active role”. The latter is, for instance, the case if an online marketplace itself places advertising for its platform and in doing so highlights a product offer made by one of its users.

Finally, an online marketplace could be held responsible for third-party information pursuant to Section 10 TMG, namely either if the online marketplace is aware of the infringement, or if the online marketplace has not acted expeditiously to remove or to disable access to said offer on becoming aware of it. The second variant, in essence, refers to the so-called “notice and takedown” procedure, which turns out to be a “key tool” for the question of ­responsibility of service providers, such as online marketplaces.

Although Sections 7 et seqq. TMG provide specific provisions covering the responsibility of service providers, the relevance of this specific law regime seems, on the one hand, limited because, as ruled by the Federal Supreme Court (Bundesgerichtshof (BGH), case no. I ZR 35/04, Internet-Versteigerung I), “cease and desist” claims should not be covered by this Special Digital Law. On the other hand, the consequences of this case law also seem limited.

As far as the responsibility of online marketplaces is concerned, most German cases take place in the field of trademark law. To be considered an infringer under trademark law, an online marketplace’s contribution must amount to its own use of the infringing sign. Under trademark law, online marketplaces, as the default rule, are not responsible for third-party offer that are put on their platforms either; the online marketplace does not use the (potentially) infringing sign, only the relevant third party does(BGH, case no. I ZR 20/17, Davidoff Hot Water IV). However, exemptions to this default rule could also apply here:
First, online marketplace involvement could amount to its own use in a situation where it leaves its “neutral position” and takes an “active role”, for instance by highlighting a particular third-party offer within its own advertising. However, such cases will mostly be limited to infringements of well-known trademarks. This is because the online marketplace would then use the sign only with respect to its own services, namely the provision of an online marketplace, and these services had already been considered dissimilar to the products offered via the marketplace (CJEU, case no. C-324/09, L’Oréal/eBay).

Second, in “Louboutin” the CJEU assumed responsibility of an online marketplaces was possible in a case where the online marketplace also operates its own online shop. Consequently, it offers and sells products on its own account, and where its own offers and the third-party offers on its marketplaces are presented in a uniform way so that well-informed and reasonably observant users could assume that the third-party offers are also made by the online marketplace itself (CJEU, joint cases no. C-148/21, C-184/21, Louboutin).

While these two exceptions to the default rule seem to be limited to rare occasions, responsibility could also result from the concept of so-called “Störerhaftung”, which has been established by case law. Responsibility according to so-called “Störerhaftung” could be assumed if an online marketplace willingly contributes to the infringement. Such a willing contribution is assumed in particular where an infringing third-party offer is kept online although the relevant online marketplace has been made aware of the infringement. In short, responsibility according to so-called “Störerhaftung” could apply if an online marketplace fails to comply with a “notice and takedown” procedure.

As far as the further General IP Law regimes are concerned, meaning patent law and design law, it had to be noted that there has been a lack of relevant cases that specifically concern the responsibility of online marketplaces. However, based on general principles, a concept of liability similar to the situation under trademark law seems likely. In particular, liability could follow from the concept of so-called “Störerhaftung”, namely when an online marketplace fails to comply with a “notice and takedown” procedure.

“Notice and takedown” as the means of choice and an extended obligation to provide a legal notice

Although online marketplaces’ responsibility for IP infringement might have to be assessed in accordance with different law regimes, a common thread can be identified. While an online marketplace, as a default rule, should not be held liable for third-party offers put on its platform, its responsibility could be assumed under certain conditions. These are that either the online marketplace takes an “active role” or if it fails to comply with a “notice and takedown” procedure. The German national group agrees with this general guideline, but the following two proposals for improvements were identified in this regard:

• First, online marketplaces should benefit from an exemption from liability as currently provided under Sections 7 et seqq. TMG also as far as “cease and desist” claims are concerned. Although, or even all the more so because current case law does not lead to a substantially broader liability concept to the detriment of online marketplaces, there seem to be no real grounds for the differentiation between “cease and desist” claims on the one hand, and other remedies on the other.
• Second, clearer and uniform guidelines on the “notice and takedown” procedure would be desirable, because these have currently been established by case law only. In particular, a qualified notice should be required so that an online marketplace is made aware of all relevant facts to assess, without carrying out any further investigations of its own, whether the allegation of an infringement is well-founded. From the time of receipt of such a qualified notice, the third-party offer becomes the online marketplace’s own responsibility, so that the online marketplace, if it decides to keep a contested offer online, can be held fully liable if said offer turns out to be infringing.

As a third proposal for improvement, the German  national group took into consideration that a third party that placed an infringing offer on the marketplace is the party actually responsible. However, it is the online marketplace that provides the platform where numerous third parties can make their sales offers. As usual in a digital context, there also is a risk that those third parties remain anonymous and untraceable. Therefore, it should be the online marketplace’s own obligation to assure that its users, meaning the third parties who place their offers on the marketplace, have submitted up-to-date contact information. Such an extended obligation to provide a legal notice initially seems to be appropriate, since the online marketplace also benefits commercially from those third-party offers. Second, it should safeguard that the IP right owner is in a position to pursue their claims against the third party as the actual infringer at least.

Need for harmonization

The internet allows instant communication worldwide. Consequently, third parties that use a particular online marketplace can originate from various territories. Similarly, users can access and use online marketplaces irrespective of where the operator of the relevant online marketplace is located. This global interconnection leads to an urgent demand for harmonization so that the same “set of rules” applies irrespective of borders. Such a uniform “set of rules” is first, more effective, and second, increases legal certainty for IP right proprietors. Consequently, comparable standards for “notice and takedown” proceedings, as well as a similar extended obligation to provide a legal notice, would also be appreciated at a global level.

Bearing this demand for harmonization in mind, the German national group looks forward to discussing this up-to-date topic during the AIPPI World Congress in October. For the group’s full report, as well as the resolution ultimately adopted, please refer to the AIPPI website, available at: www.aippi.org.