Intellectual Property
The EU Digital Services Act, L’Oréal and Louboutin
Published 7 May 2023
The EU Digital Services Act and Digital Markets Act aim to create a safer digital space and to establish a more level playing field for businesses. The EU Digital Markets Act includes rules that govern gatekeeper online platforms, being digital platforms with a systemic role in the internal market that function as bottlenecks between businesses and consumers for important digital services. Some of these services are also covered in the Digital Services Act, but for different reasons and with different types of provisions. The EU Digital Markets Act has commenced operation already, but most of the provisions do not become operational until February 2024.
Article 6 of the EU Digital Services Act provides that:
“1. Where an information society service is provided that consists of the storage of information provided by a recipient of the service, the service provider shall not be liable for the information stored at the request of a recipient of the service, on condition that the provider:
(a) does not have actual knowledge of illegal activity or illegal content and, as regards claims for damages, is not aware of facts or circumstances from which the illegal activity or illegal content is apparent; or
(b) upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the illegal content.
2. Paragraph 1 shall not apply where the recipient of the service is acting under the authority or the control of the provider.
3. Paragraph 1 shall not apply with respect to the liability under consumer protection law of online platforms that allow consumers to conclude distance contracts with traders, where such an online platform presents the specific item of information or otherwise enables the specific transaction at issue in a way that would lead an average consumer to believe that the information, or the product or service that is the object of the transaction, is provided either by the online platform itself or by a recipient of the service who is acting under its authority or control.
4. This Article shall not affect the possibility for a judicial or administrative authority, in accordance with a Member State's legal system, to require the service provider to terminate or prevent an infringement.”
(a) does not have actual knowledge of illegal activity or illegal content and, as regards claims for damages, is not aware of facts or circumstances from which the illegal activity or illegal content is apparent; or
(b) upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the illegal content.
2. Paragraph 1 shall not apply where the recipient of the service is acting under the authority or the control of the provider.
3. Paragraph 1 shall not apply with respect to the liability under consumer protection law of online platforms that allow consumers to conclude distance contracts with traders, where such an online platform presents the specific item of information or otherwise enables the specific transaction at issue in a way that would lead an average consumer to believe that the information, or the product or service that is the object of the transaction, is provided either by the online platform itself or by a recipient of the service who is acting under its authority or control.
4. This Article shall not affect the possibility for a judicial or administrative authority, in accordance with a Member State's legal system, to require the service provider to terminate or prevent an infringement.”
As can be seen, this Article has implications for online platforms regarding illegal activities, by placing a duty on such platforms to behave in a certain way once its operators have knowledge of their platform being used to offer illegal content. Article 6.3 limits the potentially wide coverage of Article 6 regarding online shopping platforms, by not allowing those platforms that offer the sale of products online from escaping liability, where an average consumer would believe that the platform is either provided by itself or by a recipient of the platform service acting under its authority or control.
In the case of L’Oréal (UK) Ltd (and others) v. eBay International AG (and others) Case C 324/09, the European Court of Justice looked at the potential liability of eBay for the sale of infringing products by sites located outside of the EU. The Court looked at a number of issues, including finding that eBay was not “using” the trademarks placed by advertisers in its advertisements/pages on the various eBay sites. This showed a slightly narrow approach on behalf of the Court when looking at intellectual property and consumer protection, one which online shopping platforms welcomed. When reading this decision against Article 6 of the EU Digital Services Act, which commenced long after the Court looked at these issues, it can be seen that the Court may well not be willing to offer such a narrow approach once the relevant provisions of the Act commence operation.
Indeed, in December 2022, the Court issued a decision in the case of Christian Louboutin v. Amazon Europe Core Sàrl (and others) Joined Cases C 148/21 and C 184/21. This case involved third party sellers offering counterfeit Louboutin shoes on Amazon’s sites. The Court seems to have moved away from its narrow approach in the L’Oreal case referred to above, by suggesting that a website such as Amazon could be seen to be “using” a third party’s trademark in certain circumstances:
“However, the fact that the operator of an online sales website incorporating an online marketplace uses a uniform method of presenting the offerings published on its website, displaying both its own advertisements and those of third-party sellers and placing its own logo as a renowned distributor on its own website and on all those advertisements, including those relating to goods offered by third-party sellers, may make it difficult to draw such a clear distinction and thus to give the well-informed and reasonably observant user the impression that that operator is marketing, in its own name and on its own behalf, the goods offered for sale by those third-party sellers. Consequently, when those goods bear a sign which is identical with a trade mark of another person, that uniform presentation may establish a link, in the eyes of those users, between that sign and the services provided by that same operator.
In particular, 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.
Second, the nature and scope of the services provided by the operator of an online sales website incorporating an online marketplace to the third-party sellers who offer goods bearing the sign at issue on that marketplace, such as the services consisting inter alia in dealing with the questions of the users relating to those goods or to the storage, shipping and management of returns of those goods, are also likely to give the impression, to a well-informed and reasonably observant user, that those same goods are being marketed by that operator, in its own name and on its own behalf, and may thus establish a link, in the eyes of those users, between its services and the signs placed on those goods and in the advertisements of those third-party sellers.
In the light of all the foregoing considerations, the answer to the questions referred should be that Article 9(2)(a) of Regulation 2017/1001 must be interpreted as meaning that the operator of an online sales website incorporating, as well as that operator’s own sales offerings, an online marketplace may be regarded as itself using a sign which is identical with an EU trade mark of another person for goods which are identical with those for which that trade mark is registered, where third-party sellers offer for sale, on that marketplace, without the consent of the proprietor of that trade mark, such goods bearing that sign, if a well-informed and reasonably observant user of that site establishes a link between the services of that operator and the sign at issue, which is in particular the case where, in view of all the circumstances of the situation in question, such a user may have the impression that that operator itself is marketing, in its own name and on its own account, the goods bearing that sign.”
This approach seems to be consistent with the EU Digital Services Act in terms of shopping platform potential liability and responsibilities, and has generally been welcomed. It remains to be seen whether the major online shopping platforms will adjust their business models to take into account the points made by the Court in this case, against Article 6 of the Act. The Court’s decision in the Louboutin case may also have ramifications for shopping platform litigation taking place in the UK and elsewhere.
This approach seems to be consistent with the EU Digital Services Act in terms of shopping platform potential liability and responsibilities, and has generally been welcomed. It remains to be seen whether the major online shopping platforms will adjust their business models to take into account the points made by the Court in this case, against Article 6 of the Act. The Court’s decision in the Louboutin case may also have ramifications for shopping platform litigation taking place in the UK and elsewhere.
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