August 2016 TRADE MARK RIGHTS IN PHYSICAL MARKETPLACES
The CJEU has ruled that market holders may be forced to stop allowing market traders who infringe trade marks from renting pitches in their markets..
The Courts of Justice of the European Union (CJEU) have now issued Decision C-494/15 (Tommy Hilfiger Licensing vs Delta Center) following a referral from the Czech Supreme Court. The decision arises from legal action by trade mark holders to force the company that runs the Prague market halls to act and prevent trade mark infringement by market traders who sub-let sales areas in the market place from them.
The Judgement interprets the EU Enforcement Directive in terms of how it should be applied to offline businesses. That is, the Enforcement Directive is not limited to electronic commerce. Consequently, CJEU has found that market traders are an “intermediary” within the meaning of the Enforcement Directive and are equivalent to online sellers (as considered in the CJEU’s landmark decision for online sellers C-324/09 (L’Oréal v eBay).
Therefore, the operator of a physical market place may be forced to put an end to trade mark infringements by market traders and take measures to prevent new infringements.
Furthermore, the CJEU has stated that the conditions for granting an injunction against an intermediary in a market place is the same as granting an injunction against an online seller. The leading legal authority on this requirement is Cartier vs BSkyB, which has just been upheld by the Court of Appeal in a further judgement ([2016] EWCA Civ 658).
So, considering a parallel situation for a physical marketplace in the UK and applying the UK injunction provisions, we observe that a market holder/intermediary cannot be required to exercise general and permanent oversight over market traders. In contrast, the market holder may be forced to act to avoid similar, repeat infringements by the same market-trader.
With respect to injunctions, these must be effective and dissuasive, but must also be equitable and proportionate. Accordingly, they must not be excessively expensive and must balance protection of intellectual property rights (trade mark rights in this case) against erecting barriers to legitimate trade.
In conclusion, trade mark holders have confirmed the existence of a powerful right in enforcing their trade mark rights. On the other hand, it seems that a compliance regime similar to that for operators of online marketplaces is now likely to be applicable to operators of physical market places. In the case of internet service providers who are the ‘intermediaries’ in the case of e-commerce, the costs of bearing such compliance regulations fall on them. We would expect the same to be the case for physical market places but might expect the difficulty and cost of compliance to be more onerous. Accordingly we would therefore expect UK courts to take a proportionate view when granting an injunction for a market holder.
