Brand protection online: The challenge of applying ‘physical’ laws to online marketplaces

By Novagraaf Team,

Most IP legislation was designed to support trademark protection in physical markets, making its application a challenge for brand owners facing trademark infringement on ecommerce channels, such as online marketplaces. Megan Taylor discusses strategies for brand protection online in light of recent rulings by the EU and UK courts.

Strategies for brand protection online have become increasingly vital in our ecommerce-driven world. But, if brand owners are to identify and act promptly against counterfeiting and other forms of trademark infringement online, they need access to the right tools. 

As IP protection efforts have shifted to digital markets, the focus has also shifted to how relevant legal provisions are to be interpreted in this new domain. Increasingly, courts are being asked to apply existing legislation, constructed when the physical market was most relevant, to ecommerce channels. For example, the recent preliminary ruling issued by the EU courts in the dispute between Christian Louboutin and Amazon.

In the UK, there are additional challenges to consider related to the ‘unjustified threats’ provisions in the UK Trade Marks Act, which can make brand owners think twice when writing to third parties alleging trademark infringement. 

Brand protection online: A question of liability in the EU

The question of whether online marketplaces are liable for trademark infringement on their platform is particularly relevant in this commercial environment. That is why the recent preliminary ruling by the Court of Justice of the EU (CJEU) in Louboutin v Amazon could have huge implications for the activities and strategies of both platform operators and brand owners in this context.

Louboutin’s claim that Amazon was liable for trademark infringement by displaying lists for and shipping counterfeit goods should make online marketplaces, such as, think twice when promoting third-party products through its platform. Likewise, the decision should make it simpler for brand owners to pursue online trademark infringement claims directly against online platform operators, as opposed to having to pursue individual counterfeiters as is the case currently. 

To find out more, read our article ‘Amazon to blame for trade in fake Louboutins suggests CJEU’.

Brand protection online: The risk of making ‘unjustified threats’ in the UK

Nonetheless, brand owners are required to act with care when taking action against perceived trademark infringement in certain jurisdictions. For example, the UK has specific legislation in place to prevent brand owners from threatening to sue for infringement, when no infringement has occurred or the right relied upon is invalid (UK Trade Marks Act, section 21).This is to protect against the misuse of IP threats to unfairly intimidate others and cause irrevocable damage to the commercial activities of potentially innocent parties. 

To establish whether a threat is ‘unjustified’, an objective assessment is made in determining whether a reasonable person would (i) believe that a registered right existed in the name of the person making the threat, and (ii) whether they perceived that the person making the threats intends to commence proceedings against them. 

Application of these provisions has recently been broadened to include the takedown tools offered by online marketplaces. Up until recently, it was not clear whether using such tools would amount to being an unjustified threat, but the UK High Court confirmed last year in Carku v Noko that it is possible. 

Takedown strategies after Carku v Noko

The question of whether use of a platform’s takedown procedures amounted to a threat of legal proceedings has also been raised in the context of eBay’s Verified Rights Owner (VeRO) Programme. However, the 2022 Carku v NOCO decision specifically considered Amazon’s Intellectual Property Rights (IPR) procedure. 

As background, Amazon offers a Brand Registry system, whereby companies register their IP rights by submitting evidence, such as a certificate of registration, to confirm they have a legitimate right to trademark(s), patent(s) and/or copyright. Accordingly, brand owners can use the Brand Registry to report IP complaints or alert Amazon to inappropriate listings using its Report Infringement Form. 

NOCO, a battery manufacturer, had successfully used Amazon’s IPR complaints procedure to takedown listings by Shenzhen Carku Technology, a car company, on the basis that those listings infringed its patent rights. 

In response, Carku brought a claim before the UK courts seeking (i) revocation of the patent and (ii) alleging that statements made by NOCO to Amazon were actionable threats of patent infringement, on the basis that those statements led to Amazon delisting its products. NOCO argued that its complaints were not “threats” and that the IPR procedure that Amazon has in place is an alternative to litigation, but the court disagreed. 

It found that, in order for this to be the case, Amazon would need to have an automated takedown policy in place in reaction to the complaint, but it does not. Rather, the fact that Amazon carries out its own assessments of the complaint, and sometimes even allows counterfeits to remain on its platform, indicates that it makes a judgement, based on the risk that the complaint presents versus its desire to sell as many products as possible. 

In this case, the fact that Amazon took the listing down shows that it considered the risk of selling those items to be too great, and it perceived the takedown notice to be a threat against both itself and the seller, Carku. It was deemed irrelevant that NOCO would not actually pursue action against Amazon as it was not to know that this would not definitely happen.

As the complaints were deemed to be “threats”, they were subsequently found to be unjustified because the patents owned by NOCO were ruled invalid. 

Navigating brand protection online: Choose your partner wisely

While technology, including automated takedown procedures, can play an important role in ensuring your rights are protected online, it is best to use such systems under the guidance of qualified professionals.

If unjustified threats are made, you can leave yourself open to injunctions, declarations and damages to be paid. By working with a specialist, initial assessment can be made as to whether the third party activities are infringing and whether action you are looking to take would be deemed as an actionable threat. 

If you are interested in brand protection online, our specialist team of Novagraaf advisers would be happy to help. Please speak to your Novagraaf attorney or contact us below.

Megan Taylor is a Trainee Trademark Attorney at Novagraaf in the UK.

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