Red soles and a red light for Amazon in European Court of Justice proceedings

In its ruling, the ECJ held that marketplaces are liable for trademark (and other IP) infringements by third-party vendors using the platform if these marketplaces create for consumers the impression the marketplace operator itself is the seller and not the individual vendors. The ruling was made in a case involving Amazon and shoe manufacturer Christian Louboutin, whose red-soled high-heeled women’s shoes are registered as a Benelux trademark. 

Amazon operates websites selling goods both directly in its own name and indirectly by providing a sales platform for third-party sellers: a so-called hybrid model. The shipping of goods offered for sale on that online marketplace may be handled either by sellers or by Amazon, which in this case stocks goods in its distribution centers and ships them to purchasers from its own warehouses. 

The ruling

In the case brought against Amazon by Louboutin, these third-party Amazon merchants are cited as regularly displaying advertisements for red-soled shoes, which violate trademark rulings. The ECJ ruling hung on whether it was clear from Amazon’s hybrid business model whether a product was being sold and fulfilled by Amazon itself or by a third-party seller. 

Ultimately, the ruling hinged on the question of whether “a well-informed and reasonably observant user of [a] site” has the impression that the operator is the advertiser and seller of goods rather than a third-party vendor because there is no clear distinction in websites. For example, the Amazon logo is present on third-party listings. In its ruling, the ECJ found that a marketplace can be held liable for marketing infringing products where this is the case. 

The consequences for brands and e-comm platforms

Whilst not an issue for sites such as Ebay – which act solely as a platform for third-party sellers – it does have implications for hybrid business models such as Amazon, whose own offerings as platform operator are mixed with those of its third-party partners. 

Prior to this Dec. 2022 judgment, marketplace operators were only liable if the platform did not remove infringing products on sale, despite having been informed thereof; or if they played an active role by, for instance, actively assisting in the optimization of offerings and the advertising of infringing products (see the judgment here). 

This new ECJ judgment will make it now much easier for IP rights owners to proceed against platform operators themselves and not against third-party sellers, who are frequently foreign sellers, and where a prosecution of such infringements rendered it difficult, if not impossible, to succeed in these kinds of legal actions. The ECJ verdict also makes clear that the times of platform operators such as Amazon conducting their commercial online activities unhampered to a major extent by European and national applicable law regulations are definitely over.