Intermediaries can be held liable for trademark infringement

European Union
In UDV North America Inc v Brandtraders NV (Case C-62/08, February 19 2009), the European Court of Justice (ECJ) has considered whether an intermediary which negotiates the purchase of trademarked goods through its website can be held liable for trademark infringement.

UDV North America Inc, the owner of the Community trademark (CTM) SMIRNOFF ICE for alcoholic beverages - namely, distilled spirits and liqueurs in Class 33 of the Nice Classification - initiated trademark infringement proceedings in the Belgian courts against Brandtraders NV. Brandtraders operates a website on which buyers and sellers of goods meet anonymously, with Brandtraders acting as an intermediary between the buyer and the seller.

In the transaction which formed the basis of this dispute, Hillyard Trading Ltd, a seller based in Gibraltar, agreed to sell 3,040 cartons of 24 bottles of Smirnoff Ice to Checkprice, a business based in Norwich, England. The negotiations were conducted through Brandtraders' website, with the identity of the buyer and seller remaining concealed. Brandtraders concluded a contract of sale with Checkprice in its own name on behalf of Hillyard. Brandtraders also addressed a letter to Hillyard assuring it that the contract had been concluded. The SMIRNOFF ICE mark appeared in the letter, but not in the sale contract. The invoice raised by Brandtraders to Checkprice comprising the sale price, including the commission charged by Brandtraders, also mentioned the SMIRNOFF ICE mark. Following payment of the invoice, the goods were discharged at Felixstowe Port, England, having been shipped from South Africa, and were made available to Checkprice. They were thereafter put into free circulation.

UDV sued Brandtraders in Belgium for trademark infringement under Articles 9(1)(a) and 9(2)(d) of the Community Trademark Regulation (40/94), which has now been superseded by Regulation 207/2009 (the infringement provisions in Article 9 remain the same). Article 9(1)(a) prevents third parties not having the consent of the CTM owner from using in the course of trade any sign which is identical to the CTM in relation to goods or services which are identical to those for which the CTM is registered. Article 9(2) includes the use of the "sign on business papers and in advertising" as being prohibited under Article 9(1).

At first instance, the Belgian court found that there had been infringement, but this was overturned on appeal. The Court of Appeal held that Brandtraders did not use the sign in relation to the sale of the goods and, therefore, the 'use' requirement under Articles 9(1)(a) and 9(2)(d) had not been made out. UDV then appealed to the Belgian Supreme Court, which referred questions to the ECJ seeking clarification of the meaning of 'use' by a third-party intermediary under Articles 9(1)(a) and 9(2)(d).

The ECJ reviewed its previous decisions on the interpretation of the term 'use' and concluded that for the trademark owner to invoke its exclusive rights, it is sufficient that the following four conditions are met:
  • The use is made without the consent of the rights holder;
  • It takes place in the course of business (ie, in the context of a commercial activity with a view to obtaining economic advantage);
  • It is made for products or services; and
  • The third party uses the sign as a mark (ie, use of the sign by the third party must, or must be likely to, affect the functions of the mark and, in particular, its essential function, which is to guarantee the source of the products or services).
The ECJ concluded that the fact that Brandtraders used an identical sign for products which were not its own (ie, to which it did not have title) was irrelevant to the issue of whether there had been the requisite use. In this case, the ECJ held that the use by Brandtraders was obviously made in the context of a commercial activity aimed at gaining an economic advantage. Brandtraders intervened in a contract of sale and received remuneration for this intervention. It was irrelevant in this context that Brandtraders acted as a commission agent and on behalf of the seller.

The ECJ thus answered the question posed by the Belgian Supreme Court by ruling that the concept of 'use' within the meaning of Articles 9(1)(a) and 9(2)(d) of the regulation includes a situation where an intermediary, acting in its own name but on behalf of a seller and thus having no interest in the sale of goods to which it is a contracting party, uses a sign identical to a CTM on business papers for identical products or services to those for which the mark is registered.
Ed Wilkie and Louisa Albertini, Field Fisher Waterhouse LLP, London

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