Online auction site is found liable for sale of fake Rolex watches

The German Federal Supreme Court has decided that the host of an auction website could be held liable for trademark infringements resulting from the sale of counterfeit goods on the site by third parties.

The defendant hosted the online website 'ricardo.de', on which third parties can offer products for sale by auction. Fake Rolex watches were offered for sale via the site. The seller explicitly identified the watches as counterfeits, describing them as "replica", "cloned perfectly", "counterfeit" and "without prove of authenticity". Accordingly Rolex filed a claim for injunctive relief and damages.

Although the court of first instance held that the suit was valid, the Court of Appeal dismissed it. The Federal Supreme Court then reversed the Court of Appeal's decision based on the provisions of the German Teleservices Act, which deals with the liability of content and service providers. Such providers are privileged by this act with respect to damages, but their liability is not limited with respect to the blocking of content and services.

The court emphasized that it is not reasonable to expect the host of an auction website to verify that every single offer on its site does not infringe the IP rights of third parties, especially as offers are usually published via an automated procedure. However, if the host is made aware that such infringements are taking place, it has a duty to block the auction as soon as possible and is further obliged to put safeguards in place to prevent such infringements taking place again (eg, filtering systems).

The Supreme Court has remanded the case to the Court of Appeal, which must now ascertain whether the defendant had the opportunity to prevent the infringing acts of this specific type from occurring.

Boris Börsch, Hölters & Elsing, Berlin