Supreme Court confirms liability of online auction sites

The First Senate of the German Federal Supreme Court has confirmed its landmark decision (Case IZR 304/01, March 11 2004) that providers of online auction platforms can be held liable for trademark infringement resulting from the sale of counterfeit goods by third parties (for further details please see “Online auction site is found liable for sale of fake Rolex watches”). This latest decision (Case IZR 73/05, April 30 2008) is yet to be published; its key features have been provided by a press release of the court.

 

The claimants produce and distribute watches under the trademark ROLEX. The defendant is the provider of the online auction platform Ricardo. Third parties had offered counterfeit Rolex watches (which were explicitly labelled as imitations) on the website.

 

The claimants sought a cease and desist order based on liability for trademark infringement. The Court of Appeal dismissed the claim. The Supreme Court subsequently reversed the decision and remanded the case to the Court of Appeal with directions to ascertain whether the defendant had the possibility  to prevent the infringements. On remand, the Court of Appeal granted the claim. This decision has now been affirmed by the Supreme Court.

 

The Supreme Court confirmed previous jurisprudence that the liability privilege of hosts of auction websites under the German Telemedia Act applies only to responsibility under criminal law and liability for damages. However, it does not apply to claims for cease and desist. According to the court, an internet auction provider can generally be held liable for infringement on the grounds that its platform enables the offering of counterfeit products.

 

The court further held that the third-party vendors of counterfeit products must have acted for commercial purposes and/or on a commercial scale in order to warrant a finding of trademark infringement.

 

The court emphasized that it would be unreasonable to impose on providers of online auctions an obligation to check every single offers on their websites. However, where a provider has been notified of a clear and obvious infringement, it is obliged to block the relevant auction immediately and take all possible and reasonable measures to avoid futur infringements.

 

In the case at hand, the court concluded that:

Therefore, the defendant was obliged to implement monitoring measures in order to prevent further infringements. However, the court found that the defendant had failed to prove that it had implemented the necessary measures. Consequently, the court held that the defendant had failed to fulfil its legal obligations.