Louboutin v Amazon - Advertising Counterfeit Goods

A recent ruling from the high-profile case of Christian Louboutin v Amazon has highlighted the potential pitfalls of allowing third-party sellers to advertise and sell counterfeit products via online commercial marketplaces. This judgment is of particular importance as online marketplaces become more popular.

As a result of counterfeit, red-soled shoes being sold by third-party sellers on Amazon, Louboutin brought an action against Amazon for infringement of their registered trademark for their signature red-soled shoes. Louboutin claimed that whilst Amazon was not selling the counterfeit products themselves, they were involved in the distribution, storage and advertising of those products and, in particular, presenting the trademark infringing products on its platform in the same manner as products sold in Amazon's name.

The courts of Belgium and Luxembourg (where the action was originally brought) referred the matter to the Court of Justice of the European Union (CJEU) to consider whether Amazon could be held directly liable for using the trademark where a third-party seller places an advert for counterfeit products on their platform.

The CJEU held that operators of online marketplaces could be held directly liable for third-party advertisements. The CJEU confirmed that users could mistakenly think Amazon themselves are selling shoes on behalf of Louboutin, particularly when Amazon displays its own logo on the third-party sellers' advert and stores and ships the shoes in question.

1. Be clear on who is selling the goods on the platform;
2. Ensure users can easily distinguish between goods sold directly by the marketplace operators and those that are sold via a third-party seller;
3. Have marketplace terms that give the marketplace operator the right to:
   • Take down adverts where the marketplace operator suspects they may be advertising counterfeit goods for sale:
   • Seek recourse against third-party sellers should counterfeit goods be sold on the marketplace; and 
   • Take action to remove/close the third-party seller's accounts from the marketplace if they are in breach of the marketplace terms;
4. Avoid advertising on third-party listings, including "sponsored by" or "recommended choice", to remove any confusion as to where the goods originate from;

Have a verification process for goods being listed and the third party listing the goods.