Stopping counterfeit through the market hall tenant: Tommy Hilfiger vs. Delta Center, C-494/15

Owners of trademarks and other IP rights may force the tenant of a market hall to take measures which contribute to avoiding new IP infringements from taking place, after a first infringement.

This week the CJEU approved of this route. The judgment follows an action by a.o. Tommy Hilfiger, Lacoste and Burberry against Delta Center, the tenant of a market hall in Prague. Delta Center sublets market stalls to ever changing parties, who in their turns offered counterfeit products for sale. As soon as the IP owners acted, the sublessee had disappeared. The next day there would be another (or the same) sublessee offering comparable counterfeited goods.

That is why the IP owners this time went after the tenant, Delta Center: can the tenant, following a clear IP infringement, be forced to cooperate more actively in preventing new infringements to take place? The answer is: yes. The tenant of a market stall is not treated differently from the provider of an online market place like eBay, an ‘intermediary’ as meant in article 11 of the Enforcement Directive. In 2011 the CJEU had already decided that an online market place can be ordered to take measures which contribute to avoiding new infringements of the same nature by the same market-trader from taking place. From the CJEU judgment of 7 July 2016, Tommy Hilfiger LLC e.a./Delta Center, case C-494/15, ECLI:EU:C:2016:528, it follows that it is up to the national judge to determine what measures are deemed appropriate:
not only must they be effective and dissuasive, but also effective and equitable. A measure must not be excessively expensive and must not create barriers to legitimate trade. Nor can the intermediary be required to exercise general and permanent oversight over its customers. Yet the intermediary may be forced to take measures which contribute to avoiding new infringements of the same nature from taking place.

And there comes an essential limitation: the measures must contribute to avoiding new infringements by the same market-trader. That may imply that the tenant cannot sublet a market stall to the same party anymore – a nice win for IP owners. But does this go far enough? Expecially a market stall can be sublet on a daily basis to ever changing parties. According to the letter of this judgment that is a different situation, and it is the question whether the tenant may be compelled in such case to take appropriate measures (see no. 34 of the judgment). That limitation was not clear from the CJEU judgment L’Oréal/eBay of 2011. The question addressed in L’Oréal/eBay applied to “the same or similar goods by the same or different users of the website”. According to the CJEU the intermediary is “to take measures which contribute, not only to bringing to an end infringements of those rights by users of that marketplace, but also to preventing further infringements of that kind.” Especially by using the plural form, this rule could be interpreted broadly: to prevent further infringements by the same or other users. The present judgment about the market stall in Prague shows that the rule applies to new infringements by the same market-trader, while the CJEU refers “to that effect” to L’Oréal/eBay. The restricted interpretation prevails.
 
Maarten Haak