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One thing that has thrived during this pandemic is online shopping. While e-commerce platforms were already a booming industry before the pandemic, their appeal has steadily increased since because of the convenience and safety they provide. Indeed, the words “Add to Cart” are now very familiar to us in our daily lives.
With the growth of this industry also comes the proliferation of allegedly counterfeit goods being sold on these online platforms. The question now is, what are the liabilities of the parties involved in selling or authorizing the sale of counterfeit goods or those which infringe the trademark rights of an owner, on these platforms.
Under Republic Act No. 8293 (the IP Code), trademark infringement is defined as the use in commerce of any reproduction, counterfeit, copy, or colorable imitation of a registered mark in connection with the sale, offering for sale, distribution, advertising of any goods or services. Thus, not only will the use of the exact trademark be punishable under the law, but so is using or adopting a colorable imitation of a trademark in commerce.
Clear from the law is that sellers who sell products bearing a registered mark or a confusingly similar mark may be liable for trademark infringement as long as there is evidence to prove that the goods are, in fact, counterfeit or, at least in the case of a nearly identical mark, adopted to confuse the public as to the source of the said goods.
The issue now deals with the liability of e-commerce platforms in cases of trademark infringement.
While Philippine jurisprudence has yet to establish and rule on this issue, guidance may be found in the amendment to the IP Code dealing with copyright infringement. Republic Act No. 10372, which amends Section 216 of the IP Code, provides for a concept known as contributory infringement. While this applies to copyright infringement cases, the amendment may shed light on how e-commerce platforms may be held liable for trademark infringement if they, 1.) benefit from the infringing act, 2.) were aware of or made aware of the infringing activity, and, 3.) had the ability to control the activities of the principal infringer.
This finds support in cases decided in other jurisdictions where it was ruled that there should be “active” participation by the platform before it may be held liable for trademark infringement. In the 2020 case of Coty Germany GmbH versus Amazon Services Europe Sarl, a German Court held that Amazon was not liable for both a listing by a seller of unauthorized “DAVIDOFF” perfumes and storage of these products in its warehouse. The court stated that the operation of an e-commerce platform and use of trademarks in offering products for sale displayed in an online marketplace is made by the sellers who are customers of the operator of that marketplace and not by that operator of the marketplace itself.* The court further reiterated previous rulings which held that “the fact of creating the technical conditions necessary for the use of a sign and being paid for that service does not mean that the party offering the service itself uses the sign.”** It must be noted that to be liable for trademark infringement, the trademark must be used in commerce. In this case, therefore, operating an e-commerce platform per se and storing goods for such third party sellers, without being made aware of such infringement, does not constitute use of the trademark in commerce and does not automatically constitute infringement.
But is there an instance where an e-commerce platform can actually be held liable?
Interestingly, in a 2019 case also decided in Germany, a court held Amazon liable for trademark infringement. The case involved the Google search results for the mark “ORTLIEB.” When the key word “ORTLIEB” was searched on Google, it generated an Amazon-sponsored link which supposedly leads to “ORTLIEB” products. However, when the Google link leading to the Amazon website is clicked (i.e., www.amazon.de/ortlieb+fahrradtasche), the link not only directs a person to products bearing the “ORTLIEB” mark, but also includes listings of products of its competitors within Amazon. The court ruled that Ortlieb may oppose Amazon’s use of the trademark in the contested advertisements on the ground that the actual use of the trademark misleads customers who input such keywords as expect seeing “offers specifically appropriate to the notification, but who are in fact led to lists of tenders containing third-party products.”***
This ruling on “misleading activity” has yet to be tested in the Philippines.
At present, e-commerce platforms in the Philippines have started to adopt a more proactive role in the take-down of posts which are believed to infringe on intellectual property rights. This is done by putting in place systems and facilities for reporting such product listings so long as these reports are substantially supported by evidence (e.g., trademark and/or copyright registration certificates, proof that the product is counterfeit, etc.). While for some people, it may be tempting to buy counterfeit products online because of their price and convenience, consumers must always remember that there is no substitute for patronizing authentic products because of quality and safety. Doing so also rewards the creativity and effort of trademark owners in building their brands.
* ECLI:EU:C:2020:267, 02 April 2020.
*** ZR 29/18, 25 July 2019. See http://juris.bundesgerichtshof.de/cgi-bin/rechtsprechung/document.py?Gericht=bgh&Art=en&Datum=Aktuell&nr=97816&linked=pm
The views and opinions expressed in this article are those of the author. This article is for general informational and educational purposes, and not offered as, and does not constitute, legal advice or legal opinion.
Joan Janneth M. Estremadura is a Senior Associate of the Intellectual Property Department of the Angara Abello Concepcion Regala & Cruz Law Offices (ACCRALAW).