02 August 2016

Market operator can be made to stop stallholders selling counterfeit goods

Businesses letting space in physical marketplaces should ensure traders do not sell counterfeit branded goods from those premises (or otherwise infringe a third party's intellectual property rights) - or risk legal action by the brand owner.

A tenant of a market hall in Czechoslovakia sublet stalls to traders who were found to be selling counterfeit branded goods.

The European Court of Justice ruled that brand owners could require the tenant to stop its stallholders selling counterfeit goods, rather than having to take legal action against each individual trader separately. This was because the tenant was an 'intermediary' - someone whose services are used by others to infringe intellectual property rights - within the meaning of EU law.

The same reasoning applies to anyone who operates all or part of a physical marketplace, such as an indoor or outdoor market, a shopping mall or the like, including in the UK.

This ruling gives brand owners much the same rights against operators of physical marketplaces as their existing rights against operators of online marketplaces, such as Ebay, which is liable as an intermediary if its services are used to sell counterfeit goods, or otherwise breach someone else's intellectual property rights.

This decision benefits brand owners throughout the EU, enabling them to enforce their rights against one business rather than having to take legal action against multiple, often small and hard to trace, businesses.

Recommendation

Businesses operating physical marketplaces should ensure that traders they authorise to operate from their premises do not sell counterfeit branded goods there (or do anything else that infringes another's intellectual property rights), or risk legal action against them by the brand owner.

Case ref:

Tommy Hilfiger Licensing LLC, Urban Trends Trading BV, Rado Uhren AG, Facton Kft., Lacoste SA, Burberry Ltd v Delta Center a.s. Case C-494/15

If you have any queries regarding this topic, please contact Head of Intellectual Property Rob Lucas on 0113 297 8941 or at rlucas@shulmans.co.uk.