Online market place Fuugro.com successfully invokes exemption from liability for hosting providers

This week, the Court of The Hague rendered a very interesting judgment about the liability of online market places in a case between Audi and Volkswagen against Fruugo.com. This case shows that technical and automatic ‘activities’ of an online market place do not easily lead to liability of the online market place due to an active role.

1. Background

 Audi and Volkswagen (hereinafter: “Audi”) found out that on the online market place of Fruugo various counterfeit products were sold. Audi initiated legal proceedings against Fruugo.

It was undisputed that the retailers that traded in these counterfeit products on the Fruugo-platform infringed the trademarks of Audi. However, Fruugo disputed that it also infringed Audi’s trademarks or had facilitated the infringements of the retailers.

2. No infringement by Fuugro

The Court refers to the case law of the ECJ in the cases Louboutin / Amazon and Coty / Amazon, and considers that:

• “Use” (of the trademark or a similar sign, as meant in article 9 EU Trademark Regulation) requires an active role, as well as direct or indirect control of the act constituting the use;
• “Use” implies at least that the trademark is used in Fuugro’s own commercial communication.

The Court notes that Fruugo has not used the Audi trademarks herself. Fruugo does not offer products for sale at her own risk and expense. The retailers upload information about the products they offer on the Fruugo platform. Fruugo is not involved with the choice of wordings, of the offer, or the product pictures. Fruugo shows the uploaded information on her platform after processing it completely technically and automatically in a uniform format. Fruugo furthermore offers retailers the possibility to use advertisement campaigns. By choosing this option, the information provided by the retailer is uploaded via a technical and automatic process in a database linked to Google (the Google Merchant Center). This database generates the advertisements from the information provided. Fruugo is not involved with the content of the advertisements (wordings and pictures) and has no influence on how often the advertisement is shown.

The Court considers that not Fruugo, but the retailer qualifies as advertiser. The advertisements serve to promote the products that the retailer offers on the Fruugo platform. It is completely up to the retailer to decide if he wants to use the advertisement campaigns (against payment of a higher fee to Fruugo).

3. Perception of consumer not always relevant

Audi argued that it is not clear for consumers whether Fruugo or the retailer is offering the products. However, the Court dismisses this argument. The Court notes that “offering” - which is a specification of “use” - implies an active role as well, and direct or indirect control of the act constituting the use. The Court cannot establish that Fruugo plays such active role. Moreover, the Court notes that the situation in the case Louboutin / Amazon to which Audi refers is different, because that case described an online market place that also displayed products offered by the website operator itself. More importantly, contrary to Audi’s argumentation, the Court considers that there is no general rule that the perception of the consumer is relevant in all circumstances when answering the question by which party the alleged counterfeit products are offered. The perception of the consumer is only relevant if a specific context gives reason thereto, for example if the website operator offers products itself as well and it is unclear for consumers who is actually offering the products.

With a view to article 6 par 4 of the DSA, which enters into force on 17 February 2024, the Court notes that the liability of online platforms under consumer protection law is excluded from the general exemption from liability of hosting providers. The Court considers that for the remainder, the perspective of the consumer is irrelevant.

4. Fuugro successfully invokes exemption from liability for hosting providers

Fuugro successfully invokes the exemption from liability for hosting providers (based on article 14 E-commerce Directive). The court considers that this exemption is applicable because:

a) Fuugro qualifies as a hosting provider:

Its role of service provider is neutral, in the sense that it has no knowledge of, or control over, the information which it stores. Fuugro does not offer the products itself. The retailers on its platform offer the products. The retailers upload the information on the platform. Fruugo is not involved with the choice of wording of the offers and the pictures. The uploaded information is processed completely technically and automatically into a uniform format shown on Fruugo’s platform. Fruugo does not use the trademarks of Audi in her own commercial communication.

The fact that Fuugro gives general guidelines to retailers does not mean that Fuugro has knowledge of or control over the actual advertisements that the retailers create with these instructions. The facts that Fuugro automatically uses AUDI as product category on its platform, has a customer service, takes care of returned items, translates product offers automatically, and offers consumers an option to pay in their own currency to local payment service providers in favor of Fuugro, and that the logo of Fuugro is shown on the invoice, do not lead to the conclusion that Fuugro plays an active role. In essence, all these circumstances do not lead to the conclusion that Fuugro has specific knowledge or control over the information on its platform;

b) Fuugro has no knowledge of the specific, allegedly illegal, content;

c) Upon obtaining such knowledge, Fuugro acts expeditiously to remove or disable access to the information.

Fuugro quickly responded by disabling access to all Audi products on her website, not only the alleged infringing ones. Moreover, infringing retailers receive a warning. In case of flagrant or structural infringements, the retailer is blocked from the platform.

4. My commentary

In practice, technical and automatic ‘activities’ of an online market place do not easily lead to liability of the online market place due to an active role. The retailers are the ones infringing on the market place – which does not necessarily make the online market place complicit or a facilitator of trademark infringement. For trademark owners, this means that notice and take downs have to be combined with other means to combat counterfeiters: by the regular means of out-of-court settlements, civil proceedings, criminal proceedings and customs detentions.

Notice and take downs alone remain insufficient, because afterall, there is no point in whacking a mole without catching it.

In my personal point of view, this judgment unfortunately does not place much responsibility on online market places when it comes to preventing counterfeiting: the statutory exemption from liability that also applies to online market places gives them sufficient leeway to take off! ✈️