Examensarbete

FACULTY OF LAW

Lund University

Astrid Andersson

The distinction between primary and contributory trademark infringement in the EU

JAEM03 Master Thesis

European Business Law

30 higher education credits

Supervisor: Ulf Maunsbach

Spring semester 2015

Contents

Summary1

Sammanfattning2

Preface3

Abbreviations4

1Introduction5

1.1Background5

1.2Purpose and question formulation6

1.3Limitations6

1.4Method and material7

1.5Disposition8

2EU trademark law the legal framework9

2.1Introduction to EU trademark law9

2.2EU trademark Regulations11

2.3The Paris Convention and the TRIPS Agreement12

3The functions of trademarks and scope of protection15

3.1The functions of trademarks15

3.2Rights conferred by a trademark16

3.3Special protection for well-known trademarks20

3.4Restrictions on the trademark right23

3.5Rights conferred by a copyright and related rights25

4Contributory infringement and EU law27

4.1Contributory liability for trademark infringement27

4.2What do the Directives say?28

4.2.1The E-Commerce Directive29

4.2.2The Enforcement30

4.2.3The Infosoc Directive30

4.3Contributory infringement on the internet31

4.2.1The Google France and Google case32

4.2.2The LOral v eBay case34

4.2.3The UPC Telekabel case36

4.4Real life contributory infringement38

4.4.1The UDV North America case38

4.3.2The Red Bull case40

4.3.3Opinion of AG Kokott in Red Bull42

4.5Contributory infringement in Germany, the United Kingdom and France43

4.4.1Germany43

4.4.2The United Kingdom44

4.4.3France44

5Analysis46

5.1The distinction between primary and contributory trademark infringement46

5.2Towards harmonisation?50

6Conclusion53

Bibliography55

Table of Cases59

Summary

There are two different kinds of trademark infringement: primary and contributory. Primary infringement is regulated in Article 5 TMD, and this Article has been subject to numerous judgments from the CJEU. On the other hand, contributory infringement is still a national matter and there is no common definition throughout the EU of what a contributory infringement actually is.

With the CJEUs judgments in Google France and Google and LOral v eBay, it has been discussed whether an ISP such as Google or eBay can be liable for trademark infringement. The CJEU has come to the conclusion that an ISP such as those at issue cannot be liable for primary infringement, for example when allowing use of keywords that correspond to other parties trademarks. However, an ISP can still be liable for contributory infringement if it does not fulfill the conditions in the E-commerce Directive.

The CJEU has in its judgments concerning primary trademark infringement, Article 5 TMD, focused on whether there has been use by the alleged infringer, and whether the alleged use of the trademark has been detrimental to the functions of the trademark. In cases such as Google France and Google and LOral v eBay, the CJEU has held that for an ISP to avoid contributory liability in accordance with the E-commerce Directive, the ISP must only provide with the technology and have a neutral and passive role. The distinction between primary and contributory infringement, taken by the CJEU, can hence be use on the one hand and active role on the other. What differs active role from being neutral and passive might lie in a prerequisite such as negligence.

Different interpretations of contributory infringement might be detrimental to the legal certainty, and can in the long run harm the free movement of goods and services. Therefore, a common definition would be appreciated. Factors to take into account when defining a contributory infringement might be whether the alleged infringer has acted negligent, what role it has played, the nature of the service (whether the service provider is neutral or active) etc.

Sammanfattning

Det finns tv olika sorters varumrkesintrng: primra och sekundra. Primra intrng regleras i Artikel 5 i varumrkesdirektivet, vilken har varit freml fr flertalet domar frn EU-domstolen. Det finns idag ingen allmn definition av ett sekundrt intrng, eftersom medverkansansvar regleras i nationell rtt.

EU-domstolens domar i Google France and Google och LOral v eBay, har franlett en diskussion om huruvida en sktjnstleverantr ssom Google och eBay kan hllas ansvariga fr varumrkesintrng. Enligt EU-domstolen r s inte fallet nr en sktjnstleverantr, ssom Google, tillter sina kunder att anvnda andras varumrken i s kallad keyword advertising. Detta till trots, en sktjnstleverantr kan lggas medverkansansvar om denne inte uppfyller de krav som stlls upp i E-handelsdirektivet.

EU domstolen har i sina domar gllande primra varumrkesintrng, Artikel 5 i varumrkesdirektivet, fokuserat p huruvida det har frekommit anvndning av varumrket och i s fall huruvida detta har skadat varumrkets olika funktioner. I rttsfall ssom Google France and Google och LOral v eBay, har EU domstolen klargjort att fr att undvika medverkansansvar i enlighet med E-handelsdirektivet, mste sktjnstleverantren endast tillhandahlla med tekniska hjlpmedel samt utva en roll som r i sin natur neutral och passiv.

Grnsdragningen mellan primra och sekundra intrng kan drfr rimligtvis ligga mellan rekvisiten anvndning och att ha en aktiv roll. Vad som skiljer mellan att spela en aktiv roll jmfrt med en passiv och neutral roll kan ligga i rekvisit ssom oaktsamhet.

Olika tolkningar av sekundra intrng och dess medverkansansvar kan leda till en situation d rttsskerheten stlls p sin spets, och kan i det lnga loppet vara ett hinder mot den fria rrligheten av varor och tjnster. En gemensam definition av sekundra intrng skulle drfr troligtvis vara mycket uppskattad. Vid utformandet av en sdan definition finns det flera faktorer som mste tas i beaktande, exempelvis vilken roll medverkaren har haft (dvs neutral eller aktiv), huruvida denna har handlat oaktsamt etc.

Preface

Eleven semesters have come to an end. Realizing that this thesis is the last one, that there will be no more exams, is very hard. Even though it is a bit scary, I am longing to start working as a lawyer, to be able to practice what I have learnt.

I would like to thank my supervisor, Ulf Maunsbach, for his support and valuable input, as well as for all interesting conversations we have had.

Thank you.

Flyinge, May 2015

Astrid Andersson

Abbreviations

AGAdvocate General

CFICourt of First Instance

CJEUCourt of Justice of the European Union

CTMCommunity Trade Mark

CTMRCommunity Trade Mark Regulation

EUEuropean Union

GCGeneral Court

IPRIntellectual Property Right

ISPInternet Service Provider

TFEUTreaty on the Functioning of the European Union

TMDTrademark Directive

TRIPSAgreement on Trade-Related Aspects of Intellectual Property Rights

UKUnited Kingdom

WIPOWorld Intellectual Property Organization

WTOWorld Trade Organisation

Introduction

Background

The national dispute between Google and Louis Vuitton[footnoteRef:1] lasted for several years but finally, in 2010, the CJEU gave its ruling. An internet service provider (ISP) does not use a trademark within the meaning of Article 5 of the Trademark Directive (TMD), when it allows its customers to use other trademarks in keyword advertising. An ISP can therefore not be liable for trademark infringement based on the Article mentioned. However, that does not necessarily mean that Google could not be liable for contributory infringement, which was up to the referring court to determine. [1: Google v Louis Vuitton Melletier et al, C-236/08, C-237/08 and C-238/08, EU:C:2010:159. This case will be analysed in chapter four of this thesis.]

Infringement of intellectual property can be either primary or contributory. A primary infringement is rights specific, meaning that the infringement depends on the rights conferred by the specific intellectual property. These rules are harmonised.

With contributory infringement, it is different. There is no specific definition of what a contributory infringement actually is, so contributory infringement is not harmonised to the same extent as primary infringement. However, several Directives (such as, for example, the E-commerce Directive and the Enforcement Directives that will be discussed in chapter 4) state that a right holder should be able to apply for an injunction against an intermediary. The E-commerce Directive also contains some provisions which describe when an ISP cannot be held liable for contributory infringement. There is hence no need to, when it comes to contributory infringement, distinguish the different kinds of intellectual property from each other. The determination of what is a contributory infringement is thus a national matter, and the different Member States all have different tort law. Since there are different views of what a contributory infringement is, this might lead to a threat against the legal certainty for companies that act on different markets.

If we go back to the Google France and Google case, the CJEU said that Google could avoid liability if its role was passive and if Google only provided its customers with the technology. But how far reaching are these requisites, and when do they become use instead? It is this distinction, between primary and contributory infringement, that will be analysed in this thesis.

Purpose and question formulation

The purpose of this thesis is to analyse the distinction between primary and contributory infringement of intellectual property.

Primary infringement is rights specific, since each type of intellectual property has different rights conferred by it. On the other hand, there is no need to distinguish contributory infringements from each other depending on what type of intellectual property the infringement concerns. The thesis will, however, focus on trademark law, but since contributory infringement is a general issue, it will also include some aspects of copyright and related rights law.

The main question analysed is What is the view taken by the CJEU, on the distinction between primary and contributory trademark infringement?

The author will also analyse the question: Does the view differ depending on whether it is an internet related or a real life contributory infringement?

Finally, since there are today no common definition in the EU on what is a contributory infringement of intellectual property, the third question discussed is: Do we need a common definition on contributory infringement of intellectual property rights in the EU?

Limitations

Primary infringement depends on the rights conferred by the specific intellectual property law, but contributory infringement does not has to be distinguished in that way. Therefore, it would have been interesting to make a comparison of the judgments from the CJEU on the different areas, to see whether the judgments differ depending on what specific intellectual property right it concerns. However, due to lack of space this thesis will focus on trademark law but will, as already stated, include some aspects of copyright and related rights law.

The relationship between intellectual property law and competition law is interesting, and the protection of intellectual property rights does raise competition concerns, and can be harmful to the internal market. But, for the same reasons as above, the author has decided not to make an in-depth analysis of these concerns.

Method and material

The author has used an EU legal method when writing this thesis.

The different sources of law that can be used when working with this method are, among others, the Treaties[footnoteRef:2], the Charter of Fundamental Rights, case law from the CJEU, general principles, international agreements etc.[footnoteRef:3] [2: The Treaty of the European Union (TEU) and the Treaty on the Functioning of the European Union (TFEU). ] [3: Hettne- Otken Eriksson, 2011, p. 40.]

The Treaties are at the top of the hierarchy of norms in the EU, followed by general principles (such as proportionality, legal certainty and fundamental rights) and the legislative acts (such as Directives, Regulations and decisions).[footnoteRef:4] [4: Craig de Brca, 2011, p. 109, 112.]

According to Article 19(1) TEU, the CJEU shall ensure that in the interpretation and application of the Treaties the law is observed. The CJEU has been entrusted with the functions of a constitutional court, so case law from the CJEU is hence fundamental and of great importance for legal arguments.[footnoteRef:5] [5: Ibid. p. 49 and Eckes, 2013, p. 173.]

Case law is central to this thesis. The author is of the opinion that for problems concerning trademark law, case law is the most valuable source of law. There are no specific Articles in the Treaties that deal with this field of law in a practical way (compared to, for example, competition law where Articles 101 and 102 TFEU are extremely important).

Further, emphasis has been given to provisions in different Directives that are important for trademark law as well as intellectual property law in general, such as the TMD, the Enforcement Directive, the Infosoc Directive and the E-commerce Directive. Many cases (that concern trademark law) referred to the CJEU for preliminary ruling concern an interpretation of the provisions in the TMD, and for Internet related cases the E-commerce Directive has been of great importance.

The author is of the opinion that opinions from the advocate generals are interesting and a good complement to judgments from the CJEU. However, in this thesis they have not been used very much as valuable sources of law but rather as a contribution to the legal discussion.

Lastly, reputable scholars have written the doctrine used in this thesis. Doctrine does not have a high hierarchal status so the author has therefore obviously not given it the same status as a source of law as with the cases from the CJEU. However, the doctrine has still been very valuable and useful. It has helped the author with the interpretation of different cases, and has been useful in balancing judgments. Further, doctrine has been of great importance for the more theoretical chapters.

The author has chosen to analyse the material from the rightholders point of view.

There is a trend in the EU that goes towards a strong legal protection, and it can be discussed whether the judgments from the CJEU referred to in this thesis are in line with that trend.

Disposition

The thesis consists of six chapters.

The second chapter gives the reader an insight into the legal framework of EU trademark law, and also information about how the views on trademarks have evolved over time.

Since this thesis intends to analyse the distinction between primary and contributory trademark infringement, the third chapter discuss the rights conferred by a trademark and different forms of primary trademark infringement. A brief comment on primary infringement in copyright and related rights will also be given in this chapter.

The following chapter will then discuss contributory infringement. Contributory infringement is a general issue, so this chapter will discuss both contributory infringement of trademark rights as well as contributory infringement of copyright and related rights. However, due to lack of space emphasis will be given to trademark cases.

In chapter five the author will analyse the material from the previous chapters followed by a short conclusion in chapter six.

EU trademark law the legal framework

Introduction to EU trademark law

The view on intellectual property within the EU is, in general, positive. Intellectual property has great economic value, so it is not surprising that the Regulations surrounding it have gone in the direction towards a stronger legal protection. However, this legal protection must be balanced with one of the core objects with the union; the importance of the internal market and the free movement of goods and services. Differences in national trademark legislation might lead to difficulties for the internal market to function correctly, and it will especially lead to restrictive practices for some companies. Therefore, the Regulations concerning intellectual property in the EU build upon several objects. One of the most important objects is the level playing field, meaning that the legal protection of intellectual property in the different Member States shall be harmonised to the extent that the companies can compete on similar conditions (which will encourage the free movement of goods and services). Another core object is to strengthen European companies competitiveness against companies from, for example, the USA and China.[footnoteRef:6] Therefore, the efforts to harmonize trademark law in the EU build upon the need and wish to create a proper functioning internal market, and not on a desire to overcome conceptual divergences.[footnoteRef:7] However, the first judgments from the CJEU on trademarks were, for trademark owners, disastrous. The CJEU showed lack of comprehension of even the basic functions of a trademark, and trademarks were looked down on as second-class industrial property rights.[footnoteRef:8] Patents and copyright were seen by the CJEU as intellectual property that stimulated and rewarded scientific process and literary creativity. Trademarks, on the other hand, were despised as vulgar commercial rights hardly worth of protection.[footnoteRef:9] In the Sirena v Eda case[footnoteRef:10], Advocate General Dutheillet de Lamothe stated: [6: Ibid. p. 14.] [7: Kur, 2008, pp. 151-152. For example, when the Treaty of Rome came into force 1958, the views on intellectual property were quite different between the Member States. In France the rights conferred by a trademark were not essentially different from the rights concerning patents and copyright. In Germany, on the other hand, the focus laid on the origin function of the trademark. The origin function was the sole and mandatory guideline regarding the protection, and acquisition, of trademarks.] [8: Keeling, 2003, p. 153.] [9: Keeling, 2003, p. 153.] [10: Sirena SRL v Eda SRL, C-40/70, ECLI:EU:C:1979:236.]

Both from the economic and from the human point of view the interests protected by patent legislation merit greater respect than those protected by trade marks.[footnoteRef:11] [11: Sirena SRL v Eda SRL, C-40/70, Opinion of AG Dutheillet de Lamothe, p. 87.]

From the human point of view, the debt which society owe to the inventor of the name Prep Good Morning is certainly not of the same nature, to say at least, as that which humanity owes to the discoverer of penicillin.[footnoteRef:12] [12: Ibid.]

Later on, in the Hoffmann- La Roche v Centrafarm case[footnoteRef:13], the CJEU took another approach. In para. 7 of the judgment, the CJEU said that: [13: Hoffmann- La Roche v Centrafarm, C-102/77, ECLI:EU:C:1978:108.]

regard must be had to the essential function of the trade mark, which is to guarantee the origin of the trade-marked product to the consumer or ultimate user, by enabling him without any possibility of confusion to distinguish that product from products which have another origin.

The judgment in Hoffmann- La Roche v Centrafarm was the beginning of a very different view on trademarks.[footnoteRef:14] Finally, in the HAG II case[footnoteRef:15], the CJEU once again made clear the value and importance of trademarks by saying: [14: Keeling, 2003, p. 156.] [15: SA SNL- SUCAL NV v HAG GF AG, C-10/89, ECLI:EU:C:1990:359]

Trade mark rights are, it should be noted, an essential element in the system of undistorted competition which the Treaty seeks to establish and maintain. Under such a system, an undertaking must be in a position to keep its customers by virtue of the quality of its products and services, something which is possible only if there are distinctive marks which enable customers to identify those products and services. For the trade mark to be able to fulfil this role, it must offer a guarantee that all goods bearing it have been produced under the control of a single undertaking which is accountable for their quality.[footnoteRef:16] [16: Ibid. para. 13.]

The judgments from the CJEU have changed radically, and as Keeling says the Court can only be applauded for admitting to past errors and recognising the importance of trademarks in the clearest of terms.[footnoteRef:17] [17: Keeling, 2003, p. 157.]

EU trademark Regulations

EU Trademark law builds upon the Trademark Directive (TMD)[footnoteRef:18] and the Community Trademark Regulation (CTMR)[footnoteRef:19]. They have been developed together, side by side, as two means to remove barriers of trade within the internal market.[footnoteRef:20] [18: Directive 2008/95/EC of the European Parliament and of the Council of 22 October 2008 to approximate the laws of the Member States relating to trade marks. Henceforth: The TMD.] [19: Council Regulation (EC) No 207/2009 of 26 February 2009 on the Community trade mark. Henceforth: The CTMR. Note that the name Community trade mark will change to European trade mark.] [20: Max Planck Institute for Intellectual Property and Competition Law in Munich, 2011, p. 49.]

The discussion on whether there should be a community trademark system started in 1958. The legislators saw this as a prerequisite for a well-functioning internal market, and as a way to improve integration throughout the community. However, it took more than 30 years before the first CTMR was presented[footnoteRef:21].[footnoteRef:22] [21: Council Regulation (EC) No 40/94 of 20 December 1993 on the Community trade mark. The first draft was presented in 1964.] [22: Levin, 2011, p. 381.]

The CTMR has three characteristics. It is an autonomous, supranational and independent system, meaning that it exists along with the national trademark legislation in the Member States. It is directly applicable, so every citizen has the right to invoke it. Further, the CTMR is unitary. A CTM enjoys the same protection and legal effect in all Member States, with one single application. It is a form of all or nothing if you file for a CTM, that application will be processed in all Member States, meaning that it is not possible to only choose some Member States when filing an application. The third characteristic is coexistence. A CTM does not replace national trademark rights. The CTMR and the national legislation exist alongside each other, and on an equal basis.[footnoteRef:23] [23: Tsoutsanis, 2010, p. 110. Note that a CTM can only enjoy protection through registration.]

The TMD aims at harmonising the provisions of national trademark law that are most likely to affect the internal market. Recital 4 of the TMD: It does not appear to be necessary to undertake full-scale approximation of the trade mark laws of the Member States. It will be sufficient if approximation is limited to those national provisions of law which most directly affect the functioning of the internal market.

However, according to some scholars, in practice, this recital has not been interpreted in a very strict manner by the CJEU. With help from the TMD, the CJEU has more or less harmonised almost the complete body of trademark law in the Member States.[footnoteRef:24] The case law from the CJEU is, compared to other fields of intellectual property law, exceptionally rich. This development has evidently led to a situation where the case law from the CJEU is of crucial importance for trademark law.[footnoteRef:25] [24: Dinwoodie, 2013, p. 6.] [25: Kur, 2008, p. 155.]

The Paris Convention and the TRIPS Agreement

The World Intellectual Property Organization (WIPO)[footnoteRef:26] administers 26 treaties, and the Paris Convention is one of them.[footnoteRef:27] The Paris Convention for the Protection of Industrial Property[footnoteRef:28] applies to industrial property in its widest sense and includes, among other things, patents and trademarks. [footnoteRef:29] The Paris Convention has established minimum standards, and it builds upon three categories: national treatment, right of priority and common rules. National treatment means that each Contracting State must grant the same protection to nationals of other Contracting States that it grants to its own nationals, and they shall enjoy the same legal remedy against any infringement of their rights[footnoteRef:30]. The right of priority means that any person who has duly filed an application for, e.g., a trademark in one of the countries of the Union shall enjoy a right of priority for filing in the other countries for a period of six months[footnoteRef:31]. The Paris Convention also includes some common rules. For example, one of the common rules is that an application for registration of a trademark filed by a national of a country in the Union may not be refused (in any other country of the Union) on the ground that filing, registration or renewal has not been effected in the country of origin. A registration may not, on the same grounds, be invalidated.[footnoteRef:32] [26: WIPO is the global forum for intellectual property services, policy, information and cooperation. It manages the Madrid system, which is a one stop solution for registering trademarks worldwide. It also manages the International Patent System (WIPO PCT) and the International Design System (WIPO HAGUE). Further, WIPO offers alternative dispute resolution in IP and technology disputes, such as arbitration and mediation. See WIPO, WIPO is the global forum for intellectual property services, policy, information and cooperation.] [27: WIPO, WIPO-Administered Treaties. ] [28: Henceforth: The Paris Convention.] [29: WIPO, Summary of the Paris Convention for the Protection of Industrial Property (1883).] [30: Article 2(1) of the Paris Convention (1967) and Abdulqawi, 2008, p. 41.] [31: Article 4(a)(1) of the Paris Convention (1967). The periods of priority depends upon what industrial property the application concerns. For example, for patents and utility models the period of priority shall be 12 months and for industrial designs the period is six months, stated in Article 4(C)(1). ] [32: Article 6(2) of the Paris Convention (1967).]

Articles 6 and 6bis-6septies of the Paris Convention are the Articles that specifically deal with matters concerning trademarks. In the Paris Convention, trademarks have rights beyond those of patents and designs. The rights concerning patents and designs are territorial, meaning that they are only valid and have only legal effect in the countries in which they have been registered. This is not the case with trademarks.[footnoteRef:33] In Article 6bis of the Paris Convention, well-known marks have special and extended rights. This Article states that a trademark that has not been registered in a specific country will still enjoy legal effect there if it is considered to be well known by the competent authority. However, this right is limited to identical or similar goods. [33: Levin, 2011, p. 387.]

The WTOs TRIPS agreement of 1994 brings the different laws and standards surrounding intellectual property around the world under international rules. The agreement establishes minimum levels of protection of intellectual property that the WTO signatories must follow.[footnoteRef:34] The TRIPS agreement builds upon the Paris and Berne Conventions, but with more concrete and far-reaching principles. The principle of national treatment in the Paris Convention is still of importance, but has been accompanied with the most-favoured-nation-treatment principle.[footnoteRef:35] This principle means that, with regard to the protection of intellectual property, any advantage, favour, privilege or immunity granted by a Member to the nationals of any other country shall be accorded immediately and unconditionally to the nationals of all other Members.[footnoteRef:36] [34: WTO, Intellectual Property: protection and enforcement.] [35: Bernitz-Karnell-Pehrson-Sandgren, 2013, p. 15 and Article 4 of the TRIPS Agreement (1994).] [36: Article 4 of the TRIPS Agreement (1994).]

Articles 15 and 16 of the TRIPS Agreement are the most interesting when it comes to trademark infringement. Article 15 concerns what is a protectable subject matter. According to the TRIPS Agreement, any sign capable of distinguishing the goods or services of one undertaking from those of other undertakings shall be capable of constituting a trademark.[footnoteRef:37] Article 16(1) states the rights conferred by a trademark. The owner shall have the exclusive right to prevent all third parties not having the owners consent from using in the course of trade identical or similar signs for goods or services, which are identical or similar to those in respect of which the trademark is registered where such use would result in a likelihood of confusion. Further, the specific right given to well-known trademarks in Article 6bis of the Paris Convention has been extended. In the Paris Convention, the right was limited to similar or identical goods. In the TRIPS Agreement, it says that Article 6bis of the Paris Convention shall apply, mutatis mutandis, to goods or services which are not similar, provided that use of that trademark in relation to those goods or services would indicate a connection between those goods or services and the owner of the registered trademark.[footnoteRef:38] [37: Ibid. Article 15(1) ] [38: Ibid. Article 16(3). ]

To make sure that WTO signatories comply with the rules and principles set out in the TRIPS Agreement, the WTO has instituted a dispute settlement body. The CJEU has gained the competence to give preliminary rulings regarding the interpretation of the TRIPS Agreement in the EU.[footnoteRef:39] [39: Bernitz-Karnell-Pehrson-Sandgren, 2013, p. 16.]

The functions of trademarks and scope of protectionThe functions of trademarks

The trademark has at least three different functions: the identifying or origin function, the quality function and the advertising and investment function.[footnoteRef:40] Among those three, the identifying or origin function is considered the most essential, since it informs the consumer about the source of the goods bearing the mark.[footnoteRef:41] This view was first established by the CJEU in Hoffmann- La Roche v Centrafarm[footnoteRef:42]. It is also emphasised in recital 11 of the TMD, where it states that the protection afforded by the registered trademark, the function of which is in particular to guarantee the trademark as an indication of origin, should be absolute in the case of identity between the mark and the sign and the goods or services. [40: Pak, 2013, p. 159.] [41: Ibid.] [42: See Chapter 2.3 above.]

Second, the trademark is associated with the quality of the product. The trademark communicates information to the consumer. For example, the consumer can associate the trademark with certain quality standards that the product fulfils. It has even been argued that today, the quality function has a greater value than the origin function.[footnoteRef:43] [43: Pak, 2013, p. 159f.]

The third function that the trademark performs is advertising and investment. This function serves to both persuade and inform consumers. The best way for the producer to reach the consumer is with advertising and the trademark functions as a bridge between advertising and purchasing.[footnoteRef:44] [44: Ibid. p. 160.]

The quality and identifying functions of a trademark are often analyzed together from the law and economics perspective. To give legal protection to a trademark is an incentive and will encourage the trademark owner to produce products of a high quality, and also to reduce consumer costs. If the consumer is pleased with the product, he or she will come back to the producer and buy more (and also be willing to pay more, if the consumer knows that the quality is consistent), which will help the producer to receive returns to his investments. A satisfied consumer will also gain from the fact that their search costs will be reduced.[footnoteRef:45] [45: Ibid. p. 160 and Landes-Posner, 1987, p. 269 ff.]

Even though the origin function might be the most important, the CJEU made clear in its judgment in the very famous LOral v Bellure case[footnoteRef:46] that for trademarks with a reputation, all functions are equally important. This case will be further discussed in chapter 3.2 as well as in chapter 3.3. [46: LOral SA v Bellure NV, C-487/07, EU:C:2009:378.]

In his opinion in HAG II, AG Jacobs stated that a trademark right must be exclusive. If the trademark proprietor has to share the mark with a competitor, he or she will lose control over the goodwill associated with the trademark. It would also be harmful to the consumers, since there is a possibility that they will be misled if there is no clarity about the origin of the trademark.[footnoteRef:47] [47: SA SNL-SUCL NV v HAG GF AG, C-10/89, Opinion of AG Jacobs, para. 19.]

Rights conferred by a trademark

Article 5 TMD describes the rights conferred by a trademark. It states that the proprietor shall have the exclusive right to the trademark, and that he shall be entitled to prevent all third parties, not having his consent, from using the trademark in the course of trade. The use prohibited is either use of an identical mark to the same kind of goods or services offered by the rightholder (meaning, identical with those for which the trademark was registered for), or use of a similar mark to the same kind of goods or services, that can create a likelihood of confusion on the part of the public.

For there to be a trademark infringement there are, as stated in Article 5 of the TMD, several prerequisites to take into consideration.

In Canon v Metro-Goldwyn-Mayer Inc.[footnoteRef:48], Canon opposed an application by Metro-Goldwyn-Mayer of the wordmark CANNON, claiming that it infringed its earlier registered trademark Canon.[footnoteRef:49] The CJEU stated that the assessment on whether there is a likelihood of confusion implies some interdependence between the relevant factors and in particular between the similarity between the trademarks and between the goods or services. The CJEU said: Accordingly, a lesser degree of similarity between these goods or services may be offset by a greater degree of similarity between the marks, and vice versa. It continued: the more distinctive the earlier mark, the greater risk of confusionmarks with a highly distinctive character, either per se or because of the reputation they possess on the market, enjoy broader protection than marks with a less distinctive character.[footnoteRef:50] [48: Canon Kabushiki Kaisha v Metro-Goldwyn-Mayer Inc., C-39/97, EU:C:1998:442. ] [49: Ibid. para. 3.] [50: Ibid. paras. 17-18. See also Lloyd Schuhfabrik Meyer & Co GmbH v Klijsen Handel BV, C-342/97, EU:C:1999:323, paras. 19-20, 28. The CJEU confirmed the judgment in Canon, and stated also that a mere aural similarity between trademarks may create a likelihood of confusion and can hence infringe the rights conferred by the registered trademark.]

For there to be an infringement, there has to be use by a third party. In the case of Arsenal Football Club plc v Matthew Reed[footnoteRef:51], the CJEU stated that use of a trademark as a badge of allegiance or badge of loyalty, was no defense for a trademark infringement. The facts of the case were as follows. Arsenal is a well-known football club in the English Premier League, which has for a long time been associated with two emblems; a cannon device and a shield device. Arsenal is also nicknamed the Gunners. Arsenal had, since 1989, the words Arsenal and Arsenal Gunners together with the figurative marks (the cannon device and the shield device) registered as trademarks in the category for outer clothing, sports clothing, footwear etc. Arsenal uses the trademarks for merchandising; the club designs and supplies its own products or via approved resellers. The commercial activity with merchandisers has extended greatly, and is of great value for the football club.[footnoteRef:52] Mr. Reed sold unofficial football souvenirs marked with signs referring to Arsenal. The products were marked, in large letters, that they were unofficial souvenirs. Also, on one of his stalls there was a disclaimer saying that the products he offered for sale were not official Arsenal merchandise, and that his business had no relationship with the official manufacturers and distributors. Mr. Reed also sold a small amount of official merchandise, but these products were distinguished from the unofficial ones and were also more expensive. [footnoteRef:53] [51: Arsenal Football Club plc v Matthew Reed, C-206/01, EU:C:2002:651.] [52: Ibid. paras. 12-14.] [53: Ibid. paras. 15-18.]

One of the questions referred to the CJEU for preliminary ruling was whether a party, which used in the course of trade a sign identical with a registered trademark and had no defense to infringement by virtue of Article 6 of the TMD, could have a defense to infringement on the ground that the use complained of does not indicate trade origin (i.e. a connection in the course of trade between the goods and the trademark proprietor)?[footnoteRef:54] [54: Ibid. para. 27.]

The CJEU started by saying that the use of a sign identical to the mark is use in the course of trade, since it takes place in the context of commercial activity with a view to economic advantage and not as a private matter. The use of the registered trademark hence falls within Article 5 (1)(a) of the TMD.[footnoteRef:55] Regarding the functions of the trademark, the CJEU said that the essential function of a trademark is to guarantee the identity of origin of the marked goods to the consumer or the end user of the product, without any possibility of confusion to distinguish the goods from others which have another origin.[footnoteRef:56] Even though Mr. Reed gave notice to his customers, there could still be a possibility that consumers who came across the product outside Mr. Reeds stall could interpret the sign as designating Arsenal FC as the undertaking of origin.[footnoteRef:57] The CJEU concluded that Mr. Reeds use of the sign could jeopardize the essential functions of the registered trademark (the guarantee of origin). Hence the trademark proprietor should be entitled to prevent all such use and rely on Article 5(1)(a) of the TMD.[footnoteRef:58] [55: Ibid. para. 40.] [56: Ibid. para. 48.] [57: Ibid. para. 57.] [58: Ibid. paras. 60, 62. It should be mentioned that in para. 54, the CJEU said that a trademark proprietor cannot prevent use by a third party if that use cannot affect his own interests as a proprietor, having regard to its functions (for example use for purely descriptive purposes and not for commercial sales to consumers). The CJEU here referred to the Michael Hlterhoff v Ulrich Freiesleben case (C-2/00, EU:C:2002:287). Mr. Hlterhoff was a dealer of precious stones, and used some registered trademarks in his oral negotiations with a lady running a jewelry business. The CJEU said that a trademark proprietor were not affected when a third party orally referred to his marks when offering goods for sale. This was though under the conditions that the third party made clear that he did not produce the goods and that the trademark was not perceived in trade as indicating origin. ]

In Adam Opel AG v Autec AG[footnoteRef:59], Adam Opel discovered that Autec (owner of the trademark Cartronic) marketed a toy that was a 1:24 remote-controlled scale model of the Opel Astra V8 coup, bearing the Opel logo (registered and owned by Adam Opel for, inter alia, vehicles and toys). Opel sought an order that prohibited Autec from commercially affixing the Opel mark to its toys. According to Opel, the use of the Opel mark on scale models vehicles by Autec constituted an infringement of that trademark, since the mark was being used for products identical with those it has been registered for. Autec claimed that the use of the Cartronic and AUTEC marks on the toy, the user instructions and on the remote control transmitter would not mislead the public about the origin of the product.[footnoteRef:60] The CJEU basically repeated the judgment in Arsenal, and stated that the trademark proprietor could prevent a third party from affixing the mark on its products, if that use could affect or was liable to affect the functions of the trademark, which was for the national court to determine.[footnoteRef:61] [59: Adam Opel AG v Autec AG, C-48/05, EU:C:2007:55.] [60: Ibid. paras. 4-10.] [61: Ibid. para. 37.]

The rights conferred by a trademark (in this case the rights under Article 5(1) (a)), were further extended in the case of LOral v Bellure et al[footnoteRef:62]. The facts of the case were as follows. LOral is the owner of several trademarks, such as the fine fragrances Trsor and Miracle. Bellure is a company that produces imitations of these fragrances. When marketing the imitations, the retailers are provided with comparison lists which indicate the word mark of the fine fragrance of which the perfume being marketed is an imitation. LOral brought proceeding against Bellure et al, claiming trademark infringement.[footnoteRef:63] Several questions were referred to the CJEU. One of the questions referred concerned Article 5 of the TMD. The referring court asked whether Article 5(1)(a) or (b)of Directive 89/104[footnoteRef:64] must be interpreted as meaning that the proprietor of a registered trademark is entitled to prevent the use by a third party, in comparative advertising, of a sign identical with that mark in relation to goods or services which are identical with those for which that mark was registered, where such use is not capable of jeopardizing the essential function of the mark, which is to indicate the origin of the goods or services.[footnoteRef:65] The CJEU started by saying that comparison lists such as those at issue should be treated like comparative advertising when they, explicitly or by indication, identify a competitor or goods or services offered by a competitor. However, the lists could also be considered to be use and fall under Article 5 (1) (a) of the TMD. The CJEU said, and referred to the Arsenal case[footnoteRef:66], that the rights conferred to the trademark proprietor in Article 5 (1) (a) shall enable the proprietor to ensure that the trademark can fulfill its functions. Not only the essential function of the trademark, which indicates origin, but also the other functions such as guaranteeing the quality of the goods, communication, investment and advertising.[footnoteRef:67] [62: LOral SA v Bellure NV, C-487/07, EU:C:2009:378.] [63: Ibid. paras. 14-22. ] [64: Replaced by todays TMD.] [65: Ibid. paras. 30, 51.] [66: Arsenal Football Club plc v Matthew Reed, C-206/01, EU:C:2002:651, para. 51.] [67: The CJEUs position regarding this discussion has been endorsed in several other cases. See, for example Google v Louis Vuitton Melletier et al, C-236/08, C-237/08 and C-238/08, EU:C:2010:159, and Portakabin Ltd v Primakabin BV, C-558/08, EU:C:2010:416.]

The protection conferred in Article 5 (1) (a) is thus broader than that provided in Article 5 (1) (b). Further, the CJEU concluded that the use of the trademark did not fall within the scope of descriptive use, since they are used for the purpose of advertising. So basically, the CJEU concluded that a trademark proprietor shall have the right to prevent use by a third party (in comparative advertising that does not fulfill all conditions) even when the use is not liable to affect the essential function of the trademark.[footnoteRef:68] This case will be further discussed in the next chapter, regarding the special protection for well-known trademarks. [68: LOral SA v Bellure NV, C-487/07, EU:C:2009:378 paras. 52-65.]

Special protection for well-known trademarks

In Article 5 (2) of the Trademark Directive (as well as in Article 6bis of the Paris Convention), a special right is given to well-known marks. Article 5 (2) states that a Member State can extend the protection to goods or services which are not similar to those for which the trademark was registered if the trademark at issue has a reputation. The use of such a sign by a third party must take unfair advantage of, or be detrimental to, the distinctive character and the repute of the trademark.

It is essential to clarify when a trademark is well known or has a reputation. In General Motors v Yplon[footnoteRef:69] (also called the Chevy case), the dispute concerned the trademark Chevy, a Benelux trademark registered (in 1961) for in particular motor vehicles, owned by General Motors. Yplon is also the owner of the Benelux trademark Chevy, registered in 1988 for detergents and various cleaning products. The latter trademark is also registered in several other Member States.[footnoteRef:70] In 1995, General Motors started proceedings against Yplon. General Motors claimed that the use of the trademark Chevy entailed dilution of its own trademark and thus damaged its advertising function. Yplon, on the other hand, claimed that General Motors had not showed that their trademark had a reputation in the Benelux countries (within the meaning of the Benelux law).[footnoteRef:71] The referring court stopped the proceedings and asked the CJEU to give a proper construction to the term repute of the trademark, and also to determine whether that condition must be satisfied throughout the Benelux countries or if it is sufficient for it to be satisfied in a part of the region.[footnoteRef:72] [69: General Motors v Yplon, C-375/97, EU:C:1999:408.] [70: Ibid. paras. 7-8.] [71: Ibid. paras. 9-10.] [72: Ibid. para. 11.]

The interpretation made by the CJEU was quite short. First, the CJEU stated that a specific percentage cannot be required since that cannot be inferred from either the letter or the spirit of Article 5 (2) of the Trademark Directive. When the trademark is known by a significant part of the public concerned by the products or services covered by that trademark, it has a reputation. With the public, the CJEU means the people that are concerned with the trademark (e.g. traders in a specific sector). When determining this, the court must take into consideration all relevant facts of the case. Some of the most important factors are the market share held by the trademark, geographical extent and duration of its use, intensity and the size of the investment made by the trademark proprietor when promoting it. Further, the CJEU stated that the trademark must not necessarily have a reputation throughout the territory; it is sufficient if the trademark has a reputation in a substantial part of it. The CJEU also emphasized the need for the earlier mark to be detrimentally affected without due cause by the use of the trademark. The stronger the earlier trademarks distinctive character and reputation, the easier will it be to accept that the use has been detrimental.[footnoteRef:73] [73: Ibid. paras. 24-31.]

In 2000, the CJEU handed down its judgment in the case Davidoff v Gofkid.[footnoteRef:74] Davidoff use its registered trademark Davidoff when distributing gentlemens cosmetics, cognac, ties glasses, cigars, pipes and pipe tobacco (all with related accessories) etc. Gofkid is the owner of the registered trademark Durffee, registered after Davidoff. Under the trademark Durffee, Gofkid distributes ashtrays, cigar and cigarette cases, cigar holders etc. Davidoff brought proceedings against Gofkid, claiming that there was a likelihood of confusion between the trademarks (Gofkid used the same script, with the D and ff presented in the same distinctive manner) and that Gofkid tried to take advantage of the high prestige mark Davidoff.[footnoteRef:75] [74: Davidoff v Gofkid, C-292/00, EU:C:2003:9.] [75: Ibid. paras. 6-9.]

The referring court asked the CJEU whether Articles 4 (4) and 5 (2) of the Trademark Directive are to be interpreted as entitling the Member States to provide specific protection for registered trademarks with a reputation in cases where the later mark or sign, which is identical with or similar to the registered mark, is intended to be used or is used for goods or services identical with or similar to those covered by the registered mark.[footnoteRef:76] [76: Ibid. para. 14.]

The CJEU started by saying that the question would only be examined under Article 5 (2), but that the response would apply mutatis mutandis to Article 4 (4)[footnoteRef:77].[footnoteRef:78] The CJEU made clear that for marks with a reputation, the protection given in 5 (2) is stronger than that given in 5 (1) since it entitles the trademark proprietor to prevent use of a sign which is identical or similar to the mark at issue even for goods or services that is not similar or identical to those at issue. The protection is given when the use takes unfair advantage of or is detrimental to the distinctive character or the repute of the mark.[footnoteRef:79] Article 5 (2) must not be interpreted by its strict wording, but rather by the objectives of the system; it is not reasonable that a mark with a reputation shall enjoy less protection where a sign is used for similar goods or services than for non-similar goods or services. Hence the CJEU concluded that the answer to the question was that the Articles at issue should be interpreted as entitling the Member States to provide specific protection for trademarks with a reputation towards use of a similar or identical sign for goods or services that are identical with or similar to those at issue.[footnoteRef:80] [77: In its proceedings against Gofkid, Davidoff searched for invalidity of the trademark Durffee. Article 4 of the TMD concerns Further grounds for refusal or invalidity concerning conflicts with earlier rights. ] [78: Davidoff v Gofkid, C-292/00, EU:C:2003:9 para. 17.] [79: Ibid. paras. 19-21.] [80: Ibid. paras. 23-25, 30.]

In LOral v Bellure, the CJEU introduced a broad function theory in EU trademark law.

In para. 49 of the judgment, the CJEU made clear that an attempt from the third party to ride on the coat-tails of the mark was enough for the action to be considered to be an advantage taken unfairly of the distinctive character or the repute of that mark. The CJEU had for a long time focused on the origin function as the essential function, but with this judgment the CJEU made clear that also the other trademark functions should enjoy absolute protection under Article 5 (1) (a) of the TMD. The quality, communication, investment and advertising functions are all functions that a trademark with a reputation can fulfill. In protecting these functions, the law protects the investment made by the proprietor for the creation of the brand image. With this judgment, the CJEU lowered the threshold under Article 5 (2) of the TMD.[footnoteRef:81] [81: Senftleben, 2014, p. 518 f and Senftleben, 2011, p. 384.]

Restrictions on the trademark right

The trademark protection must not extend beyond what can be justified by the nature of the trademark right.[footnoteRef:82] For example, in the case Adidas v Fitnessworld[footnoteRef:83], the CJEU stated that if the public concerned only see the mark as an embellishment, the use by a third party of that mark cannot constitute an infringement of the proprietors rights. However, the situation is different if the public concerned establishes a link with the registered mark and the third party.[footnoteRef:84] [82: Cohen Jehoram van Nispen Huydecoper, 2010, p. 347.] [83: Adidas v Fitnessworld, C-408/01, EU:C:2003:582.] [84: Ibid. para. 41.]

Therefore, the legislator has formulated restrictions that will enable third parties to use signs similar to registered trademarks in a manner that is not detrimental to the functions of the trademark or to the other interests that the TMD and the CTMR are meant to protect.[footnoteRef:85] [85: Cohen Jehoram van Nispen Huydecoper, 2010, p. 347.]

Some of these restrictions are already included in Article 5 of the TMD, but Article 6 contains specific restrictions, relevant to all articles on trademark infringement. The restrictions in Article 6 of the TMD are also meant to unite the interests of the protection of the trademark rights and those of the internal market and the free movement of goods and services.[footnoteRef:86] [86: Ibid. See also BMW v Ronald Karel Deenik, C-63/97, EU:C:1999:82 para. 62.]

Article 6 of the TMD states that a trademark proprietor cannot prohibit a third party from using his own name or address, nor from using the trademark if it indicates the kind, quality, intended purpose etc. The Article is especially important for third parties that sell spare parts; they must be able to actually inform their customers about the intended purpose. For this to be possible, the third parties must have the right to use the sign, provided that such use is in accordance with honest practices. For example, if your last name is Philips you are entitled to use your name in a business, but you are not entitled to open an electronics shop under the name Philips Electronics etc.[footnoteRef:87] [87: Ibid. p. 348.]

The case The Gillette Company v LA- Laboratoires Ltd[footnoteRef:88] concerned razors marketed in Finland. Both companies marketed razors. LA-Laboratoires also sold blades under the trademark Parason Flexor. Affixed to the packaging of the blades was a sticker with the words All Parason Flexor and Gillette Sensor handles are compatible with this blade. Gillette brought an action against LA-Laboratoires, claiming that they had infringed Gillettes registered trademarks Gillette and Sensor.[footnoteRef:89] [88: The Gillette Company v LA-Laboratoires Ltd, C-228/03, EU:C:2005:177.] [89: Ibid. paras. 13-14, 16.]

According to Article 6(1)(c) of the TMD, a trademark proprietor is not entitled to prevent a third party from using the mark in trade where it is necessary to indicate the intended purpose of a product, in particular spare parts and accessories. However, as the CJEU said, that Article does not lay down any criteria for determining whether a given intended purpose falls within its scope. According to earlier case law from the CJEU[footnoteRef:90], it has been stated that use of a trademark to inform the public that the advertiser is specialized in the sale of products bearing the mark at issue constitutes use indicating the intended purpose of a product and hence falls within the scope of Article 6(1)(c) of the TMD. The same applies to advertisers that carry out repair and maintenance of the products bearing that mark. Further, the CJEU said that use of the mark at issue as a means to provide the public with the information necessary as to the intended purpose of the product which it markets falls within the scope of that article unless the third party can provide the public with that information without using the mark. This was for the national court to evaluate.[footnoteRef:91] [90: BMW v Ronald Karel Deenik, C-63/97, EU:C:1999:82 paras. 54, 58-63.] [91: The Gillette Company v LA-Laboratoires Ltd, C-228/03, EU:C:2005:177, paras. 30-31, 33-35, 37.]

The CJEU also touched upon the question of what is honest practice in trade and commerce. Use of a trademark will, for example, not be in accordance with honest practice if it takes unfair advantage of the marks repute or distinctive character, if it gives the impression that there is a commercial link between the trademark proprietor and the third party or if the third party presents his products as an imitation or replica of the product bearing that mark.[footnoteRef:92] [92: Ibid. paras. 40, 49.]

Article 6(1) of the TMD is important when it comes to cases regarding comparative advertising. The provisions in Article 4(f) of the Directive on Comparative Advertising[footnoteRef:93] are basically the same as in Article 6(1)(b and c) of the TMD. According to the former Article, use of a trademark in comparative advertising must not be detrimental to the repute of the mark nor take unfair advantage of it etc. The comparative advertising will otherwise not fall within the scope of honest practices in industry and commerce. The judgment in Gillette can hence, to some extent, be adapted in cases regarding comparative advertising. [93: Directive 2006/114/EC of the European Parliament and of the Council of 12 December 2006 concerning misleading and comparative advertising.]

However, use of a trademark in comparative advertising is permitted if it does not discredit or denigrate the trademark, if it compares goods or services meeting the same needs or intended for the same purpose etc. [footnoteRef:94] The LOral v Bellure judgment mentioned in Chapter 3.2 is of great importance (or, most probably, the most important judgment) when it comes to the question whether use of a trademark in comparative advertising can constitute trademark infringement.[footnoteRef:95] [94: Ibid. Article 4(b and d).] [95: Grigoriadis, 2014, p. 163. ]

Rights conferred by a copyright and related rights

Copyright is the term used when describing the exclusive rights conferred to authors, composers, publishers, musicians etc. The rightholders are divided into three categories: the creators, the performers and the entrepreneurs (hence related rights).[footnoteRef:96] [96: Keeling, 2003, p. 263.]

Whilst trademark protection is generally dependent on registration, copyright protection is not. Because of agreements such as the Berne Convention[footnoteRef:97], literary and artistic works are given a similar level of protection in large parts of the world. However, copyright protection is still subject to national law and the harmonization is still only partial, which is apparent not least when it comes to the enforcement of rights.[footnoteRef:98] [97: Berne Convention for the Protection of Literary and Artistic Works of September 9 1886, amended on September 28 1979. Copyright is protected under several other treaties, such as the TRIPS Agreement.] [98: Keeling, 2003, pp. 265-266.]

The granting of exclusive rights to authors, performers and entrepreneurs builds on two major objects. First, the grantor wants to reward the persons who enrich cultural heritage. Secondly, there is the economic interest.: for there to be creative work made available to the general public, there must be a financial incentive for the creators.[footnoteRef:99] [99: Ibid. p. 266.]

In the Joined Cases C- 92/92 and C-326/92 Phil Collins, the CJEU gave a definition of the specific subject matter of a copyright when saying, The specific subject-matter of copyright and related rights, as governed by national legislation, is to ensure the protection of the moral and economic rights of their holders. The protection of moral rights enables authors and performers, in particular, to object to any distortion, mutilation or other modification of a work which would be prejudicial to their honour of reputation. Copyright and related rights are also economic in nature, in that they confer the right to exploit commercially the marketing of the protected work, particularly in the form of licenses granted in return for payment of royalties.[footnoteRef:100] [100: Phil Collins and Imtrat Handelsgesellschaft mbH v Patricia Im-und Export Verwaltungsgesellschaft mbH and EMI Electrola GmbH, C-92/92 and C-326/92, ECLI:EU:C:1993:847, para. 20. ]

The CJEU said, in para. 28 of the Magill case, that the essential function of a copyright was to protect the moral rights in the work and ensure a reward for the creative effort.[footnoteRef:101] [101: Radio Telefis Eireann (RTE) and Independent Television Publications Ltd (ITP) v The Commission of the European Communities, C-241/91 P and C-242/91 P, ECLI:EU:C:1995:98.]

Contributory infringement and EU lawContributory liability for trademark infringement

Contributory liability is liability imposed on a party that did not directly commit the trademark infringement, but who nonetheless is responsible for the injuries caused by the infringement.[footnoteRef:102] However, this liability is not labelled in a universally accepted manner, leading to the conclusion that there is no common understanding of what is indirect, secondary, contributory and vicarious infringement. Further, the distinction between primary infringement and the different forms of secondary liability is unclear; that depends on the different national laws. [footnoteRef:103] [102: Oswald, 2007, p. 38.] [103: Kur, 2014, pp. 529-530.]

The view on contributory liability in the US and in the EU differs. In the US, the term secondary liability is a term that covers many different types of trademark infringement claims, and can be both participant-based and relationship-based. Participant-based liability occurs when the contributory infringer induces or contributes to or facilitates the harmful behaviour of the primary infringer. Relationship-based liability occurs, on the other hand, when the defendant benefits from the harm caused by the primary infringer and when their relationship is close enough for the law to treat them as one unit.[footnoteRef:104] The essence of the term secondary liability in the US is not to hold liable the alleged contributory infringer for using the plaintiffs trademark, but rather to hold the alleged contributory infringer liable for infringements made by the third partys use of the plaintiffs trademark. For trademark owners it can therefore be better, strategically, to bring a contributory liability claim instead of suing the third party infringer. In this way, one single proceeding may be enough to secure relief against a party who enables several acts of infringement by a number of primary infringers.[footnoteRef:105] [104: Dinwoodie, 2014, p. 463 and note 1.] [105: Ibid. The benefits of suing for contributory liability have been enhanced since the entry of the internet. The efficiency gains are obviously magnified since the number of infringements that the defendant contributes to are way higher. Because of the problems that arise online, an international solution to potential liability for contributory trademark infringement has been demanded for. ]

In the EU, there is no common definition of what a contributory infringement is. There are however, as will be discussed in the following subchapter, provisions in, for example, the E-commerce Directive that deal with this matter[footnoteRef:106]. However, the pertinent provisions apply horizontally, meaning that they do not distinguish between the different IPRs, which is not the case in the US.[footnoteRef:107] Even though there has not been a comparative study on this subject that covers all of the 28 Member States, it is a safe assumption that they all have some principles regarding contributory liability, either in general principles or as provisions in civil and tort law.[footnoteRef:108] [106: In the 1980s, a group of scholars commenced a preparatory work on harmonization and unification of European Civil Law, but the work concerned mainly contract law. See Kur, 2014, p. 525, note 2. ] [107: Kur, 2014, p. 527.] [108: Ibid. p. 525 and Leistner, 2014, p. 75.]

The case law from the CJEU concerning contributory trademark infringement is limited, a fact that is not surprising since contributory infringement is governed by national law and is not specific for the different intellectual property. This chapter will therefore also discuss some aspects of copyright and related rights on the subject. Further, a brief commentary will be given on how contributory infringement is dealt with in Germany, the United Kingdom and France.

What do the Directives say?

As discussed above, there is no harmonised definition of what is a contributory liability for intellectual property infringement in the EU. Contributory liability is for the national courts to determine on a case-by-case basis. What is certain is that each Member State must ensure that there is effective enforcement and protection of intellectual property.[footnoteRef:109] [109: This is not just within the EU. Article 41 of the TRIPS Agreement states as follows: Members shall ensure that enforcement procedures as specified in this part are available under their law so as to permit effective action against any act of infringement of intellectual property rights covered by this Agreement including expeditious remedies to prevent infringements ]

There are, however, some guidelines for the national courts regarding contributory liability in the E-Commerce Directive, the Enforcement Directive and the Infosoc Directive.

4.2.1The E-Commerce Directive

The E-Commerce Directive[footnoteRef:110] aims to contribute to the proper functioning of the internal market by ensuring the free movement of information society services between the Member States. It approximates certain national provisions on, inter alia, information society services relating to the internal market, the establishment of service providers, commercial communications, electronic contracts and the liability of intermediaries[footnoteRef:111] (emphasis added).[footnoteRef:112] [110: Directive 2000/31/EC of the Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the internal market. Henceforth: The E-Commerce Directive] [111: In this thesis I have chosen to use the term contributory. However, in case law from the CJEU and in the Directives, the term intermediary is being used.] [112: Article 1 (1 and 2) of the E-Commerce Directive.]

The E-Commerce Directive deals with the central issues regarding electronic commerce, and therefore it is also known as the legal framework Directive.[footnoteRef:113] [113: Lodder, 2002, pp. 67-68.]

Recital 40 of the E-Commerce Directive states Both existing and emerging disparities in Member States legislation and case-law concerning liability of service providers acting as intermediaries prevent the smooth functioning of the internal market, in particular by impairing the development of cross-border services and producing distortion of competition () this Directive should constitute the appropriate basis for the development of rapid and reliable procedures for removing and disabling access to illegal information ().

Section 4 of the E-Commerce Directive, Articles 12-15, concerns the liability of intermediary service providers. Article 12 states, in essence, that a service provider cannot be held liable for the content of information transmitted if he is passive.

Article 13 deals with caching, meaning copies that are stored only temporarily.[footnoteRef:114] The service provider is not liable if five conditions are met. For example, he must not alter the information or else he will no longer be considered an intermediary. [114: Ibid. p. 87.]

Article 14 concerns storage of information. A service provider is not liable for the information stored at the request of a recipient under the condition that the service provider does not have actual knowledge of illegal activity or information. Also, upon obtaining knowledge or awareness the service provider must expeditiously remove or disable access to the information.

Finally, Article 15, states that Member States shall not impose any obligation on the service provider to actively seek facts or circumstances indicating illegal activity. Further, Article 15 entitles the Member States to establish obligations for information service providers to inform the competent public authority of alleged illegal activities.

4.2.2The Enforcement

The object of the Enforcement Directive[footnoteRef:115] is to require that all Member States provide for the measures, procedures and remedies necessary to ensure the enforcement of intellectual property rights. These measures must be effective, proportionate and dissuasive.[footnoteRef:116] [115: Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights. Henceforth: The Enforcement Directive.] [116: Article 3 of the Enforcement Directive.]

In recital 23 of the Enforcement Directive it says that Without prejudice to any other measures, procedures and remedies available, rightholders should have the possibility of applying for an injunction against an intermediary whose services are being used by a third party to infringe the rightholders industrial property right. The conditions and procedures relating to such injunctions should be left to the national law of the Member States ().

Further, in Article 9 (1), it says that the Member States shall ensure that judicial authorities may issue an interlocutory injunction against an intermediary whose services are being used by a third party to infringe an intellectual property right. Finally, Article 11 states that Member States must ensure that rightholders can apply for an injunction against intermediaries.

4.2.3The Infosoc Directive

There are today several Directives that harmonise different aspects of copyright and related rights in the EU.[footnoteRef:117] One of the most important of these is the Directive on copyright in the information society (Infosoc).[footnoteRef:118] Infosoc and the E-Commerce Directive complement each other, as the E-Commerce Directive harmonises issues relating to the functioning of the internal market and Infosoc deals with aspects of copyright law. Infosoc also supplements the liability provisions in the E-Commerce Directive by allowing injunctive relief against intermediaries when third parties that infringe copyright and other related rights use their services.[footnoteRef:119] [117: For example, Directive 96/9/EC of the European Parliament and of the Council of 11 March 1996 on the legal protection of databases and Directive 2001/84/EC of the European Parliament and of the Council of 27 September 2001 on the resale right for the benefit of the author of an original work of art.] [118: Directive 2001/29/EC of the European Parlianent and of the Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the information society (henceforth: Infosoc).] [119: Commission welcomes adoption of the Directive on copyright in the information society by the Council, 2001.]

Recital four of Infosoc says that [a] harmonised legal framework on copyright and related rights, through increased legal certainty and while providing for a high level of protection of intellectual property, will foster substantial investment in creativity and innovation, including network infrastructure and lead in turn to growth and increased competitiveness of European industry. Further, in recital six, it says that without harmonisation at a Community level, there can be substantial differences in the legislative activities of Member States leading to legal uncertainty. These differences might lead to restrictions on free movement or hinder economies of scale for new products and services containing copyright and related rights.

The second Article of Infosoc defines the reproduction right. In this Article, it is expressly stated that Member States shall provide for the exclusive right to authorise or prohibit direct or indirect (emphasis added), temporary or permanent reproduction by any means and any form, for authors, performers etc.

Article 5 states the exceptions and limitations. For example, some temporary acts of reproduction shall be exempted from the exclusive reproduction right in Article 2. However, in recital 59 there is an exception from the exception, which states that in a digital environment, the services of intermediaries may increasingly be used by third parties for infringing activities. Therefore, the rightholder should have the possibility of applying for an injunction against an intermediary who carries a third partys infringement of a protected work or other subject-matter in a network, even though the act carried out by the intermediary can be exempted under Article 5. It is then left to the Member States to decide upon the conditions relating to the injunctions.

Lastly, in Article 8(3), Sanctions and remedies, the legislator states that Member States shall ensure that rightholders are in a position to apply for injunctions against intermediaries whose services are used by a third party to infringe a copyright or related right.

Contributory infringement on the internet

The CJEUs judgments in the Google France and Google case and LOral v eBay case are of great importance. In these judgments, the CJEU stated that ISPs such as Google and eBay could not be liable for primary trademark infringement. Nevertheless, the CJEU did not say that search engines or auction sites could not be contributory infringers.[footnoteRef:120] [120: Kur, 2014, pp. 530- 531.]

4.2.1The Google France and Google case

In 2010, the CJEU (Grand Chamber) gave its judgment in the joined cases C-236/08 Google France SARL and Google Inc. v Louis Vuitton Malletier SA, C-237/08 Google France SARL v Viaticum SA and Luteciel SARL and C-238/08 Google France SARL v Centre national de recherce en relations humaines (CNRRH) SARL, Pierre-Alexis Thonet, Bruno Raboin and Tiger SARL.[footnoteRef:121] The case concerned the use, in an internet referencing service, of keywords corresponding to trademarks of other persons. The keywords at issue were chosen by clients of the referencing service provider (Google) and accepted and stored by Google. The clients of Google either marketed imitations of the products of the trademark proprietors or were competitors to them. The national court referred three questions to the CJEU and asked, in essence, whether Google could be prohibited from using trademarked keywords and whether Google could be held liable for trademark infringement.[footnoteRef:122] [121: Google France SARL and Google Inc. v Louis Vuitton Malletier SA, C-236/08, Google France SARL v Viaticum SA and Luteciel SARL, C-237/08 and Google France SARL v Centre national de recherce en relations humaines (CNRRH) SARL, Pierre-Alexis Thonet, Bruno Raboin and Tiger SARL, C-238/08, ECLI:EU:C:2010:159. The author will henceforth in this subchapter refer to the joined cases as the case. This case is referred to as the Google France and Google case in the other parts of the thesis.] [122: Ibid. paras. 32, 37, 41-42.]

First of all, the CJEU reiterated that a trademark proprietor is entitled to prevent use by a third party, in relation to the goods or services for which the trademark is registered, if that use is liable to affect the functions of the trademark.[footnoteRef:123] [123: Ibid. para. 49.]

Secondly, the CJEU stated that use of an identical sign constitutes use according to the Trademark Directive if that use is in a commercial context which gives the user an economic advantage. In this case, the selection of keywords paid for by the advertiser has the object of displaying his advertising link that will lead the consumers to his website where he offers his goods or services. It is therefore obvious, according to the CJEU, that the advertiser uses the keywords in a commercial activity and not for a private matter.[footnoteRef:124] [124: Ibid. paras. 50-52.]

Further, regarding the referencing service provider, it is clear that storing keywords for its customers which are identical to a registered sign and arranging the display of ads connected with these keywords is a commercial activity. However, even if the service provider operates in the course of trade, that does not have to mean that its behaviour constitutes use within the meaning of Article 5 of the Trademark Directive and Article 9 of the CTM.[footnoteRef:125] [125: Ibid. paras. 53, 55.]

For there to be use, the third party should at least use the sign in its own commercial communication. In this case, Google allowed its customers to use signs similar or identical to registered trademarks, without getting itself involved in the factual use. Google solely created and offered the technical conditions necessary for the use of a sign, and the extent to which Google has permitted its customers to make use of trademarked/protected signs should be examined under other rules of law than the Trademark Directive and the CTMR. The CJEU concluded that Google was not involved in use in the course of trade within the meaning of the Trademark Directive and the CTMR.[footnoteRef:126] [126: Ibid. paras. 56-58.]

The second question referred to the CJEU was whether the trademark proprietor was entitled to prohibit an internet referencing service provider from using a trademark with a reputation, within the meaning of Article 5(2) of the Trademark Directive and Article 9(1)(c) of the CTMR. The CJEU responded that even though Google admitted advertisers to use keywords like imitation and copy together with the registered trademarks, Google could not be held liable for use of these trademarks (for the same reasons as above).[footnoteRef:127] [127: Ibid. paras. 101, 104- 105.]

The question of whether Google could fall within the scope of Article 14 of Directive 2000/31 was also referred to the CJEU. For a referencing service provider to enjoy protection under this Article, he must be regarded as an information society service provider. The CJEU stated that Google fulfilled the requisites for being viewed as an information society service provider. However, to avoid liability Google had to play a neutral role and the services offered had to be of a solely technical, automatic and passive nature.[footnoteRef:128] [128: Ibid. paras. 106, 113-114.]

The fact that Google was being paid for the services provided and that Google set the payment terms and drafted the commercial message etc. was not enough to deprive Google from the exemptions for liability provided for in Directive 2000/31.[footnoteRef:129] [129: Ibid. paras. 115-118.]

The CJEU therefore concluded that provided that Google did not play an active role, it could not be held liable within the meaning of Article 14 of Directive 2000/31. However, this was under the condition that Google, after having obtained knowledge of the unlawful nature of the advertisers activity, expeditiously removed access or disabled access to the data concerned. This was for the national court to assess.[footnoteRef:130] [130: Ibid. paras. 119-120. See also recital 45 of Directive 2000/31.]

4.2.2The LOral v eBay case

In July 2011, the CJEU (Grand Chamber) handed down its judgment in the case LOral v eBay.[footnoteRef:131] LOral, manufacturer and supplier of perfumes, cosmetics and hair-products, started proceedings against the online marketplace eBay claiming that eBay (as well as some individual defendants), inter alia, were liable for sales of items that infringed their trademark rights.[footnoteRef:132] [131: LOral SA, Lancme parfumes et beaut & Sie CNC, Laboratoire Garnier & Sie and LOral UK Ltd v eBay International AG, eBay Europe SARL, eBay UK Ltd, Stephen Potts, Tracy Ratchford, Marie Ormsby, James Clarke, Joanna Clarke, Glen Fox and Rukhsana Bi, C-324/09, ECLI:EU:C:2011:474.] [132: Ibid. paras. 26, 28, 34.]

On eBay, a person can register a sellers account and then offer goods for sale on displayed listings. When creating an account with eBay, sellers must accept eBays online-market user agreement in which it says that sale of counterfeit goods or other trademark infringements are prohibited.[footnoteRef:133] [133: Ibid. paras. 28, 30.]

eBay can, upon request, assist the sellers in order to enhance their offers for sale, to set up online shops, to promote themselves and increase their sales. eBay can also assist its sellers by advertising some of the products sold on its marketplace using search engine operators such as Google.[footnoteRef:134] [134: Ibid. para. 31.]

Several questions were referred to the CJEU. The referring court asked, inter alia, if the proprietor of a trademark, within the meaning of the Trademark Directive and the CTMR, could prevent an online marketplace provider from advertising on the basis of a keyword which is identical to his trademark the marketplace and goods bearing that trademark which are offered for sale on it. The referring court also wanted to know whether the service provided by the operator falls within Article 14 (1) of the E-Commerce Directive. Further, the referring court asked whether Article 11 of the Enforcement Directive requires the Member States to afford proprietors of intellectual property rights the right to obtain injunctions against the operator of a website requiring said operator to take measures to prevent future infringements of those rights. [footnoteRef:135] [135: Ibid. paras. 86, 106, 125.]

Firstly, the CJEU restated what was said in Google France and Google: keywords are used as advertising, since the object of them is to trigger the display of the sellers advertisement. Therefore, there was no doubt that this was use in the course of trade. Further, two other conditions had to be met to enable the trademark proprietor to prevent the advertising at issue: (i) the advertisements by eBay had to be in relation to the goods or services identical with those for which the trademark is registered and (ii) the advertisements at issue had to, or be likely to, have an adverse effect on the functions of the trademark. [footnoteRef:136] [136: Ibid. paras. 87-88.]

The CJEU said that eBays use of keywords corresponding to LOrals trademarks as a means to promote its own services as a marketplace did not fulfil these conditions. However, insofar as eBay used the keywords to promote its sellers offers for sale of goods bearing LOrals trademarks, that should be sufficient to fulfil the condition in relation to goods or services. The court said that [i]n that regard, the words in relation to goods or services do not relate solely to the goods or services of a third party which is using signs corresponding to the trademarks but may also refer to the goods or services of another person.[footnoteRef:137] [137: Ibid. paras. 89, 91.]

The CJEU continued and said that for there to be an adverse effect on the functions of the trademark, the advertising at issue should not enable reasonably well-informed and reasonably observant internet users, or enable them only with difficulty, to ascertain the origin of the goods in question. The answer to the question was therefore that a trademark proprietor is entitled to prevent an online marketplace operator from advertising its sellers goods bearing the proprietors trademark if, as a result, there will be difficulties for a reasonably well informed consumer to ascertain the origin of the goods.[footnoteRef:138] [138: Ibid. paras. 94, 97.]

Article 12-15 of the E-Commerce Directive aims to restrict the number of situations in which intermediary providers of information society services can be held liable for infringement pursuant to the applicable national law. Even though it is for the national court to determine whether eBay shall be held liable for contributory trademark infringement, the CJEU must still consider whether an operator of an online marketplace may rely on the exemption from liability in Article 14 of that Directive.[footnoteRef:139] [139: Ibid. paras. 107-108.]

First of all, to fall within the scope of Article 14 the provider must be an intermediary provider. This means, basically, that the provider must have taken a neutral role by a merely technical and automatic processing of the relevant data. If an operator assists its sellers by optimising the presentation of the offers for sale, the operator can gain knowledge of, or control over, the data relating to those offers for sale. This is, according to the CJEU, an example of taking an active role and the operator should therefore not be exempted from liability under Article 14 of the E-Commerce Directive. However, this was for the national court to determine.[footnoteRef:140] [140: Ibid. paras. 112-113, 116.]

Finally, the CJEU stated that even if an ISP could be exempted from liability, the Member States had to ensure that the national courts should be able to order an ISP to take measures against present infringements as well as preventing future infringements of the same kind. This as a means to ensure the effective protection of intellectual property rights.[footnoteRef:141] [141: Ibid. paras. 131, 144.]

4.2.3The UPC Telekabel case

In November 2011, the CJEU gave its judgment in the SABAM case.[footnoteRef:142] Scarlet Extended, an ISP which provided its customers access to the internet (without offering other services such as downloading or file sharing), was according to SABAM best placed to take measures to bring to an end copyright infringements committed by its customers.[footnoteRef:143] The CJEUs ruling was not, however, in SABAMs favour. According to the CJEU, a court injunction against an ISP to install global and preventive filtering systems with a view to prevent copyright infringements should be precluded. Such an injunction would result in a serious infringement in the ISPs right to conduct business, as well as potentially undermining the freedom of information.[footnoteRef:144] [142: Scarlet Extended SA v Socit belge des auteurs, compositeurs et diteurs SCRL (SABAM), C-70/10, EU:C:2011:771. ] [143: Ibid. paras. 16, 18.] [144: Ibid. paras. 48, 52, 55.]

In the recent UPC Telekabel Wien GmbH v Constantin Film Verleih GmbH and Wega Filmproduktionsgesellschaft mbH case[footnoteRef:145], the CJEU ruled in line with its judgment in the SABAM case. Two film production companies, Constantin and Wega, claimed for an order against UPC Telekabel to block the access of its customers to cinematographic works over which they hold a right related to copyright.[footnoteRef:146] [145: UPC Telekabel Wien GmbH v Constantin Film Verleih GmbH and Wega Filmproduktionsgesellschaft mbH, C-314/12, EU:C:2014:192.] [146: Ibid. para. 11.]

One of the questions referred to the CJEU was whether an ISP such as USP Telekabel should be regarded as an intermediary within the meaning of Article 8(3) of Infosoc, since it allows persons to make protected subject-matter available to the public without the rightholders consent while using the services offered by the ISP.[footnoteRef:147] The services of intermediaries are often used to infringe copyright and related rights, hence the possibility in Article 8(3) of Infosoc for the rightholders to apply for an injunction against an intermediary. Recital 59 of Infosoc states that the term intermediary covers any person who carries a third partys infringement of a protected work or other subject-matter in a network. Not regarding an ISP such as USP Telekabel as an intermediary would, according to the CJEU, be wrong since it is the ISP that makes the transmission possible and is therefore an inevitable actor in the process. The objective of Infosoc is to give rightholders a high level of protection. If ISPs should be exempted from the scope of Article 8(3) of Infosoc, this would diminish the protection of the rightholders and therefore go against the objectives of Infosoc.[footnoteRef:148] [147: Ibid. para. 23.] [148: Ibid. paras. 27, 30, 32, 33.]

The CJEU continued by saying that there is no need for a special relationship, such as a contractual link, between the ISP and the infringing third party. First of all, there is no provision in Article 8(3) of Infosoc that indicates that there has to be a link between them. Secondly, if such link should be required it would go against the overall objective of Infosoc since a requirement such as this would diminish the legal protection of the rightholders.[footnoteRef:149] [149: Ibid. paras. 34-35.]

The CJEU also discussed the relationship between the fundamental rights of EU law and the interpretation of the provisions of Infosoc. When implementing Infosoc in the Member States, there must be a balance between the two and the national court must also respect other principles of EU law, such as the principle of proportionality. In the present case, the national court must take into consideration (i) that intellectual property is protected under Article 17(2) of the Charter[footnoteRef:150] (ii) the freedom to conduct business, which an ISP does, under Article 16 of the Charter[footnoteRef:151] and (iii) the freedom of internet users, protected under Article 11 of the Charter[f