“I love designer-dupe goodies”
Let’s be honest – who does not like the feeling of luxury? And who does not like the idea of cheaper alternatives to pricey products?
A growing number of influencers are using their social media accounts to promote designer counterfeits online. In a video, which received more than 35.4 million likes on TikTok, an influencer shouts out to her followers “I got two things from Prada… just kidding! These are dupes”. Meanwhile, influencers with thousands of followers openly promote “dupe boxes” via unboxing trends or proudly present their newest discoveries in their designer dupe hauls.
The so-called “dupe influencers” generate millions of views, likes, and shares through content that facilitates the advertisement of counterfeit goods via platforms like TikTok, Facebook, Instagram, and YouTube. While recommending their followers to buy counterfeited products, dupe influencers are putting them at risk by exposing them to potentially unsafe and illegal products.
Often, these counterfeit products are sold on online marketplaces like Amazon. These intermediary services providers bridge the divide between influencers and buyers. Thus, they take over a key role in the sale process of counterfeit products. What can be done to avoid the spread of counterfeit products via influencers? To what extent shall intermediary services providers be held liable?
The need for intermediary service providers to take action is illustrated in the recent German case concerning Amazon and Coty, a distributor of perfumes. Coty holds a licence for the EU trade mark DAVIDOFF, which enjoys protection for perfumes. After Coty identified a third-party selling DAVIDOFF perfume via Amazon without their consent, the company launched infringement proceedings against Amazon. The product has been sold by the third party via the “Fulfilment by Amazon” service, where Amazon stocks and ships the goods for a third-party seller. Coty argued that Amazon infringed Article 9 (3) (b) of the Trade Mark Regulation (hereinafter: EUTMR) by stocking and shipping the perfumes. According to this Article, the proprietor of an EU trade mark can prevent third parties using identical goods and an identical sign from offering the goods, putting them on the market, or stocking them.
Coty originally pursued the claims before the court in Munich, which ruled in Amazon’s favour. Following Coty’s appeal, the German Federal Court requested a preliminary ruling on the interpretation of Article 9 (3) (b) EUTMR.
‘Does a person who, on behalf of a third party, stores goods which infringe trade mark rights, without having knowledge of that infringement, stock those goods for the purpose of offering them or putting them on the market, if it is not that person himself but rather the third party alone which intends to offer the goods or put them on the market?’
In short, the CJEU answered the question in the negative. Accordingly, a person storing trade mark infringing goods on behalf of a third party only infringes trade mark rights if it also pursues the aims of offering the goods for sale or putting them on the market. The decision underlines that “use”, a precondition for trade mark infringement, requires active behaviour and direct or indirect control of the act constituting the use. Only a third party who has direct or indirect control of the act constituting the use is effectively able to stop that use and therefore comply with the posed prohibition. Creating the technical conditions necessary for a third party to use trade marks is not in itself “use”.
During the proceedings, Coty furthermore posed the question of whether the activity of the operator of an online marketplace in circumstances such as those in the main proceedings falls within the scope of Article 14(1) of the E-Commerce Directive. This provision exempts online marketplaces from liability if they do not have actual knowledge of the illegal activity or information and act swiftly to remove access to such information upon obtaining such knowledge or awareness. This question was not answered by the CJEU. However, the Advocate General noted that lack of “actual knowledge” of an online marketplace that engages in “active behavior” in placing products on the market does not necessarily exempt the online marketplace from liability. If an online marketplace is significantly involved in putting products on the market, it can be expected to show special care and diligence in matters regarding the legality of the goods they trade. The Advocate General did not expressly address whether swift removal or disabling of access should mitigate this liability. The Advocate General also did not address how online marketplaces should show such special care and diligence.
Thus, while Amazon welcomed the CJEU’s decision, there are still plenty of unanswered questions regarding the liability of intermediary services’ providers. The CJEU failed to provide clear guidance.
The recently published European Commission’s Proposal for a Digital Services Act (DSA) is a first attempt to resolve these questions. The DSA constitutes a welcome initiative to reform the existing legal framework under the e-Commerce Directive. This ambitious legislative proposal aims to encourage the adoption and implementation of proactive content moderation policies by platforms. It places more responsibility on intermediary service providers to control the content which is posted on their websites. It remains to be seen to what extent the DSA can be qualified as a useful tool in combatting dupe influencers.