EU Court Gives Help in Fight on Knockoff Goods

     (CN) — The owner of a marketplace of shops can be forced to stop renting space to tenants that hock counterfeit goods, the European Court of Justice ruled Thursday.
     Delta Center is a tenant of the Prague market halls and subleases space to various vendors. Manufacturers including Tommy Hilfiger, Lacoste and Burberry discovered that the vendors were selling knockoffs of their goods and asked a Czech court to order Delta to stop renting spaces to traders in counterfeit items.
     The companies argued that under the European Court of Justice’s 2011 ruling in L’Oreal and Others v. Ebay, which involved online vendors selling counterfeit goods and ordered online marketplaces to take measures to stop trademark infringement, brick-and-mortar market owners have the same obligation to fight infringement by evicting tenants that sell counterfeit goods.
     The Czech court asked the EU high court to weigh in on whether its holding in L’Oreal also applied to brick-and-mortar marketplaces.
     In its preliminary ruling issued Thursday, the Luxembourg-based high court said like eBay in L’Oreal, Delta is an intermediary under EU law and can therefore be forced to take measures to stamp out trademark infringement and prevent it from happening in the future.
     The fact that Delta operates in a brick-and-mortar setting is irrelevant, since the scope of EU law isn’t limited to e-commerce, the high court said.
     However, the court also said that any injunction issued by the Czech court against Delta should be proportionate, not unnecessarily expensive and should not place barriers to legitimate trade. Furthermore, Delta cannot be forced to oversee its tenants’ activities generally or permanently.
     But the court said any injunction can require Delta to doing something so that the same traders aren’t continuing to sell the same counterfeit goods — an issue for the Czech court to consider in its handling of the case, according to the 4-page ruling.

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