Whitepaper

Secondary Liability for the Sale of Counterfeits

It may sound absurd to hold someone liable for another one’s trademark infringing activities, however, the anonymity of the internet has made it difficult to identify, let alone sue direct infringers, whereby the brand owners are calling for legal intervention and solutions to the problem.

To tackle the sale of counterfeits en masse, flea market owners, internet service providers, landlords, online sales platforms, etc. are more and more in the centre of discussion on who is liable for preventing the counterfeit sales online.

While in the early days the liability of intermediaries may have been difficult to justify in legal terms, today the doctrine is developed in jurisprudence and further defined by the law in most jurisdictions. Of course, indirect liability cannot come without limits. Not everyone who made the smallest contribution to the actual sale of counterfeit goods can be held liable. In order to be seen as an indirect infringer, a certain degree of involvement is necessary. Whether that be a degree of knowledge, control over the infringing activity or an active role in the conclusion of the sale – to name a few out of the many different wordings used by the different courts around the world.

Consequently, a worldwide approach exists, although with nuances and divergent wordings. As seen in some jurisdictions such as the EU, the doctrine apropos online sales have been extended to the sale of counterfeit in physical places like flea markets or shopping malls. These places will be included in the analysis, as there is often no reason to distinguish between the online sale of goods, on the one hand, and ‘brick and mortar’ sale of goods, on the other hand.

This study makes a selection of the most relevant case law worldwide. To thin out the scope of this article, the main focus is on the sale of infringing goods, as opposed to infringing services. While contributory liability also exists for some other IP rights (copyright, patents, …), the focus of this article is on trademark rights.