The liability of so-called 'online marketplaces' for sales of counterfeit products is a contentious area in Turkey, as Riza Cagirgan and Ahmet Akguloglu explain.
In parallel with developments in information and communication technologies, computers and the Internet have become an indispensable part of our lives and e-commerce has become a rising star. Nowadays, e-commerce is a constantly growing sector and a global-scale economy in its own right.
The common use of e-commerce got underway in Turkey belatedly, but today it's going strong.
Turkey has followed global developments and Turkish entrepreneurs have launched multiple e-commerce websites by way of B2C (business to consumer) and C2C (consumer to consumer) models.
The B2C model, which is used for websites enabling direct sale to consumers and constituting online merchandising activities, has also been developed for 'private shopping' websites which constitute a platform where price-reduced products of various brands are sold.
The C2C e-commerce model was introduced to Turkey by a website called gittigidiyor.com which was established in 2001. It has now been purchased by eBay and it led to the establishment of many other similar e-commerce websites. The trade volume of such websites increases in direct proportion to Turkish society's trust in them.
Development of e-commerce
While e-commerce changed the nature of traditional commerce, it also created an environment where infringement of IP rights and illegal activities affecting consumers became common.
As a result of intense investigation and legal proceedings, in the bricks-and-mortar market the sale of counterfeit products has been significantly reduced, so counterfeiters have opted to offer their products via e-commerce, which constitutes a grey area.
In Turkey, as e-commerce has become more popular, the sale of counterfeit products increased. These websites usually sell textile and cosmetic products, shoes, bags, watches and accessories of well-known brands.
Use of both the C2C and the B2C e-commerce models has increased the sale of counterfeit products and many consumers who purchase the products based on the images and declarations of the seller are finding that the products are counterfeit when they are delivered.
Use of e-commerce platforms in sale of counterfeit products not only damages the rights of IP owners but also can affect human health due to bad and low quality production methods, and therefore endangers consumers. When it comes to pharmaceuticals, the consequences could even be fatal. In this respect, creating a safe platform for both IP rights owners and consumers is vital.
Marketing of counterfeit products by way of e-commerce has triggered IP rights owners to search for new prevention methods, some of which have led to legal actions against e-commerce platforms.
The Decree Law regarding Protection of Trademarks number 556 entitles rights owners to initiate civil and/or criminal proceedings against infringing parties. The crucial point here is the correct determination of against whom and with which claims proceedings should be initiated. In this respect, the rights owners need to determine the infringing party/parties, way of infringement and liability limits in order to benefit from the rights recognised by the laws.
Within this scope, the rights owner is entitled to initiate lawsuits before civil courts against producers of counterfeit products (who may also be directly marketing such products via an e-commerce platform they operate) or parties who sell the counterfeit products via an e-commerce platform for prevention of infringement of trademark rights. In addition, rights owners are entitled to claim compensation for material and moral damages.
For maximum efficiency purposes, it is a good idea to request a preliminary injunction for confiscation of counterfeit products wherever they are present and/or prevention of access to the website or link where the counterfeit products are marketed, either before or during the lawsuit. In the event the court rules on the preliminary injunction, marketing of counterfeit products will be prevented until the lawsuit is concluded, which increases the efficiency of the legal action.
A rights owner who is entitled to initiate a civil lawsuit against the infringing party is also entitled to file a criminal complaint and request a search and confiscation decision.
Following a request from the public prosecutor, the Criminal Court of Peace may decide on search and confiscation of counterfeit products and then the counterfeit products may be confiscated by way of a police raid; criminal lawsuits are then initiated against the infringing parties. A search and confiscation order issued during criminal proceedings has similar effects to a preliminary injunction issued during civil lawsuits.
However, such search and confiscation orders differ from preliminary injunctions because they do not block access to the e-commerce website where the counterfeit products are marketed. In this respect, it is obvious that a preliminary injunction issued by a civil court is more efficient compared to criminal orders.
Fundamentally, there is not much debate on the possible legal actions against the above-mentioned uses. The main argument is focused on the sale of counterfeit products via a C2C model named 'online marketplace'. In this model, the operator of the e-commerce website is neither the producer nor the seller of the counterfeit product.
These websites are established to match sellers with consumers online by way of establishing a suitable infrastructure. E-commerce websites which do not aim to market counterfeit products are now commonly used by infringing parties and constitute a major problem for right owners.
Legal actions against such e-commerce platforms have initiated a discussion on liability limits. Hence, the e-commerce platform operators claim that they cannot be held responsible since they neither produce nor sell the counterfeit products and it is practically impossible to review the authenticity of every product marketed via their e-commerce platforms.
In relation to this matter, courts of France and the UK have ruled that the e-commerce platform operators bear some responsibility, notably in L'Oreal SA v eBay International AG, EWHC 1094 (2009) in the UK, and Hermès International v Feitz and eBay, Tribunal de Grande Instance, Troyes, June 4, 2008, No.06/02604 (France) while the courts of Germany and the US have generally ruled that it is not possible to hold the e-commerce platform operator directly liable if the rights owner does not serve any prior notification, including in Rolex v Ricardo IZR 304/01, Bundesgerichtshof, March 11, 2004 (Germany) and Tiffany (NJ) Inc v eBay, 2008 WL 2 (US).
The Turkish courts are also of the opinion that the rights owner shall first serve a notice to the e-commerce platform operator requesting removal of the counterfeit products and in the event of the operator not removing the offending item, the e-commerce platform operator can be held liable.
As a result of the above assessments, enactment of legislation on e-commerce is a substantial step for resolution of disputes arising in relation to e-commerce, which is envisaged to be the major, and may be the only, shopping platform. In accordance with applicable legislation, possible action against infringements on the B2C model is clear.
Possible action regarding infringements on the C2C model is, however, still a grey area. Despite the fact that the courts are currently building case law on IP disputes arising from online marketplaces, harmonisation of the legislation on e-commerce is important for both consumers and right owners.