Dispute over counterfeits at capital's marketplace - New Precedent in a landlord case
The Court of Appeal in Warsaw has handed down a landmark judgment in a case concerning the protection of EU trademark rights. The subject of the dispute was the activity of a popular marketplace in the capital city, where products bearing counterfeit trademarks of our clients were notoriously traded. The judgment, which was handed down on 21 May 2024 (ref. no. VII AGa 1048/23), is the first ruling in Poland in which the responsibility for trade in counterfeits was also imposed on the manager of the marketplace, and not only on individual sellers.
Marketplace manager's liability
To date, cases involving trade in counterfeits have mainly focused on the direct perpetrators, i.e. the sellers of counterfeit goods. In this case, the Court of Appeal extended liability to the manager of the marketplace, considering him to be an intermediary whose services were used to infringe intellectual property rights. The Court held that there were no grounds to make the liability of an intermediary such as a market hall manager conditional on intentional fault. Even the lack of awareness of infringements does not absolve the intermediary from liability as long as the intermediary does not take any real action to prevent such infringements.
'Due diligence on the part of the trader requires that he be aware of those problems that relate to his business - especially if they occur regularly and recurrently,' the Court of Appeal noted in the grounds for the judgment. The court emphasised that it was difficult to assume that the defendant, the manager of the market place, was not aware that the exclusive rights of a well-known clothing company were regularly infringed on the facility administered by it.
The basis for liability of the manager of the market place was Article 296, paragraph 3, first sentence in fine of the Industrial Property Law Act, according to which claims for infringement of the right of protection for a trademark may also be filed against a person whose services were used in the infringement of the right of protection for the trademark. This provision is the implementation into the Polish legal order of the third sentence of Article 11 of Directive 2004/48/EC on the enforcement of intellectual property rights.
The manager of the market place was obliged by the Court of Appeal not to conclude new agreements and not to extend already existing agreements with traders against whom (with a final court's verdict or a final decision of an administrative body) the infringement of the right of protection for a trademark was confirmed and to introduce to all concluded agreements a clause prohibiting trade in counterfeit products and allowing to terminate an agreement in the case of infringement of such prohibition.
Importantly, the judgment in question also awarded our client a sum of money to compensate for the damage caused by the trade mark infringement. The possibility of awarding damages for trademark infringement against an indirect infringer has so far raised doubts in the doctrine.
Decision of the Court of Appeal versus an earlier ruling
Earlier, the Regional Court in Warsaw dismissed the claim, holding that the administrator may be held liable only if it is proven that the administrator was guilty of intentional fault and aware that a particular seller infringed industrial property rights. However, the Court of Appeal did not share this position, stressing that the manager is obliged to monitor commercial activity on its premises, respond to signals of irregularities and take appropriate measures to prevent infringements.
Background to the fight against counterfeiting
The case was brought by our client, a well-known French clothing company, which regularly secures counterfeit products at Polish markets. Despite the fact that the Police and the National Tax Administration take action and criminal cases are initiated, the counterfeit trade continues to grow. Therefore, our client decided not to limit its actions only to cases against sellers, but also to hold the manager of the marketplace responsible.
Significance of the judgment
The judgment is of great significance in the context of the fight against the trade in counterfeit goods, particularly at marketplaces and shopping centers, where such products are prevalent. So far, in Poland, attempts to counteract this phenomenon have resembled a battle with windmills, and right holders have struggled to effectively enforce their rights. The Court of Appeal's decision opens up new possibilities for trademark owners to more effectively fight infringements, pursuing claims not only against direct sellers, but also managers who provide commercial space for such activities and have so far benefited from such illegal activity.
The judgement may set an important precedent for other cases of a similar nature, as well as setting new standards for managers of marketplaces and shopping centers, obliging them to be more diligent in preventing infringements of intellectual property rights on their premises.
Originally published 19 September 2024
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