(Without) the responsibility of marketplaces

Many people know marketplaces, such as "AliExpress", "Yandex.Market", "Wildberries" and others, on whose sites you can order various goods, ranging from stationery and household chemicals to electronics and clothing.

Remember how you used to have to go to different stores to buy food, clothes, and household appliances? And now, in a few clicks, a consumer can put sausage, sneakers, TV, and motor oil into one “basket”. At the same time, it is possible to choose the most advantageous offer for the same product in relation to the price.

But let's see what makes it possible to choose the same product within the same marketplace but at different prices. Everything is very simple, due to the fact that the marketplace allows different stores to sell the same goods, independently determining the selling price, in connection with which a competitive environment is formed inside the marketplace. It would seem that everything is great: a large number of sellers and goods are aggregated in one place, and there is healthy competition.

At the same time, unfortunately, marketplaces, like other types of trading platforms, are not without offers for the sale of counterfeit goods, which, of course, negatively affects the rights and legitimate interests of intellectual property owners.

If the practice of combating counterfeiting in ordinary online stores has long been formed and established, then what to do with violations of exclusive rights allowed on marketplaces is not yet completely clear. In particular, it is not clear whether marketplaces are responsible for the fact that counterfeit goods are offered for sale and sold on their sites.

In order to find out whether marketplaces are recognized as infringers or exempted from liability for placing offers on their websites for the sale of goods that illegally use someone else's intellectual property, I suggest referring to judicial practice.

To begin with, let's figure out what meaning the courts put into the term marketplace. “Marketplace is an e-commerce platform, an online e-commerce store that provides information about a product or service of third parties whose transactions are processed by the marketplace operator. In general, the marketplace is an optimized online platform for the provision of products and services. You can often buy the same product from several retailers, and the price of the product may vary. In other words, a marketplace is an electronic trading platform that plays the role of an intermediary between the seller of goods and the buyer" (Resolution of the Court for Intellectual Property Rights dated March 18, 2022, in case No. A40-92572/2021).

At the same time, in this case, the courts of three instances came to the conclusion that Internet Solutions LLC (OZON.RU) does not use the result of intellectual activity and is not a seller of goods. The use of the results of intellectual activity and the sale of goods in which, according to the plaintiff, the results of intellectual activity are used, is carried out by users of the platform (OZON.RU marketplace), in connection with which, in satisfying the requirements of the copyright holder of the exclusive right to the work, a series of board games "Responsible for 5 seconds" was denied.

In case No. A41-73925/2020, the courts refused the right holder of the trademark "КОФТЁНЫШИ", protected in relation to clothing, to satisfy the claim against Wildberryies LLC (WILDBERRIES.RU) for the recovery of compensation, since they agreed with the defendant's argument that it is an informational intermediary and provides sellers with the opportunity to post material or information on the website www.wildberries.ru, providing an intermediary service of a technical nature, which is limited to creating an information environment for the seller and the potential buyer, in which the seller and the potential buyer have the opportunity to sell the goods by concluding a direct purchase agreement - sales of goods among themselves.

In case No. A40-197360/2021, the courts considered the claim of New Book Center LLC against the defendants Internet Solutions LLC (OZON.RU) and Gaplayeva D.A. (seller of goods) on the protection of exclusive rights to a series of trademarks "CHITAI-GOROD" according to certificates of the Russian Federation No. 397048, 666622, 801252, 801255, 801256, 801258, 221124, joint and several recoveries of compensation for violation of exclusive rights to trademarks in the amount of 1 000 000 rubles. In this case, the courts also refused to satisfy the requirements for the marketplace to the right holder, indicating that he cannot be held liable, since he has the status of an information intermediary. At the same time, the courts proceeded with the fact that after receiving the claim, OZON.RU immediately applied to the seller of the goods with a request to change the name of the store. Due to the fact that the seller of the goods did not fulfill the requirements of the marketplace and ignored its appeals, OZON.RU terminated the commission agreement with the seller of the goods, in connection with which the potential violation of the plaintiff's rights was suppressed, i.e. OZON.RU fulfilled its obligations as an information intermediary as established by Article 1253.1 of the Civil Code of the Russian Federation. Thus, the courts concluded that, since Internet Solutions LLC, relying on assurances about the circumstances from its counterparties and guided by the presumption of good faith of the participants in civil transactions, can be considered to have shown due diligence when choosing a counterparty and concluding an agreement with him, which also does not allow holding the marketplace responsible for any illegal actions on the part of users of the OZON.RU site.

The Ninth Arbitration Court of Appeal came to similar conclusions in its decision dated 04/07/2022 in case No. A40-192739/2021, supporting the conclusion of the court of the first instance that Internet Solutions LLC (OZON.RU) cannot be held liable for illegal use of the trademark "GROSTYLE" because it is the holder of the marketplace and does not sell goods on which the trademark was applied. At the same time, Internet Solutions LLC provides sellers with the opportunity to post material or information about goods offered for sale on the OZON.RU platform, does not control the goods sold by sellers, and cannot be held liable in cases where the seller of the goods violates the rights of third parties.

I also consider the conclusion set out in the decision of the Ninth Arbitration Court of Appeal dated February 4, 2022, in case No. A40-154619/2020 is quite interesting, as to why the marketplace cannot be held liable for the violation of an exclusive right. Thus, the court of appeal indicated that: “Access to the information platform is provided to the user (consumer) free of charge. The purpose of the information platform is to provide an opportunity to conclude a sales contract between the user (consumer) and the store (seller), without being a party to the legal relationship between the user (consumer) and the store (seller). In general, the approach of the court is clear - the marketplace does not act as a party to legal relations between the seller and the buyer, does not acquire rights and obligations, and therefore cannot be held liable for the violation of intellectual property rights. At the same time, it is not entirely clear how the conclusion that the provision of services to the consumer is free of charge can affect the lack of responsibility of the marketplace.

Interestingly, in Russia, OZON.RU and similar sites are officially recognized as marketplaces and socially significant Internet resources (paragraph 337 of the List of socially significant information resources on the Internet information and telecommunications network, approved by Order of the Ministry of Communications of Russia dated March 31, 2020 No. 148).

Doesn't it mean that in this case, marketplaces are "untouchable" and, in principle, are not subject to liability?

To test this hypothesis, I propose to refer to the ruling of the Intellectual Property Rights Court dated June 22, 2022, in case No. A41-85375/2020.

Within the framework of this case, the Arbitration Court of the Moscow Region considered the claim Comfortplus LLC to WILDBERRIES LLC and Stroy Materials Holding LLC with demands to prohibit offering for sale and selling various goods under the GUOCAI designations, confusingly similar to the GUOCAI trademark according to the certificate of the Russian Federation No. 739112; to recover jointly and severally compensation in the amount of 2,000,000 rubles from the defendants for infringement of the exclusive right to a trademark. By the decision of the Arbitration Court of the Moscow Region dated 09/01/2021, WILDEBERRIS LLC and Stroy Materials Holding LLC in favor of the trademark owner received joint compensation in the amount of 2,000,000 rubles, the rest of the claims were left unsatisfied.

The arguments of the marketplace, which objected to the satisfaction of the requirements against it, also boiled down to the fact that it is an information intermediary and should not be held responsible for the illegal use of the trademark, which was carried out by the seller.

As you know, paragraph 3 of Article 1253.1 of the Civil Code of the Russian Federation establishes that an information intermediary that provides the opportunity to post material in the information and telecommunications network is not responsible for the violation of intellectual rights that occurred as a result of the placement of material in the information and telecommunications network by a third party or at his direction, while simultaneously observing the following conditions by the information intermediary:

1) he did not know and should not have known that the use of the corresponding result of intellectual activity or means of individualization contained in such material is unlawful;

2) if he receives a written statement from the copyright holder about the infringement of intellectual rights indicating the page of the site and (or) the network address on the Internet on which such material is posted, he promptly took the necessary and sufficient measures to stop the infringement of intellectual rights. The list of necessary and sufficient measures and the procedure for their implementation may be established by law.

At the same time, the courts of three instances did not agree with the arguments of WILDEBURRIES LLC that it is an information intermediary since the examination by the courts of the rules for using the portal and the public offer of WILDEBURRIES LLC showed that this marketplace is aware of the content of the information posted on its website, and also has the ability to make changes to the content of the information published on this site, even taking into account the fact that the seller independently posts information about the offer for the sale of goods. At the same time, the courts also found that the offers for sale posted on the website www.wildberries.ru using the disputed designations were published by some other person than WILDBERRIES LLC, which also acts as the recipient of funds for the sale and delivery of the ordered goods since the checks presented in the case file contain indications of the identifying data of this organization.

It seems to me that the determining factor, in this case, was the fact that WILDBERRIES LLC, after receiving the right holder's claim, did not take timely measures aimed at suppressing the violation, namely, it did not remove illegal materials from its website that violated the plaintiff's exclusive right to a trademark, and therefore not exempt from liability.

The fact that the marketplace violated the exclusive rights to the trademark was also established in case No. А41-84058/2019, in which the court decided to oblige WILDBERRIES LLC to stop using the designation “6th SENSE”, which is confusingly similar to the trademark according to the certificate of the Russian Federation No. 712493 in respect of goods of the 3rd class of the International Classification of Goods and Services for the registration of marks “aromatic water; toilet water; deodorants for humans or animals; aromatic mixtures of flowers and herbs; vegetable extracts for cosmetic purposes; flower extracts [perfume]" by deleting from the website https://www.wildberries.ru/catalog/6587484/detail.aspx

Thus, summarizing the above, we can conclude that, although marketplaces are protected by the legal limitation of liability for information intermediaries, however, this does not in all cases help them avoid such liability. An important criterion that must be proven in court in order to hold the marketplace liable is the fact that the marketplace knew about the violation committed on its site, but did not take any action to stop such a violation. Evidence of such inaction of the information intermediary may be claim letters about the violation of the exclusive right, ignored by the marketplace.

At the end of my article, I would like to note that when writing it, I did not set myself the goal of putting marketplaces in a bad light, indicating that intellectual property rights are constantly violated on their sites, and they do not bear any responsibility. My task was to analyze and understand why the courts refuse to satisfy the requirements of the right holders, and what are their motives.

And as it turned out, everything is quite simple. The marketplace is not subject to liability if, having received a claim from the copyright holder, it took all measures within its power to eliminate the violation (told the seller that he was violating other people's rights; provided the copyright holder with information about the seller; blocked the seller's account if he refused to voluntarily eliminate violation).

It is worth noting that marketplaces are interested in not bringing the case to court and eliminating the violation out of court. For example, the Wildberries service implements Digital Arbitration service which allows the copyright holder and the seller (the alleged infringer) to resolve the dispute out of court. Other marketplaces have similar services.

At the same time, the fact that marketplaces do not always respond to requests from copyright holders, do not provide information about sellers and do not block accounts on which violations of exclusive rights are allowed, leads to the fact that copyright holders are forced to resort to judicial protection involving marketplaces as co-defendants.