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Will Combatting the Sale of Counterfeit Goods at Big Marketplaces in Poland Become Easier? What is the Current Enforcement Practice in the Czech Republic: The Source of The Landmark Delta Center Case?

Will Combatting the Sale of Counterfeit Goods at Big Marketplaces in Poland Become Easier? What is the Current Enforcement Practice in the Czech Republic: The Source of The Landmark Delta Center Case?

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At the moment in Poland entities that facilitate infringements by renting properties and those offering other services used to infringe trademark rights may be held liable. However, in the next few years, the practice of Polish courts with respect to the liability of intermediaries for IP infringements on the basis of CJEU ruling C-494/15 will develop and could significantly change the way in which trademark infringement claims are pursued - due to the introduction of new legal tools into Polish law.

The Polish perspective

The Act on changes to the Polish Industrial Property Law, which entered into force in March this year, significantly extends the catalogue of entities that can be held liable for trademark infringements (more information on the changes of IP law in Poland in general can be found here: https://www.remarksblog.com/2019/03/poland-trademarks-quicker-stronger-broader/). This is in line with the approach taken by the CJEU, namely that a request to cease IP infringements should not be limited only to the offering of counterfeit products online where the owner of an e-commerce platform is obliged to remove the infringing offers upon a justified request (this is the so-called notice and take down procedure commonly used in Poland and many other EU countries). 

Due to the constant increase in IP infringements, a decision was taken to also regulate the liability of other entities that facilitate (or "intermediate in") infringements. In the coming years, Polish case law will no doubt indicate how we should determine what constitutes an intermediary or indirect infringer, i.e. how active it should be and what kind of knowledge it should have about an infringement in order for it to be held liable. Whether intentionally or not, such entities do gain profits for providing their services - and this could be significant in determining their liability, since - in general - claims such as a request to cease an infringement and to return unfairly obtained profits can be raised regardless of the intention to infringe IP rights. Also, the form in which intermediaries cease their infringements would need to be further analysed, e.g. whether owners of physical marketplaces would be obliged to terminate the lease agreements with their tenants or whether companies that refill packaging supplied to them by another person with a mark confusingly similar to a registered trademark affixed to it should refuse to provide such services.  

For now, the change in Polish law only covers indirect trademark infringements. However, in the case of counterfeit goods, other IP rights such as copyrights and designs also play a significant protective role. Therefore, further changes in the law may be expected. 

E-commerce platforms will remain subject to their own legal regime in such cases, i.e. the notice and take down procedure will continue to apply. However, in case of other intermediaries, it will be easier to hold them liable because legal action can be taken straight away without the need to send a request to cease the infringement (in the case of the notice and take down procedure, an e-commerce platform can only be held liable if it does not comply with a justified request to cease the infringement).  

The Czech perspective

In the Czech Republic, where the dispute Tommy Hilfiger Licensing LLC and Others vs DELTA CENTER a.s. and the ruling of C-494/15 have their source, the issue of intermediaries has recently started to attract more attention. Under Czech law, IP owners may also take legal action against persons who merely provided the means for an IP infringement to take place, i.e. persons who are considered as intermediaries. Unfortunately, the wording of the relevant provision is rather vague and consequently open to various interpretations. 

A clear interpretation of this provision was necessary when the dispute Tommy Hilfiger Licensing LLC and Others vs DELTA CENTER a.s. came before Czech courts. DELTA CENTER is a company that operates a public marketplace where private entrepreneurs can sell their products, including clothing and toys that may potentially infringe IP rights. 

The Czech Supreme Court expressed concerns that a loose interpretation of what constitutes an intermediary may result - in extreme cases - in certain unintended consequences. For example, entities providing electricity to companies infringing IP rights may also end up being sued. 

After the preliminary ruling of the CJEU, the Czech Supreme Court classified DELTA CENTER as an intermediary due to that fact that it provides services directly leading to the infringement of IP rights. However, the concerns expressed by the Czech Supreme Court do remain relevant because it is necessary to draw a line somewhere and carefully define what constitutes an intermediary. In this case, the High Court in Prague ordered DELTA CENTER to publish an apology in a national newspaper and send an apology letter to the plaintiffs. The court also ruled that the list of sanctions that may be imposed on an intermediary is shorter than the list of sanctions that may be imposed on a direct infringer. The case has been referred to the Constitutional Court of the Czech Republic to consider various constitutional aspects and is currently pending. Although it is not yet over, the case will set a precedent for future rulings.

Since the ruling was issued, the city of Prague has been taking steps to clear the DELTA CENTER marketplace of counterfeits and has set strict deadlines for terminating the lease agreements with the offending shops. This is a part of the Prague city government's long-term strategy to close down the main hubs of counterfeit trade. More specific regulations and relevant court decisions may be expected in the Czech Republic in the near future. 

Here at DLA Piper we will be keeping a close eye on the practice of Polish and Czech courts with regard to the liability of intermediaries and on how Polish courts develop their own catalogue of intermediaries and their level of involvement in infringements. 

By Aleksandra Baczykowska, Senior Associate (DLA Piper Poland) and Jan Metelka, Junior Associate (DLA Piper Czech Republic)  

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