Intellectual Property High Court Ruled that Internet Shopping Mall Operators Can be Found Liable for Trademark Infringement

The Intellectual Property High Court of Japan rendered a decision on February 14, 2012 that stated “there are situations where the same liability as a seller is imposed on an Internet shopping mall operator for trademark infringement”. The decision was rendered for a trial in which Rakuten, Inc., a Japanese Internet shopping mall operator, was sued to delete the display of product baring infringing mark and compensate for damages on the grounds that a product using a logo mark of the world-famous lollipop “Chupa Chups”

without permission was sold on its Internet shopping mall “Rakuten Ichiba”.

Decision Summary

Internet shopping mall operators earn operating profits by charging internet sellers entrance fees and can avoid risks by deleting products from its website and discontinuing the sale of certain products. Therefore, it is appropriate to understand that a trademark owner is justified in seeking injunctive relief as well as compensatory damages, typically sought against a seller, against an Internet shopping mall operator on the grounds of trademark infringement if the Internet shopping mall operator neglects to delete product baring an infringing mark¬ from the operator’s website within a reasonable period after being notified of trademark infringement.

Commentary

The court of the first instance (Tokyo District Court) dismissed the trademark owner’s claim for trademark infringement against Internet shopping mall operator Rakuten, concluding that Rakuten is “not an entity selling the product baring the infringing mark”. On appeal, however, the IP High Court determined that “even an Internet shopping mall operator can be an aider and an abettor of trademark infringement when he/she specifically recognizes that a mark used on a seller’s product infringes a third party’s trademark”. It should be noted that this was the first time the IP High Court determined there are situations where an Internet shopping mall operator as well as a seller could be found liable for trademark infringement.

When a product baring an infringing mark is sold on an Internet shopping mall operator’s website, the trademark owner can obviously seek injunctive relief against the seller by forcing the seller to stop selling the product baring the infringing mark on the Internet and/or seek compensatory damages from the seller on the grounds of trademark infringement. Sellers, however, cannot always be easily identified due to Internet-specific anonymity, and some sellers even re-sell products baring infringing marks with different seller’s names after temporarily deleting the display of them. Therefore, it is difficult for the trademark owner alone to police sellers of products baring infringing marks. This decision is significant because Internet shopping mall operators capable of deleting seller’s information and display of products, and discontinuing the sale of products were deemed to have an obligation to put measures in place to prevent trademark infringement.

On the other hand, it is difficult for Internet shopping mall operators to determine whether or not a product sold on its website bares an infringing mark. In particular, it is more difficult for an Internet shopping mall operator such as Rakuten Ichiba, having a large website selling a vast number of products to determine which products bare an infringing mark. This decision indicated that “even if a product which possibly bares an infringing mark is placed for sale, an Internet shopping mall operator should not immediately recognize a high probability of trademark infringement because the seller may own right to use the trademark or a product for sale may be a parallel imported product”. The Court provided a prima facie condition that the Internet shopping mall operator shall be liable for trademark infringement “if he/she neglects to delete the product baring the infringing mark from the website within a reasonable period after being notified of trademark infringement”.

The decision did not indicate how many days constitute a “reasonable period”. In the present case, the trademark owner’s claim was dismissed because Rakuten was found not to be liable since Rakuten deleted the product baring the infringing mark from its website within eight days after being notified of infringement by the trademark owner. In any case, Internet shopping mall operators, when notified of a violation of the trademark law from trademark owner or other reputable source, are required to take quick measures to remove the product baring the infringing mark.
This decision is considered to have an effect on the determination of infringement of design rights as well as patent rights on the Internet.