13 What Liability for Internet Service Provider Faced with Trade
Mark Infringement on Internet Auction Site and Shopping Mall?
: Comparison between Europe, France, Germany and Japan(*)
Invited Researcher: Asako Wechs HATANAKA(**)

Of 53.4% seized counterfeit high brand products in 2011 by the Japanese National Police Agency are fromthe sales made on the Internet. Nevertheless, unlike the situation in Europe where the adversarial conflicts
between the Internet service providers and the high brand trade mark owners are brought in court, Japan seems
to have achieved establishing a collaborative partnership between the two in many ways. Yet, such practice inJapan has not been adequately highlighted as a successful model in the world. On the international sphere, thequestion remains to be solved, as neither the discussions throughout the WIPO standing committee nor the
Anti-Counterfeiting Trade Agreement achieved an international consensus in this regard. The issue is therefore
left to the national law, despite the ubiquitous nature of the Internet. The ultimate purpose of this research istherefore to find out an appropriate solution with regards the liability of Internet service provider on trade markinfringement through legal comparative study between Europe and Japan. To this end, the following questions
shall be answered: to what extent should an Internet service provider carry the burden of policing the use of
trade mark on its site? How shall it be legally secured?

Introduction
Emergence of Internet has made theenforcement of intellectual property right evenmore complex, in particular from two aspects:
firstly, due to the involvement of intermediary asa significant player in infringing acts. Secondly,
because of Internet’s ubiquity, some kind of
unified rules seems to be needed in the world
despite of the difference in national law 1.
This paper deals with trade markinfringement taking place on Internet from theperspective of Internet service provider andanalyses the scope of its liability in a comparative
fashion. To this end, following questions shall beanswered: to what extent should an Internet
service provider carry the burden of policing theuse of trade mark offered on its services, whether
Internet auction sites or shopping malls? How
shall it be legally secured?

Ⅰ Internet service provider, trade
mark owner and consumer: Lostin counterfeit
Due to the wide dissemination of Internet
and its casualty, trade mark infringement on
Internet involve more diversified stakeholders
than on the off-line world. Players aroundcounterfeit on Internet shall include trade markowner, distributor or seller (i.e. user of Internet
service provider), Internet service provider andconsumer (i.e. buyer on Internet auction sites
and/or shopping malls). Problematically, however,
the role of intermediary including Internet
service provider in this regard is something what
the intellectual property legal norms did not take
into account at its genesis. On top of that, aconflict of interests exists around counterfeit
among these stakeholders, as each of them has
different perception towards the consequence ofcounterfeit whether positive or negative.
Yet, undeniable fact is that, trade mark rightis infringed and causes an enormous amount ofdamage to its owner, in particular to luxury goods
owner. As a result, one (or more) of actors
designated above shall have to pay for it, despiteof the dilemma each stakeholder faces with, which
is not necessarily reconcilable.
1

Problems of counterfeit on Internet(1) Alterations caused by Internet on therelationship between trade mark andcounterfeit
Couple of figures may help understanding
the significant impact that Internet has caused to
trade mark infringement on Internet auction sites(*) This is a summary of the report published under the Industrial Property Research Promotion Project FY2012
entrusted by the Japan Patent Office.
(**) Ph.D. Candidate, Centre for International Intellectual Property Studies (CEIPI), University of Strasbourg, France●

IIP Bulletin 2013 Vol.22

1 ●and shopping malls. Due to Internet, distributionof product and service bearing a trade markbecame easier in technical terms, wider ingeographical scope and quicker in time. As aresult thereof, the traditional locations wherecounterfeits have been detected such as customs
at border and actual points of distribution became
replaced by virtual spaces, thus became hardly
visible.
(2) Absence of ex officio inspection
In the offline world, detection of counterfeits
has been the work of administrative authority
such as police and custom on the air and land,
who has been granted an ex officio competence inorder to seize counterfeits2. In the online world,
however, detection of counterfeit becomes hardly
visible. Multiplied stakeholders on Internet haveno ex officio power as such, thus, traditional tools
faced with trade mark infringement has lost its
meaning.
2

Dilemma between Internet service
provider and trade mark ownerNot knowing the appropriate answer to thescope and extent of liability incurred by own
business, the social transformation describedabove gives rise to the following question: who islegally liable for trade mark infringement taking
place on Internet auction sites and shopping
malls? Whilst Internet service provider insists on
its innocence, trade mark owner is persistent inclaiming its liability. Such conflicts, however, do
not reduce or eradicate the number of counterfeit,
which causes a dilemma to both parties in which
way they should tackle against the problem.
(1) Role of Internet service provider: caseof Internet auction site and shopping
mallInternet service provider stands between
positively seen role and its potentially negative
consequence.
Asaresult,unforeseen
consequences hit Internet service provider, as its
legal status transformed from mere facilitator(provider) to infringer of intellectual property
right. In comparison to each of single trade markowner and consumer, Internet service provider
has greater ability to fight against counterfeit byvirtue of the information it stores, financial
advantage as well as the effectiveness of being on
the upper stream of infringement. Therefore, it isin the best position to deal with counterfeit3.

●(2) Burden of enforcement for trade markownerAccording to Hilty, “infringement” shall bedifferently categorized depending on the intent of
infringers and the degree of similarity between
the products at stake. “Identical use” includes“counterfeit” (i.e. trade mark infringement),
which reflects the absence of respect in the legal
norms aiming at protecting intellectual property
right on the side of infringer. In the light of above,trade mark infringement occurring on Internet
auction sites and shopping malls would be
deemed as identical use of trade markconstituting only harmful effect in the eyes oftrade mark owner.
(3) To cooperate or to confront?
In reply to situations exposed above,
Internet service provider and trade mark ownershare a dilemma whether to cooperate or toconfront. Japan and Europe took opposing ways inthis regard, which lead to contradictory
consequences on the operation of Internet
auction sites and shopping malls. Whereas inEurope, adversarial conflicts between Internet
auction provider and high brand trade markowner are brought in court, Japan seems to haveachieved establishing a collaborative partnership
between the two in many ways.
(i)

Cooperative model in JapanThe secret of peaceful state of affairs inJapan is the following: conflicts between Internet
service provider and right holder do not appear in
the form of litigation, because of the cooperative
regime. So-called “Japanese approach” aims at
establishing and effective means to fight against
counterfeits together, which is a common
objective for both parties.
Pragmatically, the success of the Japaneseapproach is underpinned by the effectiveness ofguidelines accompanying the substantive law.
Severalguidelines
subsequently
madesupplementary rules to the substantive law inorder to enable its wider application to trade
mark infringement.
(ii) Confrontation in Europe
Contrary to the seemingly peaceful situationin Japan, Europe faced with more difficulties. As aconsequence thereof, numerous litigations
between well-known trade mark owners andInternet service provider represented by eBay
followed. Confrontation between the stakeholders
in Europe thus resulted in entrusting the
2 ●IIP Bulletin 2013 Vol.22

demarcation of the scope of Internet service
provider’s liability to the justice.
3

Consumer and counterfeit

Consumers, on the other hand, have come toplay an “ambivalent role” between the desire forfake and sense of responsibility4. Yet, necessity ofprotecting sound consumers from economic loss,
risk of health and safety as well as trade markorigin guarantee still constitute the fundamental
grounds of trade mark norms.

Ⅱ Comparative analysis of legal
regime on the liability ofInternet service provider related
to trade mark infringement
As a result of two opposing models between
the stakeholders, the jurisprudence has been
more abundant in Europe than in Japan, whichlends to further clarifications of Internet service
provider’s liability. Whilst French judiciary has
shown hesitation in determining whether or not
Internet service provider shall be liable at all,German courts took rigid attitude towards
Internet service provider from the outset andfocused on refining the scope of liability.
1

Nature of liability:
liability or privilege?

exemption

from

In case of Japan, the idea of exemption fromliability stems from the uncertainty whether or
not Internet service provider has any obligationof acting against infringement of legal interests.
Contrary to that, the position of Internet service
provider is framed as privilege in Germany, as theinitial provision stipulating the “liability(Verantwortlichkeit)”ofsuchservicespresupposes the principle of “sanding on its own
fault (Einstehenmuessen)”5. Common understanding
in both cases is that Internet service provider’sobligation of removal or disabling access to
information upon obtaining knowledge orawareness of illegality is limited to the extent
technically possible6.
2

Scope of liability

Whether express or implied in law, it is bothof civil and criminal responsibilities that
constitute the scope of liability for Internet
service provider in Europe. French law LCEN (loin°2004-575 du 21 juin 2004 pour la confiance●

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dans l'économie numérique) chose the express
manner in order to exempt the civil and criminal
liability distinctively 7 . To the contrary, both ofGerman law TMG (Telemediengesetz) 8 and
E-Commerce Directive 9 opted for an implied
provision in this regard.
As a contrast to the above, only civil liability
and namely, compensatory damage gives rise inJapan.

3

Determining the threshold of
liability and extent of duty ofcare

Manners of determining the threshold of
liability at national dimension demonstrate adiversification of judicial attitude. Common
understanding in Europe, France, Germany andJapan is that Internet service provider is not the
principle user of infringed trade mark right on
Internet auction sites and shopping malls.
However, the assessment of causality to trade
mark infringement has different findings and mayreach different degree of liability and obligation
imposed to Internet service provider.
(1) Who uses trade mark on Internet
auction site and shopping mall?
Regardless of jurisdictions concerned,
Internet service provider is not held to be theuser of trade mark in question, but it is seller
engaging directly to the distribution of the said
product who is deemed to be the proper user of
trade mark10.
(2) Object or subject?
The threshold of determining the liability
then shifts to the next question: should it beassessed by object or subject of infringing act
concerned? Object in case of Internet auction
sites and shopping malls refer to information,
irrespective of whether or not sent by Internet
service provider. To the contrary, subject puts thetype of sender into question.
(i)

Object: German approach
In Germany, the legal threshold has been
made on the objectivity of information. Therefore,
the laws clearly distinguish between informationof its own and third party, thereby applying theprivilege to the liability to Internet service
provider when information is sent out from athird party. In such a way, the type of service madeby Internet service provider comes less into
question, as long as it can clearly be evidenced
3 ●that information is of foreign nature to it.
(ii) Subject: European, French and JapaneseapproachContrary to the German approach above,
France and Japan chose the subjectivity as a
primary point of judgment. Accordingly, it is not
the type of information, but the type of senderthat comes into question. The approach as suchrequires an objective assessment as to thequalification of “sender”.
(3) Tort liability or indirect infringement?
Because Internet service provider does notdirectly commit to trade mark infringement, thetest applicable for assessing the degree of its
involvement is made either through tort liability
or commitment to indirect infringement. Whereas
the former puts the full extent of tortfeasor’s
misconduct into question, the latter limits its
scope to the actual infringement occurred11. The
difference as such leads to a divergent range of
duty of cares deriving therefrom. Whilst thethreshold of reasonable feasibility works as
capping the scope of liability in case of German
indirect infringement, the ceiling of duty of cares
deriving from tort liability in French manner has
no limit and may leave the judiciary more rooms
for imposing stricter obligations on Internet
service provider. Following court cases in China,
Europe, France, Germany, Japan and the UK
involve eBay as respondent representing Internet
service provider and demonstrate the different
approaches as well as consequences thereof.
(i)Tort liability
French judiciary demonstrates how Internet
service provider’s liability can be determined bytort liability. The UK and China further shows
ways of applying joint tort liability as its
subcategory.
(a) French approach
In order to determine whether or not
Internet service provider is liable for trade markinfringement undertaken on its Internet auction
sites, French court took the harmonized position
with the CJEU. Therefore, the role played byInternet service provider is the determining
element, which may lead to constitute tort basedon the lack of duty of care. Problematicallythough, it took fluctuant ways in defining whatshall be deemed as “active role” and courts havebeen hesitant to decide the nature of Internet
service provider among hosting provider, broker●

and/or editor of services.
Deficiencies of French approach as such are
as follows; due to the necessity in determining
the role played by Internet service provider,judicial instructions become necessarily fact
based and difficult to predict the consequence ofliability for stakeholders. The high threshold of
duty of care imposed on the side of Internet
service provider may only be justified by enabling
the cost balance between the likelihood of grossdamage caused by counterfeit product and thecost for prevention.
(b) Joint tort liability
In the UK, joinder of tort liability was denied,despite of eBay judged being subject to duty toprevent infringements from third party12. To thecontrary, China enables the admission of joint tort
liability by applying the relevant statutory
provision13.
(ii) Indirect infringement
Whilst German manner of applying indirect
infringement to Internet service provider is very
specifically defined, Japanese fashion of doing so
is still at dawn. By virtue of successive BGH(Federal Court of Justice of Germany) precisions,the scope of liability as well as obligations
imposed to Internet service provider became
clearer in Germany.
(a)

Accessory liability in Germany
Among
other
alternatives
suchascontributory liability or direct liability by virtueof competition law, German courts rely on
indirect infringement as a liability rationale
against Internet service provider, namely,
so-called “accessory liability (Störerhaftung)” 14 .
Jurisprudence in this regard is abundant under
undeniablerigorous
tendency
againstintermediaries, and develops further the extent
of duty of cares imposed on Internet service
provider.
In sum, BGH jurisprudence alludes that
already first warning from right holder invokes
liability and that securitization of sound market,
i.e. opening of new Internet auction site without
any potential or recurrent trade markinfringement, is required 15 . Problematically, thelatter criteria calls for a subjective assessment on
the likelihood of infringement so that Internet
service provider is obliged to undertake wider actof duty of care to be on the safer side.
(b) Suggestive application of indirect infringement
4 ●IIP Bulletin 2013 Vol.22

in Japan
Liability deriving from trade mark indirect
infringement is stipulated expressly in Art. 37 ofJapanese Trade mark Act 16 . The sole court
decision Chupa Chups case dealing with thematter has been recently issued and raises
divergent views 17 . By suggesting newinterpretations of indirect infringement provision
as well as injunction to be applicable to Internet
service provider committing to accomplice under
Art. 37 of Japanese Trade mark Act, current ofthoughts made by Intellectual Property High
Court shall be appreciated as bringing positiveeffects to restraining acts of accomplice to trade
mark infringement. Yet, hesitated manner ofwordings make it unclear whether or not the casein question is indeed considered as indirect
infringement or rather another extension of
direct infringement through Karaoke doctrine.
4

Consequence of liability

Above findings of liability entail order of
injunction and imposition of measures against
trade mark infringement. Scope and form as suchdiffer though, depending on how liability isreasoned.
(1) Legal foundation of injunction
Based on the forgoing arguments in section
II.2, one question still remains: how to justify
applying injunction to intermediary includingInternet service provider, who does not directly
commit to infringement? Comparative insights
demonstrate heterogeneous approaches in reply
to that question.
(2) Scope of injunction
Further question gives rise as to the scopeof injunction whether it solely aims at stopping
imminent infringement or includes preventive
measures against future infringement. German
and Japanese statutory rules make both possible
through express provision. On the European
sphere, CJEU boldly admitted the extensive
interpretation of Art. 11 of Enforcement
Directive to preventive measures.
(3) Range of imposable measures: towards
the obligation of general monitoring?
Extent of measures as a result of liability
imposed on Internet service provider may takedifferent forms depending on whether it derives
from tort liability or indirect infringement.
Whereas the former constitutes ground for a●

IIP Bulletin 2013 Vol.22

priori obligation to run appropriate filtering forthe purpose of preventing infringement in such a
way imposed in France, German theory ofaccessory liability incurs both a priori and aposteriori obligation, in particular where thelikelihood of infringement in future is high. Pointof determination is therefore whether Internet
service provider is to be accused of its behaviour
against trade mark infringement (French
approach), or consequence thereof (German andJapanese approach). Whilst the liability derives
from negligence in the former, the latter is basedon the absolute right inherent to intellectual
property right.
Problematically, wide range of imposable
measures as such can hardly be distinguishedbetween mere duty of care, which itself is notforbidden18, and obligation of general monitoring,which is subject to certain restriction 19.
So far, feasibility of filtering mechanism
constitutes a ceiling as one step before obligationof general monitoring. The threshold as suchshould remain based on industry standards,
otherwise incentives for Internet service
provider for improving technology of filtering
may be needed, which is hardly imposable fornon-profit or private entities, or the dependence
on court findings, which might continue todevelop right owner sided extremes with the riskof fragmented consequences in Europe, continues
to rise20.
5

Way forward

Couple of notable moves with regards theliability of Internet service provider shall bementioned as two diverging ways forward in
Europe. Certainly, drawing a line between
different categories of Internet service provider’sservices and mapping each of these to acorresponding
group
with
appropriate
responsibility is a sensitive task, which requires
ex ante policymaking. The subtle feasibility indoing so has already been proven by the previous
attempts made both in France and Germany,
which did not come to adoption.
On the European level, Memorandum ofUnderstanding (MoU) has been signed between
Internet service providers and trade markowners, which has been positively assessed by
the European Commission21.

Conclusion
Comparative analysis of legal regime on the
5 ●liability of Internet service provider related to
trade mark infringement enabled an observationthat the scope and extent of liability as well as
imposable measures greatly influence theneutrality of Internet. Legal norms of intellectual
property law for the protection of right and thesocial benefit of Internet have to be balanced, but
putting the axe on the appropriate position still
has to be striven for.
Legal problems on trade mark infringement
on Internet auction sites and shopping malls has
exhausted legal institutions as well as solutions,with the exception of enforcement of right forless-known trademark. There is not much room
left for Internet service provider to enjoy its
freedom from judicial point of view. That said,
further digitization of trade mark and thedevelopment of Internet service may one day casta question whether or not the current regime
works out, where the scope of trade mark use
requires new interpretation. That shall probably
depend on the scale of infringement as well as
the nature of additional services beyond“hosting” or otherwise stipulated in the current
substantive laws taking place in the future.
1

See WIPO SCT/25/3 at para. 58.
Cf. Arts. 4 and 9, Council Regulation (EC) No
1383/2003 and Arts. 69-3 and 69-12, Customs Act ofJapan (Law No. 61 of 02.04.1954).
3
See for example Spindler G. et al. “TDG Kommentar”(CH Beck, 2004) at 169.
4
Vrins O. et al. (eds.) “Enforcement of intellectual
property rights through border measures: Law andpractice in the EU” (2nd ed., Oxford University Press,2012)” at 21.
5
Cf. §5 of TDG (Gesetz über die Nutzung vonTelediensten) and BT-Dr. 13/7385 at 19.
6
Cf. Art. 3(1) of Japanese Act on Internet service
provider’s liability and §. 5 of German TDG.
7
Art. 6-I-2 (on civil liability) and Art. 6-I-3 (on criminal
liability) in French LCEN (loi n°2004-575 du 21 juin
2004 pour la confiance dans l'économie numérique).
8§10 of German TMG (Telemediengesetz vom 26. Februar
2007, BGBI. I S. 179) only stipulates that Internet
service provider is “not liable (nicht verantwortlich)”,but intends to include both civil and criminal liability(see BT-Drs Nr. 14/6098 at 23).
9Art. 14 of E-Commerce Directive.
10
Cf. relevant decisions from CJEU (Case C324/09,
L’Oréal et al. / eBay, at paras. 101 and 105), Germany(BGH Internet Versteigerung I, GRUR 2004, 860 at 861),
France (Hermès International c. eBay France et al.,TGI Troyes, civ., 4 juin 2008) and Japan (Tokyo
district court, 31.08.2010 (Heisei 21 (wa) No. 33872)
Vol. 2127 Hanreijihō 87).
11
Ensthaler J. and Heinemann M. “Die Fortentwicklung
der Providerhaftung durch die Rechtsprechung”
GRUR 2012, 433 at 436.
2

●

12

L'Oreal SA & Ors v EBay International AG & Ors[2009] EWHC 1094 (Ch) (22 May 2009) at paras. 373
and 382.
13
Shanghai First Intermediate People's Court, 25 April
2011, Hu Yi Zhong Min Wu Zhi Zhong (Zi) No.40.
14
Hoeren T. and Yankova S. “The Liability of Internet
Intermediaries – The German Perspective” IIC 2012,
501 at 503-506.
15
Lement C. “Störerhaftung eines Internetauktionshauses
bei Fremdversteigerungen” GRUR 2007, 708 at 713.
16Japanese Trade mark Act (Act No. 127 of April 13,1959).
17
Tokyo district court, 31 August 2010 (Heisei 21 (Wa)No. 33872) Vol. 2127 Hanreijihō at 87 and TokyoIntellectual Property High Court, 2012 (Heisei 22 (Ne)No. 10076) 2161 Hanreijihō at 86 – Chupa Chups.
18
Recital 48, E-Commerce Directive.
19
Cf. For Europe, Art. 15(1), E-Commerce Directive and
CJEU Case-C360/10, SABAM / Netlog NV, in which
injunction aiming at requiring an installation offiltering system as a preventive measure applied
indiscriminately to all users, exclusively at its expense,
for an unlimited period, is held to be precluded fromthe EU legal norms. In Japan, implied prohibition ofgeneral monitoring from Japanese Act on Internet
service provider’s liability is noted.
20
Cf. Spindler G. et al. “Study on the liability of Internet
intermediaries” (11.12.2007) at 22-23.
21
European Commission “Report from the Commission
to the European Parliament and the Council on thefunctioning of the Memorandum of Understanding on
the Sale of Counterfeit Goods via the Internet”(18.4.2013) COM(2013) 209 final, at 8 et seq.

6 ●IIP Bulletin 2013 Vol.22