The battle against counterfeiting and piracy has been escalating for many years, and the scale of intellectual property violations, such as trading in counterfeit goods and piracy, is continually increasing. Consumers are often misled by fake products (when it’s challenging to distinguish a counterfeit from the original), but there are also instances of customers consciously choosing cheaper substitutes.
Marketplaces and trade halls are places where counterfeits are frequently encountered. In May 2024, the Warsaw Court of Appeal issued a precedent-setting verdict that held the marketplace manager responsible for the sale of counterfeits on their premises.
Groundbreaking verdict on manager’s responsibilities
The case was initiated by a well-known French clothing company from Paris, which sued the manager of one of Warsaw’s markets, alongside lawsuits against the vendors. The court of first instance originally ruled that “an intermediary cannot be held responsible for the actions of vendors, in a situation where the regulations forbid violating the law.”
However, the Court of Appeal emphasized that there is “an intermediary’s responsibility for what happens on the territory it controls, if it has even general but credible information that there is trade in counterfeits on that territory and it does not react.” The Court of Appeal awarded the French brand compensation and obligated the manager not to enter into new and not to extend current contracts with vendors who were infringing on trademark rights. In addition, the manager should include in all the contracts a clause prohibiting the trade in counterfeits and allowing for contract termination in case of such prohibition violation.
Legal basis for manager’s responsibilities
The legal basis for the responsibility of marketplace managers for the sale of counterfeits is primarily the Industrial Property law. Moreover, the 2004 directive enforcing intellectual property rights indicates that “entities that own trademarks may act against intermediaries whose services such a third party has used while violating industrial property rights.”
Actions managers should take
To avoid legal liability, marketplace managers should certainly implement appropriate procedures to protect their interests. An example is adjusting the market regulations, so they clearly establish the prohibition of trade in counterfeits and introduce the possibility of terminating rental contracts for commercial space in case of intellectual property law violation.
Thoughtful implementation of such measures would help reduce the counterfeit problem in marketplaces and protect both consumers and legitimate businesses from the negative consequences of illegal trade practices.
Handling counterfeits
According to Article 286 of the Industrial Property Law, the court deciding on infringement cases may order withdrawal or destruction of counterfeit goods or improperly marketed goods. It can also grant the authorized party a monetary amount awarded for its benefit. The court, when making decisions, considers infringements and third-party interests.
Consumers who bought counterfeits or illegally marketed goods have nothing to fear. Court decisions on the destruction of such goods do not apply to consumers who bought them.
Producers who find counterfeits of their products on the market should report the matter to the appropriate authorities, such as the police or the Office of Competition and Consumer Protection. According to Article 305.1 of the Industrial Property Law, a person responsible for selling or marking goods with a counterfeit trademark to put them into circulation is subject to a fine, restriction of freedom, and even imprisonment for up to 2 years.
Author: Sylwia Werpachowska, Chałas i Wspólnicy Law Firm
Source: https://managerplus.pl/przelomowy-wyrok-zarzadcy-targowisk-odpowiedzialni-za-handel-podrobkami-52214
