ECJ: Former contract partner is not liable for online advertising breaching trademark rights

The European Court of Justice on 3 March 2016 decided that former licensees are not liable for internet advertising which associates their names with the previously licensed mark whether they themselves have initiated the advertisement which remains on the Internet in spite of their efforts to have it removed or the advertisement is disseminated by a third party without the formers’ consent (file number C-179/15).

The Hungarian company Együd Garage was a service workshop for Daimler. According to the customer service agreement, Együd Garage was entitled to use the “Mercedes-Benz” mark which is also protected in Hungary and to advertise on the Internet with the description “authorised Mercedes-Benz workshop”. Együd Garage itself initiated an advertisement accordingly on the Internet. In addition, the advertisement was also disseminated by third parties on reference websites. After the ending of the cooperation with Daimler, the workshop attempted to have all online advertisements which referred to the connection between it and the “Mercedes” mark to be deleted. In spite of the efforts of Együd Garage, both the advertisement initiated by it and also those initiated by third parties remained accessible.

Daimler demanded from Együd Garage that the advertisements be removed and an undertaking to refrain from further infringements. The Hungarian court requested a preliminary ruling from the ECJ as to whether Daimler could demand such measures from its former cooperation partner.

In the opinion of the ECJ, the publication of an online advertisement in which a mark is named constitutes a use of the mark if the advertiser has given instructions for the advertisement. The use of the mark by the relevant company ends, however, when the advertiser expressly requests the operator of the website to delete the advertisement. This applies even if the operator does not in fact comply with the deletion request. In addition, as clarified by the ECJ, the advertiser is not responsible for the acts of the third party which continues to disseminate an advertisement on its own website without the former’s consent.

The ECJ thereby found that while Daimler could not oblige the former cooperation partner in court to desist from the online publication of the advertisement in dispute, the owner of the mark could nevertheless demand from the advertiser the surrender of all financial benefits accrued to it due to the advertisement which was still accessible. Daimler may also proceed against the operator of the website which breaches the rights arising from Daimler’s mark.

The decision of the ECJ provides former licensees with the possibility to avoid injunction proceedings because of the infringement of a mark if online advertising remaining on the Internet has not been initiated by the licensee itself or not deleted by a website operator in spite of having been so requested. The risk of “uncontrollable” internet advertising is thereby mostly transferred to the owner of the mark. The right to the surrender of financial advantages is likely to be a poor consolation. The reference to the right to proceed against the individual website operators is unsatisfactory for the mark’s proprietor. Following the judgment of the ECJ, it seems to be appropriate for the mark’s proprietor to secure itself already in the licence agreement with regard to online advertising.