Court of Appeal Determines Samsung Liable for Trademark Infringement by Third-Party App Developers
Introduction
In the case of Montres Breguet SA & Ors v Samsung Electronics Co Ltd & Anor: EWCA-Civil 2023 1478, the Court of Appeal delved into issues concerning the liability of an online platform provider for trademark infringement carried out by third-party app developers within its digital ecosystem. The case presents a compelling discourse on the interplay between intellectual property rights, the role of service providers in the online marketplace, and the limitations on liability under the Electronic Commerce (EC Directive) Regulations 2002.
Key Facts
The appellants, part of the Swatch group, alleged that Samsung infringed upon their trademarks through smartwatch face apps developed by third parties and available on Samsung’s Galaxy App store. Samsung was accused of being either directly liable or a joint tortfeasor with the app developers for the trademark infringements. The judge at the initial trial found in favor of Swatch on most points, holding Samsung primarily liable for the infringements, without the need to assess the joint tortfeasor claim.
The appeal focused on three fundamental issues:
- Whether Samsung’s own use of the signs amounted to trademark use;
- If the use of the signs was in relation to smartwatches and not merely the apps; and
- Whether Samsung had a defense to financial remedies under Article 14(1) of the e-Commerce Directive.
Legal Principles
Use by Whom?
The court examined whether Samsung’s actions constituted “use” of the trademarks. The principle established by cases such as Google France SARL v Louis Vuitton Malletier SA (2010) and Louboutin v Amazon Europe Core Sàrl (2022) indicated that use occurs when a sign is utilized in one’s commercial communication. The service provider must play a role beyond merely facilitating third-party use.
Use in Relation to What?
The analysis turned on whether the signs were used in relation to goods (i.e., smartwatches) rather than the apps alone. Here, the post-sale context was examined to determine if the trademarked signs were used to denote the origin of the smartwatches to third parties encountering the products, applying principles from cases such as Arsenal Football Club plc v Reed (2002) and London Taxi Corporation Ltd v Frazer-Nash Research Ltd (2017).
Liability Under Article 14(1) of the e-Commerce Directive
Samsung’s potential exemption from liability according to Article 14(1) was contingent on proving its role was “merely technical, automatic, and passive” with no control over, or knowledge of, the information stored, as laid out in cases such as Google France (2010) and L’Oréal SA v eBay International AG (2011). The “diligent economic operator” test establishes awareness of facts from which illegal activity is apparent, a concept further refined in Peterson v Google LLC (2021).
Outcomes
The appeal was dismissed on all grounds. It was determined that Samsung did indeed “use” the signs in its commercial communications, transcending the mere facilitation of third-party use. The signs were also deemed to be used in relation to smartwatches, extending beyond just the apps. Finally, Samsung was not able to shelter under Article 14(1) of the e-Commerce Directive, as its involvement was active and not just mechanical or passive, thus not meeting the criteria for liability limitation.
Conclusion
The Court of Appeal’s decision in Montres Breguet SA & Ors v Samsung Electronics Co Ltd & Anor underscores the delicate balance that platform operators must maintain in the digital sphere. Samsung’s active participation and control over the content within its app store placed it within the sphere of direct liability for trademark infringement. As online marketplaces continue to grow, this case affirms the need for vigilant content review practices that consider the underlying legal implications and the clear, discernible attribution of responsibility for intellectual property right usage.