Hosting providers liable for online counterfeits

A Turkish court has ruled that hosting providers are liable for trademark violations resulting from the online sale of fake goods.

In the landmark case, a cosmetics company sued a Turkish auction website (the hosting provider) for trademark infringement from the sale of counterfeit products through the site, reports legal firm Baker & McKenzie.

Initially, a Turkish court threw out the case, saying that the auction website was not responsible for counterfeit goods as they are merely an online intermediary in the sale, and cannot test the authenticity of the products going through it.

But the decision was taken higher, to the Turkish Supreme Court, who found that in fact the hosting provider was liable for the fake goods as it had been notified by the cosmetics company, and yet continued to trade.

According to the verdict, a trademark owner may bring a claim against a hosting provider for a number of reasons, including to stop trademark infringement as well as to stop the publication, offer and sale of the counterfeit products on a website.

The lawsuit in itself served as a cease and desist letter, according to the court, and thus ruled in the plaintiff's favour.

This is the first decision on hosting providers' liability for trademark infringement in Turkey with future decisions set to provide further guidance as to the prerequisites for liability, according to Baker & McKenzie.

The decision is, however, still a milestone with significance for both trademark owners and hosting providers.

Until future clarification, the case means that hosting providers should be aware that they can be held liable for trademark infringement if they allow third parties to publish infringing material on their websites after being notified by the trademark owner.

This case shows that once providers become aware of the trademark infringement, they are obligated to prevent it, or they will otherwise become jointly liable for damages arising out of the sale and publication of the infringing material.

For trademark owners, a major problem has always been finding a party against whom to file a claim as counterfeiters are often not easy to find. Now, trademark owners may simply notify the hosting provider to stop trademark infringement.

Last month, a landmark ruling was handed down in the UK that established the right of trademark owners to secure court orders blocking websites that sell counterfeit products.