In Perfetti Van Melle S. p.A v. Rakuten Co., Ltd., the Intellectual Property (IP) High Court in Tokyo addressed the issue of whether Rakuten, who organizes a website in which numerous independent stores and dealers can sell goods on the Rakuten website (called an “internet mall” in Japanese), could be liable for trademark infringement committed by those stores. Although the court dismissed the suit and found the defendant Rakuten not liable, the court recognized that an internet mall can be liable in certain circumstances.

The plaintiff Perfetti Van Melle is an Italian entity that holds trademarks to “Chupa Chups,” a famous candy. The defendant, Rakuten, operates the biggest internet mall in Japan, called “Rakuten Ichiba.” The plaintiff claimed that several shops using the Rakuten website were committing trademark infringement by selling items such as mugs, caps and baby bibs that incorporated the “Chupa Chups” trademark. The plaintiff sued Rakuten seeking an injunction and damages under the Japanese trademark law and unfair competition law. Rakuten argued that it was not liable because it was merely the administrator of the website, and not the shop that directly sold the products accused of trademark infringement.

The IP High Court held that the threshold test for finding the administrator of an internet mall liable depends on whether the administrator receives commissions from the shops, has power or control over the shops, and knows or should have known of the existence of trademark infringement by the shops. If the test is satisfied, then the administrator can be held liable for damages and be subject to an injunction for the infringement unless the administrator removes the infringing products from the website within a reasonable time period. Applying this test to the case, the court concluded that Rakuten was not liable because Rakuten had removed the infringing products within a reasonable time after learning of the infringement.

The decision of the IP High Court leaves unclear when an administrator “should have known” of the infringement or what it means to remove the infringing goods “within a reasonable time.” Nevertheless, website administrators may now have to investigate if goods sold on the internet mall are infringing trademarks and remove them if they are costs.