In a landmark trademark infringement decision, the Turkish Supreme Court[1] has ruled that hosting providers are liable for trademark violations in connection with the online sale of counterfeit products.

Background

In response to the online sale of allegedly counterfeit products, a cosmetics company sued a Turkish auction website for trademark infringement from the sale of counterfeit products through the site. The hosting provider asserted that it was not liable as it cannot test the products, and the site is merely an intermediary platform providing a safe payment environment for users. The trial court agreed, ruling that the hosting provider was not liable for selling counterfeit products given the absence of a specific regulation imposing liability. On appeal, the Supreme Court reversed the trial court's decision, holding that the hosting provider (auction site) was liable for trademark infringement associated with the sale of counterfeit products, and referred the case back to the trial court for further proceedings.

On remand, relying on EU regulations similar to Turkish law on the issue as well as European Court of Justice precedents, the trial court ruled the hosting provider was not liable because the claimant failed to serve notice under the notice and takedown rules before filing suit. The notice was required as the hosting provider was not in a position to know whether a product is genuine, and has no legal obligation to monitor content or products.

What the case says

The Supreme Court disagreed, holding that a hosting provider is liable once it becomes aware of the counterfeit products. In overruling the trial court a second time, the Supreme Court found that the trademark owner's filing of the lawsuit against the hosting provider satisfied the notice requirement. As a consequence, it was unnecessary for the trial court to rely by analogy on a similar European regulation. If the hosting provider was on notice of the lawsuit and yet continued to provide a platform for sales of the counterfeit product, it was, in essence, participating in the infringement. The court also found that the plaintiff's lawsuit was sufficient to serve as a cease-and-desist letter under Article 50 of the Code of Obligations.

Observations

As the first decision on hosting providers' liability for trademark infringement in Turkey, it is a milestone with significance for both trademark owners and hosting providers. Future decisions will hopefully provide more guidance as to the prerequisites for liability. Until future clarification, 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. Once providers become aware of the trademark infringement, they are obligated to prevent it, otherwise becoming 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.