Clifford Chance

While e-commerce platforms play a major role in our economy, the basis for a change in the regulation governing them seems to be emerging both in case law and legislation.

The classical application of hosting provider status to e-commerce platforms

Hosting service providers are defined in Article 6-1-2 of the LCEN as “All natural or legal persons who ensure, even free of charge, the storage of signals, writings, images, sounds or messages of any nature provided by the recipients of these services, for the purpose of making them available to the public via online communication services to the public.”

The limited liability regime for hosting providers under the LCEN applies when an e-commerce platform is considered to have no knowledge of infringing content, or when it manages to quickly to remove it. This liability regime is favourable to the hosting service providers and most frequently applied so that they will not be held liable for such content.

Earlier this year (*1), Lafuma, a company that specialises in outdoor equipment and clothing, accused Alibaba of infringement of its trade mark on the Alibaba online platform. The Paris Court of First Instance ruled that Alibaba could not be held liable in its capacity as a publisher because no editorial role, knowledge or control of the content of the advertisements had been demonstrated.

The main reasons were that the “services that are offered (…) are inherent to online marketplaces, have only a technical and logistical purpose, to enable the operation of the site and guarantee that the Internet user (…) will find what he is looking for.”  The Court also noted that Alibaba was not a party to the sales contracts and that Alibaba did not intervene in any way in the parties’ transaction.

However, Alibaba was found liable as a hosting service provider, despite the much more limited liability regime normally in place for hosting service providers. Lafuma had served formal notice on the online platform to withdraw the disputed advertisements and Alibaba did not respond promptly - therefore, Alibaba was not able to benefit from the usual limited liability for hosts under the LCEN. Typically, the Courts seem to place less liability on online platforms in comparison to publishers, but in this instance the Court underlined that it is important hosting service providers meet their responsibilities if they wish to benefit from that more favourable regime.

A potential reinforcement of the liability of online platforms when infringing intellectual property rights

The purpose of the Copyright Directive (2019/790 EU) is to modernise EU Copyright Law and take account of the increase in digital and cross-border use of protected content. Major stakeholders in the online content market such as Youtube, Dailymotion and Facebook will now be liable if they communicate copyrighted works to the public without prior authorisation. However, they will avoid liability if they:

1. Make best efforts to obtain permission from rights holders,
2. Make best efforts to ensure the unavailability of the work, and
3. Promptly take action to remove or deny access to the work, after receiving sufficiently reasoned notification from the right holders.

Several factors seem to indicate that the legal framework of online platforms operating in France is likely to evolve in the near future.

In a report submitted to the Assemblée Nationale (French National Assembly), the Cour des Comptes (*2) (the French national audit office) recommended the reinforcement of the legal obligations of e-commerce platforms in the fight against counterfeiting.

The report highlighted the fact that the current regulatory framework does not encourage oversight by e-commerce platforms. The Court adopted 11 recommendations in this regard, which include the introduction of recognition tools, verification of the identity of sellers and more comprehensive consumer information. 

On the jurisprudential side, on 5 June 2020(*3), the Paris Court of First Instance hardened its stance on the liability of digital platforms. In a decision issued against the well-known real estate rental online marketplace Airbnb, a tenant sublet her apartment without the landlord’s consent, which is required under a law of 6 July 1989. For the first time, the judges found both the platform jointly and severally liable with its user, the sublessee, to pay compensation to the owner of the premises (equal to the amount of rents received during the two disputed years plus legal costs).

As a publisher, the Court found that Airbnb had a right of control over the content of the advertisements published and the activities carried out through it. Airbnb stated in its general terms and conditions that it could check whether the host had the right to offer a property for rental or not. Therefore, the judges ruled that the platform was guilty of misconduct by failing to verify that one of its hosts was carrying out an illicit activity through the platform. However, this decision is not final and could be subject  to appeal. Although the decision does not directly concern the field of intellectual property, it establishes a general principle which may influence future intellectual property law decisions.

Clearly, French law is moving in a direction of potentially placing more liability on online platforms, and this could soon have impact in the context of intellectual  property rights violations. 

1 Paris Court of First Instance, 3rd Chamber, 3rd section, 10 January 2020, No 18-00171

2 The Fight Against Counterfeit, an organization and tools to better protect consumers and industrial property rights, Communication to the National Assembly’s public policy evaluation and control committee, February 2020

3 Paris Court of First Instance, 5 June 2020, No 11-19005405