Swatch v Samsung: intermediary liability for trade mark infringement

The Court of Appeal has determined that the first instance judge in Swatch v Samsung was entirely correct:

1. Samsung was actually using the various trade marks: its actions went well beyond merely creating the technical conditions for the app developers to use the marks.
2. Use of the marks was in relation to smart watches: post-sale context was important as consumers may think the watches with the infringing app faces were produced by Samsung in collaboration with the brands.
3. The “hosting defence” (Art 14. e-Commerce Directive, implemented in the UK by the Electronic Commerce Regulations 2002) did not apply to Samsung, as its use of the marks was not merely technical, automatic and passive.

This outcome is not particularly surprising, and is likely to be welcome news for brand owners in the ongoing struggle against infringement via online market places. This decision is likely to embolden brands in pursuing such claims and confirms that app stores do not automatically benefit from the hosting defence.

Intermediaries have always been faced with a balancing act in terms of how involved they can or should get with the activities of third parties using their services. This decision could actually be seen as encouragement for platforms to reduce the extent of their content review procedures in order to increase the chances of being able to rely on the hosting defence, which could be more harmful to brands in the long run. This judgment makes it clear that service providers are not obliged to carry out these kinds of review and, if they do, they risk losing their ability to rely on the hosting defence. Time will tell how the industry responds.