Prosecution of managers – marketplace counterfeits

Prosecution of managers – marketplace counterfeits

The case: The manager of an Internet platform operator in Germany was horrified when one day the police appeared at his private house and proceeded to search his living quarters and private vehicles. Counterfeits had been found on his employer’s marketplace, and the manager was accused of participating in the punishable trade mark infringement committed by sellers of these products on the platform run by his employer.

 A total of €610,000, which was in his two bank accounts, as well as business documents, were seized. The purpose of the action: asset recovery and preservation of evidence.

On the Internet platform, trade mark infringements through the marketing of counterfeit products had repeatedly occurred. The manager had received positive knowledge of this. However, he had not acted to remove the offers from the platform, nor to block access to them. Therefore, a criminal charge for aiding and abetting trade mark infringements committed by the providers on the platform was considered.

The manager’s defence was that he had not been involved in the relevant day-to-day business, nor did he have a management function in the core business. Furthermore, from a technical point of view, he lacked administrative access to his employer’s marketplace. In addition, he claimed the mere knowledge of property right infringements was not punishable.

To protect the business model of neutral host providers, the German Telemedia Act (TMG), implementing the ‘Directive on electronic commerce’, provides for ‘liability privileges’ of host providers. However, these end if the host provider gains genuine knowledge of a trade mark infringement and does not take immediate action to block access to the infringing information or if it does not take precautions to prevent further infringements.

Managers of a host provider are also only liable under these special circumstances. The employee must therefore have had positive knowledge of the trade mark infringement and must be in a responsible position and thus be obliged to work towards ensuring that the trade mark infringements brought to their attention are remedied immediately and that no further infringements occur. They must have acted contrary to these obligations to be criminally liable.

That was the position in the present case. Internally, the manager had the task of dealing with infringements on the platform, and he had also received knowledge of the trade mark infringement. Nevertheless, he had not taken immediate action to eliminate the trade mark infringement. Although he had not acted as perpetrator or accomplice of a punishable trademark infringement, he had become a participant in the punishable trade mark infringement committed by the sellers of the counterfeit products on the platform through his omission in breach of his duties. Since the attachment in the amount of €610,000 stemmed from the violations in question, the seizure of the sum for asset recovery was permitted, OLG Frankfurt, 20 August 2013, 2 Ws 104/12 (on copyright infringements).

Learnings: Employees of Internet providers occupying the position of manager should take news about trade mark infringements by third parties on their Internet platform very seriously. If they gain positive knowledge of the trade mark infringement as a result of such a message, they must, within the scope of their duties, take steps to ensure that this is stopped immediately and that no further infringements occur. If they act contrary to this, they may be liable to prosecution for participation in third-party trademark infringement.

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