Host liability – when can the ‘hosting defence’ be relied on

Are hosts liable for the actions of their users? The recent decision of Montres Breguet v Samsung confirms that, in some cases, they are.

This decision provides useful guidance in relation to hosts’ liability, and the ‘hosting defence’ under the E-Commerce Directive. In this case, Samsung, as the app store operator, was liable for trade mark infringement despite the apps being created by third parties.

Background

The claimants were all group companies of Swatch, the Swiss watch maker. They brought a claim for trade mark infringement regarding apps which were on the Samsung app store. The claimant argued that 30 of these apps infringed 23 of Swatch’s trade marks. All the apps were made by third parties (i.e. not made by Samsung).

The apps allowed users to change the faces on their Samsung watches, and each app was subject to review by Samsung before being made available on the Samsung store.

It was conceded by Samsung that, had the app reviewers known about the Swatch trade marks, these apps would not have made it through the review process. Despite this, they put forward that they were covered by the so called ‘hosting defence’, which, if successful, would mean that they would not be held liable for the third party apps’ infringement.

The High Court therefore had to consider whether the third party apps had in fact infringed Swatch’s trade marks, and if they had, the extent to which Samsung could be held liable for this infringement.

Decision

The court found that a number of the apps had elements which were identical or similar to the Swatch trade marks in question.

Importantly, the court found that Samsung’s involvement in reviewing the apps was enough to prevent them from relying on the hosting defence, despite Samsung’s arguments that they did not ‘use’ the signs, they simply allowed third parties to via their app store. The court stressed the importance of considering Samsung’s actions as a whole when considering what amounts to ‘use’ for the purposes of the hosting defence.

Because Samsung reviewed the apps, their actions were not simply ‘the storage of information’, and therefore not ‘technical, automatic and passive’ in nature, which is what is required in order to rely on the hosting defence.

The Judge found that, had Samsung acted as a diligent economic operator, they would have identified that the apps could be infringing. Samsung therefore did not satisfy the test provided in L’Oreal v eBay for the hosting defence.

A holistic approach should be taken when considering infringement; the activities of the provider as a whole should be taken into account. For example, the court considered that it was relevant that the employees hired by Samsung to review the apps did not have much experience in the relevant market and they were given limited guidance by Samsung with respect to possible infringement problems.

If providers take any kind of ‘active’ role in their process, for example reviewing apps before they are published, then it is possible that they could be held liable for the infringement.

It is therefore not good enough for providers to argue they are not directly involved; they must act overall as ‘diligent economic operators’.

Contact Briffa for advice regarding trade marks, and trade mark infringement on info@briffa.com or call 0207 288 6003.

Written by Laura Gathercole, Trainee Solicitor