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Special supplement for edition 11 (215)
November 2016

Landlord, watch what your tenants are up to!

Agnieszka Kocon

Landlord, watch what your tenants are up to!
Agnieszka Kocon, a legal advisor and senior associate at Łaszczuk & Partners

The infringement of intellectual property rights by the sellers of counterfeit goods is a huge problem for famous brands across the world. The owners of the brands are in a constant battle against such fake products, sometimes going after not only their producers, but also the other parties acting as intermediaries – and these include landlords.

The basis for such an approach can be found in the IP Enforcement Directive (2004/48/EC). According to a recent judgment by the European Court of Justice, Art. 11 of the IP Enforcement Directive allows an injunction to be issued ordering the landlord to take specific action when dealing with a tenant, in particular to refrain from extending lease contracts with a trademark infringer. While Polish lawmakers have yet to directly implement Art. 11 of the directive, the general rules of liability under the Civil Code could be applied analogously, supported by the principle of pro-EU interpretation of national law. So far there have not been any rulings issued by Polish courts in comparable cases, but it appears that under Polish law it is also possible to issue an injunction against a landlord requiring it to take specific action in relation to a tenant, although in Poland such an injunction would probably carry stricter conditions, particularly the need to prove that the landlord was at fault when acting as an intermediary for the sale of infringing goods.

With respect to trademark infringement on the internet, under a legal precedent of the Court of Justice (C-324/09 L’Oréal SA) injured parties may seek an injunction against the operator of an online marketplace ordering it to take action to stop infringements by users and prevent them in the future. Based on the L’Oréal case, the question arose whether the interpretation could also be applied in a situation where IP infringement occurs in a physical location, e.g. a bricks-and-mortar shop. The answer was provided by the Court of Justice in its judgment of July 7th 2016 (C-494/15 Tommy Hilfiger Licensing LLC).

In the Hilfiger case, counterfeit goods of well-known brands were being sold at a physical marketplace in Prague called Pražská Tržnice. The tenant of the marketplace, Delta Center a.s., rented out retail units there to persons directly involved in the retail of knock-off goods. The proprietors of the trademarks applied to the Czech court for an injunction ordering Delta Center to refrain from concluding or extending such sub-leases to those whose conduct had been legally held to constitute an infringement of the applicants’ IP rights. In a preliminary ruling, the Court of Justice ruled that a landlord renting space in a market hall to traders pitching counterfeit goods (or in this case, a tenant subletting this space) falls within the concept of “an intermediary whose services are being used by a third party to infringe an intellectual property right” and therefore liable to such an injunction under the IP Enforcement Directive.

How could this ruling impact landlords in Poland and other EU member states? Landlords should recognise the potential risk they may face due to the infringement of intellectual property rights by their tenants. However, this is a risk that can be addressed in the lease contract, for example, by ensuring the landlord has the right to terminate the lease if the tenant is found to be infringing the intellectual property rights of others.

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