For nearly two decades, major e-commerce marketplaces operated under a protective shield known as the "passive intermediary" model. This legal framework allowed platforms to position themselves as neutral conduits, much like a postal service or a telephone network, rather than active participants in commerce. Under this model, brand owners were left with a single primary tool: the takedown notice. If counterfeit goods appeared, the rights holder sent a request, and the platform removed the listing. The burden of discovery and enforcement fell almost entirely on the brand, not the infrastructure provider.
That era is ending. The rise of sophisticated algorithmic advertising, integrated fulfillment networks, and real-time personalization has blurred the line between neutral hosting and active commercial participation. As courts in the United States and regulators in Europe begin to scrutinize this gray area, the legal landscape for trademark protection is shifting from reactive administration to proactive accountability.
The Shifting Legal Doctrine in the United States
The foundation of US contributory trademark liability stems from the 1982 Supreme Court case Inwood Laboratories, Inc. v. Ives Laboratories, Inc. The ruling established that a party could be liable if it intentionally induced infringement or continued to supply services to someone it knew was infringing. However, this test was designed for physical manufacturers, not digital marketplaces hosting millions of third-party sellers.
The pivotal moment came with Tiffany (NJ) Inc. v. eBay Inc. in 2010. The Second Circuit Court of Appeals ruled that eBay could not be held contributorily liable for counterfeit Tiffany jewelry sold on its platform unless it had specific knowledge of individual infringing listings. General awareness that counterfeiting was widespread was deemed insufficient. This decision effectively immunized platforms from structural liability, provided they maintained efficient takedown portals.
Yet, recent jurisprudence suggests this immunity is eroding. The Ninth Circuit’s 2023 decision in Y.Y.G.M. SA v. Redbubble highlighted the awkwardness of applying old doctrines to modern algorithmic environments where platforms monetize every click and transaction. More significantly, the case of Kelly Toys Holdings, LLC v. 19885566 Store exposed Alibaba to serious liability risks. A Southern District of New York judge held Alibaba in contempt for continuing to promote counterfeit Squishmallow toys through sponsored ads and premium merchant services, despite knowing those sellers were subject to an injunction. The court made clear that a platform actively monetizing infringing activity cannot hide behind the Tiffany shield.
The key legal standard emerging here is "willful blindness." If a platform suspects widespread counterfeiting in a specific category and deliberately avoids investigating it to maintain plausible deniability, it may lose its liability protections. This principle holds true regardless of whether the infrastructure is physical (like a mall landlord) or digital (like an algorithmic feed).
The European Structural Shift: The Digital Services Act
While the United States moves through case-by-case litigation, Europe has enacted a comprehensive regulatory overhaul with the Digital Services Act (DSA), which fully took effect in 2024. The DSA fundamentally alters the liability equation for Very Large Online Platforms (VLOPs) - defined as those with more than 45 million monthly active users in the EU.
VLOPs can no longer claim passive neutrality. They are required to conduct annual systemic risk assessments regarding illegal content, including counterfeit goods. These platforms must implement documented mitigation measures, undergo independent audits, and appoint compliance officers accountable to national regulators. Failure to comply can result in fines of up to 6% of global annual turnover or even suspension from the EU market.
This is a categorical shift from reactive administration to structural vigilance. Platforms like Amazon, Alibaba, and AliExpress must now prove, through formal audit trails, how they identify and address IP infringement risks on a systemic level. The European Commission’s recent enforcement actions, including a €120 million fine against X (formerly Twitter) for transparency violations, signal that these rules are not merely theoretical.
For brand owners, this creates new enforcement pathways. Evidence of systemic IP infringement can now be brought before regulatory bodies with real enforcement powers, rather than being lost in a platform’s private takedown interface. However, this requires navigating a complex two-tier system involving both the European Commission and national Digital Services Coordinators. The critical role of trademark law in safeguarding these identities is now more dependent on regulatory compliance than ever before.
The Asia-Pacific Landscape
The approach to platform liability varies significantly across the Asia-Pacific region, creating distinct challenges for global brands.
China operates under a framework that aligns more closely with European standards of accountability. Article 38 of China’s E-Commerce Law imposes joint and several liability on platforms if they knew or should have known of infringement and failed to act. However, enforcement faces structural hurdles. Recent investigations revealed that many storefronts on major platforms are registered at nonexistent addresses, creating a gap between law and reality. New draft regulations aim to close this by requiring identity verification and real-time integration with public IP databases to suspend listings linked to canceled trademarks within 48 hours.
A critical requirement for foreign brands in China is local trademark registration. Platforms like Alibaba’s Intellectual Property Protection Platform (IPP) generally require Chinese-registered rights to process takedown requests on Taobao and Tmall. Without this local foothold, brands have limited recourse, making domestic registration a commercial necessity rather than just a legal formality. Consider the risks associated with marks like WE LEVEL UP EXPERIENCE if protection strategies are not localized.
India has seen its courts gradually expand the scope of intermediary liability. While Section 79 of the Information Technology Act provides safe harbor for neutral intermediaries, Delhi High Court precedents suggest that platforms engaging in active facilitation - such as providing warehousing or using brand trademarks in their own advertising tools - may lose this protection. Recent rulings indicate that liability thresholds are converging with US standards: platforms must act promptly upon notice, but they are not expected to proactively police every listing unless they engage in specific active behaviors that aid infringement.
Japan, South Korea, and Australia each maintain their own distinct frameworks, while Southeast Asian markets continue to develop their positions on digital commerce liability.
The Small-Parcel Problem and Cross-Border Realities
The decline of large commercial shipments in favor of direct-to-consumer small parcels has undermined traditional customs enforcement. Individual packages are often designed to fall below de minimis thresholds, allowing counterfeit goods to bypass border scrutiny. By the time a rights holder identifies an infringing shipment, it is usually already delivered to the consumer.
In this environment, platform-level enforcement is the only scalable solution. Customs recordation remains valuable but insufficient for high-volume digital commerce. This reality drives the urgency behind regulations like the DSA and evolving US common law: if you cannot intercept the parcels, you must address the platform conditions that produce them. Effective management of this complexity mirrors the importance of navigating trademark risks in highly digitalized markets.
Strategic Imperatives for Brand Owners
For intellectual property holders, effective enforcement is no longer an administrative task but a strategic function. The following steps are essential in this new landscape:
Prioritize Multi-Jurisdictional Registration: Filing trademarks in key markets like China, the EU, the UK, and Australia is now a prerequisite for enforcement. A brand owner relying solely on home jurisdiction registrations will find themselves without tools in the very markets where infringement is most active. The cost of registration is negligible compared to the expense of battling counterfeiting without legal standing.
Build Evidence of Platform Conduct: Litigation outcomes increasingly depend on demonstrating a platform’s level of involvement. Brand owners should document not just infringing listings, but the commercial context: sponsored advertisements for counterfeit sellers, fulfillment services provided by the platform, and prior notices received. This evidence shifts a dispute from a simple takedown request to a claim of contributory liability.
Leverage New Regulatory Pathways in Europe: Rights holders should utilize the DSA’s enforcement mechanisms. Submitting documented evidence of systemic risk failures to national Digital Services Coordinators or the European Commission can yield results that private takedown systems cannot. These regulatory bodies have the power to impose significant penalties for non-compliance.
Monitor Legislative Developments in China: The upcoming implementation of stricter identity verification and IP database integration rules in China will change the dynamics of enforcement on platforms like Alibaba. Brands relying on the IPP Platform should prepare for a more mandatory and transparent framework that may reduce the volume of infringement they need to manage reactively.
The narrative that platforms bear no responsibility for the commercial conditions on their systems is becoming legally unsustainable. Platforms capable of running real-time advertising and AI-powered recommendations are not helpless in the face of counterfeiting, they are actively shaping the marketplace. European law has already recognized this duty of care. US doctrine is moving toward the same conclusion, albeit more slowly. The critical role of trademark monitoring in safeguarding brand integrity must now extend beyond legal boundaries into operational oversight.