As the online marketplace business develops and becomes a bigger sector, the conflicts emanating from online marketplaces and arising in connection with online sale transactions are also increasing. The law is clear about the legal rule that hosting providers are not obliged to conduct a legality review on the content uploaded onto their platforms, but there are numerous circumstances wherein this assessment of liability might not be made with such a clear-cut distinction. Below we delved into a few of the most recent court decisions in the assessment of liability of a provider of an online marketplace in online sale transactions made by the online marketplace. These decisions show that the first and the most essential benchmark in such assessment is determination of the party (i.e. seller) of the online transaction in question.
The first decision is a case addressed to a well-known online marketplace about a product put on sale by a third party in that marketplace. The facts of the case are that the seller (third party) cancelled the customer’s purchase one (1) day after the sale due to the product being out of stock. Later, the customer was informed that the reason of the cancellation was that the sale price presented in the online market place was erroneously lower than its actual price. The consumer therefore applied to a consumer arbitration committee for delivery of the product and the application was accepted. Following this, the online marketplace objected to the decision before the Consumer Court with the defense that the product was not sold by the online marketplace itself and that the seller is a third party and the online marketplace cannot be held liable. The Court upheld the objection as the sale was not made by the marketplace but by a third party.
In another case in the same vein, websites mostly popular for cars sales were sued alongside many other defendants, including a few various online marketplaces, based on the claim that the defendants engage in the sale of unlicensed cars, constituting unfair competition as per the Turkish Commercial Code. The common defense of online marketplaces was based on the fact that the cars listed on the marketplace are not owned and thus sold by the marketplace, as the websites are mere hosting providers. The First Instance Court ruled that since the online marketplaces are not directly selling the cars and only provide an online platform for people to sell cars, and this makes them host providers, they cannot be held liable for unfair competition. The decision was appealed but the High Court of Appeals rejected the appeal1.
In a case involving another well-known online marketplace, the First Instance Court ruled that the marketplace cannot be held liable for alleged trademark infringement for products put on sale. The trademark owner requested an access ban on the website due to infringement of the products and compensation of damages, but the court held that the website cannot be responsible given it acts as a medium bringing sellers and buyers together and does not own and sell the infringing products.
Given the precedents outlined above, it is evident that the courts’ approach to the issue of liability of online marketplaces for sales transactions or for sold goods is becoming more consistent and the focus is on the actual parties to the transaction. A closer look on the sales transaction suffices to see the line between the marketplace and the seller, which is crucial in determination of liability.
This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in September 2019. A link to the full Legal Insight Quarterly may be found here