Brand manufacturers and distributors had asked the Supreme Court of the Czech Republic to order Delta Centre, the company that rents and sub-lets Prague's market halls, to stop sub-letting space to people who sell counterfeit products.
EU law allows trade mark holders to bring an action against intermediaries whose services are used by a third party to infringe their trade marks.
The manufacturers of the branded products, including fashion brand Tommy Hilfiger, argued that, like the operator of an online marketplace, the operator of a physical marketplace should be forced to take steps to stop on-going trade mark infringement and ensure it does not happen again.
The Czech court asked the CJEU, Europe's highest court, to rule on the issue.
The CJEU ruled that "the tenant of market halls who sublets the various sales points situated in those halls to market-traders, some of whom use their pitches in order to sell counterfeit branded products" can be classed as "an intermediary whose services are being used by a third party to infringe an intellectual property right" under the EU directive on enforcement of intellectual property rights.
The concept of an intermediary and their obligations to address trade mark infringement is therefore not restricted to the digital world and e-commerce, according to the ruling.
The conditions for any injunctions issued against an intermediary in a market hall are identical to those for intermediaries in an online market, the CJEU said, referring to its ruling in 2011 in a case involving L'Oreal and online auction site eBay which concerned the sales of fake perfumes. That means that they must be effective and dissuasive, but also equitable and proportionate, it said.
Injunctions should ensure a fair balance between the protection of intellectual property and the absence of obstacles to legitimate trade, the CJEU said.