Short Reads

Online marketplace's liability for trademark infringement

Online marketplace's liability for trademark infringement

Online marketplace's liability for trademark infringement

28.04.2020 EU law

While online shopping is booming in such period of COVID-19 outbreak, the Court of Justice of the EU (CJEU) recently decided that Amazon cannot be accused of trade mark infringement when, on behalf of a third party, it stores goods which infringe trade mark rights without being aware of such infringement.

The Court nevertheless made it clear that this would not be the case if Amazon had the intention to offer or put these goods on the market itself or was not able to identify the third party seller (C-567/18, April 2, 2020).  

The litigation opposes the perfume distributor and licensee of the trademark DAVIDOFF, namely Coty Germany GmbH to several companies of the group Amazon (including Amazon Services Europe Sarl and Amazon FC Graben GmbH). On a marketplace of the website www.amazon.de, perfumes infringing the aforementioned trademark – namely perfume bottles for which the trademark rights were not exhausted – were offered for sales by a third party under the ‘Fulfilment by Amazon’ scheme. This means that the perfumes were sold by the third seller itself (a sale contract was concluded between the latter and the buyer) but stored, packed and dispatched by Amazon group companies, including Amazon FC Graben that operates a warehouse.

At Coty’s request, the third party vendor agreed to refrain from selling these litigious products and Amazon sent them to Coty while mentioning that some of them were sold by another seller. Coty requested information on that seller but Amazon was not able to provide Coty with such information. Coty then brought an action against Amazon in order to hear the latter be ordered to desist, in the course of trade, from stocking or dispatching ‘Davidoff Hot Water’ brand perfumes in Germany, if those goods were not put on the EU market with Coty’s consent.

In that framework the Bundesgerichtshof (Federal Court of Justice in Germany) referred the following question to the Court of Justice for a preliminary ruling: ‘Does a person who, on behalf of a third party, stores goods which infringe trade mark rights, without having knowledge of that infringement, stock those goods for the purpose of offering them or putting them on the market, if it is not that person himself but rather the third party alone which intends to offer the goods or put them on the market?’ In substance, the CJEU replied that such activity does not constitute a trademark infringement in the meaning of Article 9 of Regulation 2017/1001 (EUTMR), but it added some nuance.

Article 9 EUTMR provides several exclusive rights to the trademark holder including the right to prevent all third parties not having his consent from using in the course of trade any sign identical with, or similar to, its trade mark in relation to goods or services that are identical with, or similar to, those for which the trade mark is registered. Paragraph 3 of the provision specifies that the trademark holder may prohibit third parties from “offering the goods, putting them on the market, or stocking them for those purposes under the sign, or offering or supplying services thereunder”.

On the basis of its previous case law, the Court recalled that Article 9 EUTMR and the expression ‘using’ involve active behaviour and direct or indirect control of the act constituting the use (§37 of the decision). Furthermore, in order for the storage of goods bearing signs identical or similar to invoked trademarks to be classified as a ‘use’ of those signs, it is also necessary for the economic operator providing the storage to pursue itself the aim of offering the goods or putting them on the market (§45).

Taking into account the phrasing of the referral, the Court of Justice could have ended its decision at this stage. However the Court added first that “That conclusion is, however, without prejudice to the possibility of considering that those parties themselves [Amazon] use the sign in connection with bottles of perfume which they stock not on behalf of third-party sellers but on their own behalf or which, if they were unable to identify the third-party seller, would be offered or put on the market by those parties themselves” (§48). In the present case, Amazon was unable to provide Coty with information on the second third party seller of the litigious perfumes and could therefore be held liable of trademark infringement. The CJEU thus provides an important way out for trademark owners.

Second the Court stated that “it is apparent from settled case-law that, where an economic operator has enabled another operator to make use of the trade mark, its role must, as necessary, be examined from the point of view of rules of law other than (…) Article 9 of Regulation 2017/1001 (…), such as Article 14(1) of Directive 2000/31 or the first sentence of Article 11 of Directive 2004/48” (§49). According to Article 14 of the E-Commerce Directive, a hosting service provider can be held liable upon having actual knowledge of illegal activity/information if it does not act expeditiously to remove or to disable access to the latter. Besides, Article 11, first sentence of the IP Enforcement Directive provides that where a judicial decision is taken finding an IP infringement, the judicial authorities must be able to issue against the infringer an injunction aimed at prohibiting the continuation of the infringement.

§§ 48 and 49 of the judgement therefore leave open whether Amazon has to be held liable for trademark infringement in the case at hand. In that way the CJEU also broadens the scope of the referral phrased by the German Federal Court which narrowly describes the role of Amazon as solely storing goods for third party and assuming that Amazon had no knowledge of the illegality of the third seller’s activity.

However, the Court does not go as far as the Advocate General did in his opinion of November 28, 2019. Advocate General Campos Sanchez-Bordona indeed went a step further while considering that if all the services provided by Amazon group under the “Fullfilment by Amazon” scheme are taken into account, they should be considered as falling within the scope of application of Article 9(3)(b) EUTMR.

Under the “Fulfilment by Amazon” scheme, Amazon group undertakes a broad range of activities, including storing goods on behalf of sellers but also packing, preparation of the goods for delivery and their delivery, advertising and promotional activities, information to customers, and the refund of the price of faulty goods (Amazon also receives payment for the goods sold, which it then transfers to the seller’s bank account).

The Advocate General stated in §82 of his opinion that the fact that said companies are strongly involved in the commercialization of the products through this program implies that they may be required to exert a particular care (diligence) as regards the control of the lawfulness of the goods that they put in commerce. Indeed because they are aware that, without such control, they could easily serve as a means to sell “unlawful, counterfeit, pirated, or stolen goods, selling goods in an unlawful or unethical manner, violating the proprietary rights of third parties”, they cannot escape their own responsibility simply by passing it on the seller.

According to the Advocate General, such active role should be considered as directly infringing trademark rights and therefore the fact of not being aware of the IP infringement by the third party seller would not exonerate Amazon from its liability.

In the same vein, in the context of interim proceedings, the Brussels commercial court judged last summer that Amazon’s advertising and storing activities constitute direct use of the applicant’s trade marks (in that case, Christian Louboutin) and therefore held Amazon liable of trade mark infringement. Amazon’s shipping and dispatching activities were also covered by Louboutin’s claim but were excluded of the scope of the injunction due to lack of evidence. This Amazon/Louboutin case slightly differs from the present Amazon/Coty case as in the former case the storing activity which constitutes a trademark infringement according to the Belgian court was related to products stored and sold by Amazon. An appeal against the Brussels commercial court’s decision is pending. Meanwhile Louboutin has also launched a new action against Amazon before the Brussels commercial court for similar facts. The Belgian saga between Louboutin and Amazon is thus not yet closed.

Team

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