The Court of Justice of the European Union (CJEU) has made an important ruling for brand owners, online marketplaces and retailers alike, in finding that Amazon is not liable for unwittingly stocking trade mark infringing goods on behalf of third party sellers.
The original case before the German courts concerned a claim for trade mark infringement brought by Coty Germany GmbH (Coty), a perfume distributor and licensee of the EU trade mark DAVIDOFF, against Amazon. Amazon is not part of the contractual relationship when a product is sold on its marketplace; the relationship is between the third party seller using the marketplace and the purchaser. Amazon does, however, offer a scheme whereby it stores third party goods in its warehouse and arranges for them to be dispatched upon sale.
Coty claimed that two Amazon Group companies had infringed its rights in the DAVIDOFF trade mark by storing ‘Davidoff Hot Water’ perfumes and by handing them to delivery companies, on behalf of third party sellers using the marketplace.
Coty initially sent a formal letter of notice to the third party seller regarding its rights in the DAVIDOFF trade mark, which led to the seller agreeing to cease selling the perfume. Coty then requested that Amazon return all the bottles of perfume stocked on behalf of the seller, and Amazon sent Coty a package containing 30 bottles of perfume. However, Amazon also informed Coty that 11 of those 30 bottles had originated from a different seller’s stock. Coty subsequently requested that Amazon disclose the name and address of that seller, but Amazon refused.
Coty then issued proceedings in Germany against Amazon for trade mark infringement. The action was dismissed at first instance and on appeal, but Coty appealed again to the German Federal Court of Justice (the Federal Court). The Federal Court was of the view that Amazon was not liable for infringement, but before it gave its ruling, it wanted the CJEU to rule on the interpretation of Article 9 of the EU Trade Mark Regulation (which sets out the rights conferred on trade mark owners), and in particular what constitutes ‘stocking’ for the purposes of Article 9(3). It referred the following question to the CJEU:
“Does a person who, on behalf of a third party, stores goods which infringe trademark 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?”
The CJEU’s Decision
The CJEU considered whether Amazon’s mere storage, without offering or intending to offer the goods for sale, or putting them on the market, constitutes ‘use’ and subsequently infringement of the DAVIDOFF trade mark. While the concept of ‘use’ is not defined in the legislation, the Court gave the concept its ordinary meaning, as involving active behaviour and direct or indirect control of the act constituting use.
The CJEU held that the mere storage of infringing goods by Amazon on its marketplace platform does not constitute an infringement by Amazon of the trade marks in question. In order for the mere storage of goods bearing infringing trade marks to be classified as ‘use’ of those trade marks, and therefore infringement of them, it is necessary “for the economic operator providing the storage itself to pursue the aim referred to by those provisions, which is offering the goods or putting them on the market.”
The CJEU went on to confirm that, failing that, “it cannot be concluded that the act constituting the use of the trade mark is carried out by that person, or that the sign is used in that person’s own commercial communication“. In other words, a company, such as an online marketplace operator, which merely stores goods on behalf of third party sellers without itself being aware that those goods infringe another person’s trade marks, does not itself infringe those trade marks, provided it does not pursue the aim of offering the goods for sale itself.
During the course of its judgment, the CJEU also referred back to some of its previous decisions, including the case of L’Oréal, where it held that marketplace operators are not liable for their customers’ trade mark infringement, reminding us that this is not the first time these issues have been considered by the CJEU.
The CJEU also noted that the Federal Court had stated unequivocally that Amazon had not itself offered the goods concerned for sale or put them on the market; it was the third party alone who intended to offer the goods or put them on the market. Interestingly, that allowed the CJEU to conclude that, while on the facts of this case Amazon did not itself use the sign in its own commercial communication, subject to a finding of fact by a local court, Amazon could still be liable for trade mark infringement if it took more active steps in the sale of those infringing goods.
Implications of the CJEU’s decision
The liability of online marketplace providers is an increasingly important and complex issue, as we continue to rely more and more heavily on digital technology and online marketplace platforms in our everyday lives. This results in an increase in the risk of unwittingly becoming part of the unlawful activity of another person.
Brand owners have been trying to stem the existence of counterfeit goods for years, and have long been looking at the role played by online marketplaces as a result. While, as this case confirms, an online marketplace operator cannot be liable for another person’s trade mark infringement where they merely store the goods, unaware that they are infringing goods, they must ensure they are not taking any actions that might constitute active ‘use’ of those goods and trade marks. Additionally, once the online marketplace operator is made aware of the infringing activities of a third party seller on its platform, it will be legally obliged to take quick and effective action to stop the infringing activity, such as removing those products or the seller from the marketplace.
Clearly the more responsibility and control a marketplace operator has and the more active its role in selling infringing goods on behalf of third party sellers, the higher its risk of being found liable for trade mark infringement. However, without the CJEU’s clear view on this, the position with regards to just how far a marketplace operator would have to go to be classified as being actively involved in the selling process and thus liable for infringement is still unclear. This will undoubtedly need to addressed and clarified in the future, as it is clear that the lines between mere storage of goods and the assistance in the actual selling process are, in practice, not clear cut.
The good news for brand owners is that, despite this decision, there are still powerful remedies available to tackle the sale of infringing, counterfeit and look-a-like products online across the major sales platforms. Most European courts are also now willing to grant broad injunctions to force platforms to take down infringing goods and so even if a brand owner is unable to prove that an online marketplace operator is itself guilty of trade mark infringement, there are other avenues available to enable it to protect its brands.