Summary of decision
In Coty v Amazon, the European Court of Justice (CJEU) found that Amazon does not ‘use’ and therefore does not infringe third-party EU trade mark rights when merely storing goods on behalf of third parties, without knowledge of the infringement.
Key facts
- Coty (a distributor of perfumes) holds a licence for the EU trade mark DAVIDOFF.
- Amazon Services Europe allows third-party sellers to sell goods in the ‘Amazon Marketplace’. Sellers may participate in the ‘Fulfilment by Amazon’ scheme whereby their goods are stored in a warehouse operated by Amazon FC Graben, one of Amazon’s group companies. These goods are then distributed by an external provider.
Background
In May 2014, Coty made a test purchase of a bottle of “Davidoff Hot Water EdT 60ml” perfume from www.amazon.de, sold by an unlicensed third-party and dispatched under the ‘Fulfilment by Amazon’ scheme. The bottle was not sold by Amazon and at the time Amazon was not aware that the product was infringing Coty’s trade mark rights.
After Amazon rejected Coty’s request to disclose the seller’s details. Coty sued Amazon in Germany for trade mark infringement on the basis that it was stocking and distributing DAVIDOFF-branded goods without Coty’s consent.
Dispute
The German Federal Court found that Amazon did not infringe Coty’s rights by stocking and dispatching the goods, without playing an active role in their advertisement or sale. Coty subsequently appealed this decision. As case law related to mere advertisement of infringing products by intermediaries (like Amazon) is well-established in the EU, the key question considered by the CJEU was:
“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 the on the market, if it is not the person himself but rather the third party alone which intends to offer the goods or put them on the market?”
Essentially, by merely stocking infringing goods in its warehouse through the fulfilment scheme, does Amazon therefore also infringe third-party EU trade mark rights?
Relevant Law
Article 9(1) of the Regulation no 207/2009, reproduced in Article 9(1) and (2) Regulation 2017/1001 (the “Regulations”) states that an EU trade mark confers on the proprietor the exclusive right to prevent all third parties from using, in the course of trade, any sign which is identical or similar to a mark that could cause confusion with the owner’s mark.
‘Use’ includes offering the goods, putting them on the market or stocking them for those purposes (Article 9(2)(b) Regulation No 207/2009, reproduced in Article 9(3)(b) Regulation 2017/1001).
Judgment
Following its own case law, the CJEU reaffirmed that the ordinary meaning of the term ‘use’ (which is not defined in EU legislation) must involve “active behaviour and direct or indirect control of the act constituting use”. In the context of an e-commerce platform, it is the the seller of an item for sale who uses the trade mark and not the operator of the marketplace i.e. Amazon. The Court reiterated the long-established position in Google France (Cases C‑236/08 to C‑238/08) that an online platform that simply creates the technical conditions necessary for use of a sign, and receives remuneration for this service, does not itself ‘use’ the sign.
The CJEU applied similar reasoning to the storing and dispatching of goods by an intermediary, concluding that a person (i.e. Amazon), who on behalf of a third-party (i.e. the seller), stores goods that infringe trade mark rights without being aware of the infringement, must not be regarded as stocking the goods to offer or put them on the market, if they do not pursue those aims.
In summary, provided that Amazon was not aware of the infringing activity, merely storing goods does not infringe third-party trade mark rights in the EU under Article 9 of the Regulation.
Practical implications
Whilst the CJEU decision provides some clarity regarding the mere stocking of goods, it does not fully address the liability of online providers, like Amazon. To most people, Amazon is more than merely a stockist of goods: it plays an active role in the creation of advertisements by suggesting suitable terms as well as also stocking, dispatching, marketing and selling those goods. The judgment does not provide any guidance as to what brand owners really want to know which is when Amazon will be liable and the level of activity or knowledge which is required to establish infringement.
This latter point is particularly relevant as it relates to Article 14(1)(b) Directive 2000/31, which states that information service providers (Amazon) will not be liable unless “upon obtaining such knowledge or awareness, acts expeditiously to remove or disable access to the information”. Indeed, if Amazon had been found liable as a primary infringer, it is highly likely that it would not have benefited from the Article 14 safe-harbour defence, potentially opening the floodgates for future claims.
The decision also leaves many other questions unanswered. For example, what, if any, liability arises from Amazon’s ‘empty shelf’ practices, whereby goods which are sold-out are marked as out-of-stock, directing its consumers (actively) to third-party alternatives?
As technology and Amazon’s own selling practices evolve, rights holders face a constant challenge in policing their rights via the global platform. Some solace may come in the form of the recent EU copyright directive, which places an obligation on some intermediaries to actively monitor infringing copyright material uploaded by their users. Naturally, however, this will not be as effective in combating infringing physical goods.
Nevertheless, as Amazon continues to play a more active role in the sale of third-party goods, like the recent Copyright Directive, we may see a continued increase in claims and potential change in future regulation. We may also see greater responsibility placed on online platforms, like Amazon, to take a more active role in policing infringing goods.
