Marketplaces may have cards marked
Blake Robinson believes Amazon may not escape future scrutiny. C-567/18, Coty Germany GmbH v Amazon Services Europe SARL, Amazon Europe Core SARL, Amazon FC Graben GmbH & Amazon EU SARL, CJEU, 2nd April 2020
This article explores the implications of the CJEU’s recent judgment in response to the preliminary reference request of the Bundesgerichtshof (Germany’s Federal Court of Justice).
When looking into the liability ramifications of the storage of infringing products by Amazon, the following question was referred to the CJEU, regarding the interpretation of Article 9(2)(b) of Regulation 207/2009 and Article 9(3)(b) of Regulation 2017/1001:
“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?”
The CJEU’s response to this question had the potential for severe ramifications for marketplaces such as Amazon. In the end, what we have now received from the CJEU is the result of a narrowly framed question, but may be a sign of future developments.
The background to this case will be familiar to many brand owners. Coty Germany GmbH, as the licensee of the DAVIDOFF brand, became aware of infringing “Davidoff Hot Water Eau de Toilette 60ml” perfumes for sale on Amazon and sent a letter to the third-party seller requesting cessation of the sale of the goods. The goods, which were stored in the Amazon FC Graben warehouse as part of the Fulfilment by Amazon (FBA) scheme, were subsequently sent to Coty by Amazon. Some of the stock sent to Coty belonged to a different seller, and Coty requested disclosure of the name and address of this seller, which Amazon refused.
The FBA scheme allows members to store their wares at an Amazon warehouse. However, in the words of Amazon: “FBA helps your business grow while doing the heavy lifting for you”. Amazon can provide support in relation to storage, delivery, customer service, returns, pricing optimisation, business analytics and business recommendations, as well as boosting the visibility of products.
Coty argued that the FBA scheme in itself amounted to infringing use of a trade mark. However, Coty’s hurdle was showing use in relation to Amazon’s own commercial communication. The referring court accepted that the argument turned on whether a person who stores goods that infringe trade mark rights stocks those goods in order to offer them for sale, even if it is only a third party who intends to sell those goods.
The CJEU’s judgment offered a clear and unsurprising response to the question asked. The Court felt – in short – that what Amazon did, based on the question asked, was not use for the purposes of infringement. This is an issue that has been explored many times before, but in the end boils down to the fact that any infringing activity must be carried out in relation to one’s own commercial communications, not the creation of “technical conditions” necessary for a third party to use.
This decision is not necessarily a defeat for brand owners. The question referred by the German court was narrow, and significant aspects of Amazon’s fulfilment service were not scrutinised as a result.
Looking at the opinion of the Advocate General (AG), who explored the issue in a wider context, the potential implications are clear. If the additional elements of the FBA scheme were scrutinised, it is likely that the issue of control and commercial communication would have been less problematic.
In fact, the answer to the question provided by the AG, in the context of the whole Amazon offering, is more favourable for brand owners. The AG felt that the Articles should be interpreted as follows:
- A person does not store for a third-party seller products infringing the rights of a brand for the purpose of their offer or their placing on the market when it is not aware of this infringement and when it is not itself but the third party which intends to offer the products or put them on the market.
- However, it is possible to consider that this person stores these products for the purposes of the third party’s offer or placing on the market if it is actively involved in their distribution, within the framework of a programme with the characteristics of the programme called Fulfilment by Amazon, to which the seller subscribes.
- The fact that this person is unaware that, under such a programme, the third party offers or sells the products that contravene the rights of the trade mark owner does not exempt him from his responsibility, when it can reasonably be expected for him to use the means at his disposal to detect this violation.
The AG also looked at the Directive on Electronic Commerce. He confirmed that under this directive, it is still the case that once the marketplace becomes aware of the infringement, it must act or face secondary liability. This is a confirmation that there are still clear steps to take regarding infringing content on marketplaces.
So, while this judgment may seem like a victory for Amazon, brand owners should not see this as a loss. It seems that there are still areas of the FBA scheme to be scrutinised, and if this is done, it is possible that a new route to enforcement on marketplaces could be established, if active involvement can be shown.
- This case does not end the possibility to bring Amazon into infringement actions in relation to products sold under its Fulfilment by Amazon scheme
- If you can find evidence of a marketplace’s active involvement in the sale of infringing products, it is possible that said marketplace could also be liable for infringement
- Under the Directive on Electronic Commerce, marketplaces are obligated to remove infringing content once they have been notified of it
Trainee Trade Mark Attorney, Stobbs IP Limited