CJEU finds Amazon not liable for direct infringement by unwittingly stocking infringing goods being sold through its website

In a decision published today, the Court of Justice of the European Union has found that Amazon is not liable for unwittingly stocking trade mark infringing goods by third-party sellers (Coty v Amazon C-567/18). The decision means a rejection of the concept of extending liability of platforms, such as Amazon, for direct trade mark infringement through the stocking products for third parties. This was not regarded by the CJEU as use of a third party's trade mark. Providing logistical storage services on behalf of seller communities, where the individual sellers may be offering infringing or counterfeit products, does not extend responsibility for the nature of the products sold by an online platform, where it has no knowledge of any infringement.

However, as Joel Smith, Herbert Smith Freehills' Head of IP in London comments: "The more responsibility and control that platforms take for selling and offering to sell products or optimising the sales experience, the more likely they could be found liable for infringing a brand owner's trade mark or being liable as an accessory with the individual seller.  Most European courts are now also willing to grant broad injunctions to force platforms to take-down infringing items (and search their sites).  Powerful remedies still exist to tackle the sale of counterfeit, look-a-like and infringing products online across the major sales platforms, despite this decision."

The CJEU's decision clarifies that there will not normally be infringing use of a third party's trade mark by a contract manufacturer, where the manufacturer does not intend to commercialise directly and does not have the requisite active behaviour or control over selection and applying the trade mark to the goods.  "The contract manufacturer is closer to an intermediary, than an independent manufacturer or retailer", said Joel, commenting on the impact of this decision on other third parties.

Background

The reference originated in Germany where Coty had conducted a test purchase of some Davidoff Hot Water perfume being sold on Amazon-Marketplace which it alleged was a parallel import and thus the IP rights in which were not exhausted (Coty hold a licence for the EU trade mark DAVIDOFF).

Amazon Services Europe enables third-party sellers to place offers for sale in respect of their goods in the Amazon-Marketplace section of the website www.amazon.de. In the event of sale, contracts concerning those goods are concluded between the third-party sellers and the purchasers. Those third-party sellers may also avail themselves of the Fulfilment by Amazon scheme, under which goods are stored by Amazon group companies, including Amazon FC Graben, which operates a warehouse. The goods are dispatched by external service providers.

Following the test purchase, Coty sent a formal letter of notice to the seller on the ground that the rights conferred by the mark at issue were not exhausted in respect of the goods consigned by the seller to Amazon FC Graben under that scheme. The seller agreed to cease selling the perfume and Coty then requested that requested Amazon Services Europe to return all the Davidoff bottles of perfume stocked on behalf of the seller. Amazon Services Europe sent Coty a package containing 30 bottles of perfume, but another company belonging to the Amazon group informed Coty that 11 out of the 30 bottles sent originated from another seller’s stock. Coty therefore requested that Amazon Services Europe disclose the name and address of that other seller, but Amazon Services Europe replied that it was not in a position to accede to that request.

Coty took the view that Amazon Services Europe’s conduct, on the one hand, and that of Amazon FC Graben, on the other, infringed its rights in the DAVIDOFF mark, and requested, that those two companies be ordered, subject to penalties, to desist, in the course of trade, from stocking or dispatching ‘Davidoff Hot Water’ brand perfumes in Germany, or from causing them to be stocked or dispatched, if those goods were not put on the EU market with Coty’s consent.

The issue of Amazon's liability was referred by the Bundesgerichtshof (Federal Court of Justice, Germany) to the CJEU 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?’

The CJEU's decision

The CJEU concluded that the mere storage by Amazon, in the context of its online marketplace (Amazon-Marketplace - as described above) of goods which infringe trade mark rights does not constitute an infringement by Amazon of those trade mark rights. It found that, a company which, on behalf of a third-party seller, stores goods, without being aware that they infringe trade mark rights does not itself use that trade mark, so long as it does not pursue, like the seller, the aim of offering the goods for sale or putting them on the market.

The CJEU looked at the meaning of "using" a trade mark in the context of the exclusive right of a EU trade mark owner under Article 9 of Regulation 2017/1001 to prevent third parties from using the sign the course of trade.  It sets out a non-exhaustive list of the types of use which may be prohibited by the trade mark owner, including offering the goods, putting them on the market or stocking them for those purposes.  It reviewed its earlier decisions;

• The CJEU had concluded that the use referred to Article 9 "refers exclusively to active behaviour on the part of the third party" (see Daimler, C‑179/15 and Mitsubishi Shoji Kaisha and Mitsubishi Caterpillar Forklift Europe C‑129/17).
• "Only a third party who has direct or indirect control of the act constituting the use is effectively able to stop that use" and therefore comply with any prohibition that the trade mark owner asserts (Daimler),
• The CJEU had "also repeatedly held that the use, by a third party, of a sign identical or similar to the proprietor’s trade mark implies, at the very least, that that third party uses the sign in its own commercial communication. A person may thus allow its clients to use signs which are identical or similar to trade marks without itself using those signs" (Google France and Google, C‑236/08).
• As regards the operation of an e-commerce platform, the use of signs identical or similar to trade marks in offers for sale displayed in an online marketplace is made by the sellers who are customers of the operator of that marketplace and not by that operator itself (L’Oréal and Others, C‑324/09).
• Where the main activity was filling cans already bearing a brand/trade mark, executing a technical part of the production process, without having any interest in the external presentation of the product, is not using the signs on the product "but only creating the technical conditions necessary for the third party to use them" (Frisdranken Industrie Winters, C‑119/10).
• An economic operator who imports or sends to a warehouse-keeper, for the purposes of their being put on the market, goods bearing a trade mark of which it is not the proprietor's, may be regarded as ‘using’ a sign identical to that trade mark.  That is not necessarily true of the warehouse-keeper who provides simply a storage service in relation to goods bearing another person’s trade mark (TOP Logistics and Others, C‑379/14).
• The fact of creating the technical conditions necessary for the use of a sign and being paid for that service does not mean that the party offering the service itself uses the sign (Google France and Google, C‑236/08 to C‑238/08, and  Frisdranken Industrie Winters, C‑119/10).

It also concluded that the wording of Article 9 means that the provision relates "specifically to the offering of goods, their being put on the market, their being stocked ‘for those purposes’ or the supply of services under the sign concerned".

The CJEU said that it followed that in order for the storage of goods bearing signs identical, or similar to trade marks to be classified as ‘using’ those signs (and thus infringing), "it is also 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. 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 this case, the CJEU noted that the referring court had stated unequivocally that Amazon had not themselves offered the goods concerned for sale or put them on the market, and it was the third party alone who intended to offer the goods or put them on the market.  That allowed the CJEU to conclude that Amazon did not themselves use the sign in their own commercial communication, whilst acknowledging that it could still be possible for Amazon to be liable for trade mark infringement, if it took more active steps (depending on the finding of facts by a local court).

Coty also asked the CJEU to rule on whether the activity of the operator of an online marketplace in circumstances, such as those in the main proceedings falls within the scope of Article 14(1) the E-commerce Directive 2000/31 (hosting) and whether such an operator must be regarded as an ‘infringer’ (as referred to in the first sentence of Article 11 of the Enforcement Directive 2004/48) (injunctions).  However the CJEU declined to do so.

Thus the CJEU felt only able to conclude that the answer is that a person who, on behalf of a third party, stores goods which infringe trade mark rights, without being aware of that infringement or intending to commercialise the products themselves, must not be regarded as stocking those goods in order to offer them or put them on the market on behalf of a third party.

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