Coty v Amazon: CJEU confirms Amazon is not liable for trade mark infringement by merely storing a third party seller’s infringing goods

Europe

On 2 April 2020, the CJEU handed down its judgment in the Coty v Amazon[1] case, which relates to a referral from the Bundesgerichtshof, Germany’s Federal Court of Justice. The CJEU ruled in favour of Amazon holding that the mere storage by Amazon, in the context of its online marketplace, of goods which infringe trade mark rights does not constitute an infringement. The judgment is unsurprising; it follows the previous line of authorities on the liability of marketplaces for trade mark infringement (or rather the lack thereof). Although the case gives some clarity on the position of marketplace operators when it comes to storing goods, the most interesting aspect of this case is the issues in respect of which the CJEU declined to comment. In particular, the CJEU did not address whether a marketplace operator is liable for trade mark infringement where they are performing more than a simple storage function for their customers, for example, advertising customers’ goods and managing the sales process. The Advocate General opined on these issues, but the Court did not. This is interesting as the Court’s silence on this issue could be interpreted as a tacit rejection of the Advocate General’s views. That said, without a clear view from the Court on the issue, there remains uncertainty as to 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. We may well see a future referral to the Court requesting clarification on this topic.

Background

The claimant, Coty Germany GmbH (‘Coty’), is a perfume distributor and licensee of the EU trade mark DAVIDOFF. Amazon is the well-known marketplace, offering third party sellers the ability to place offers for sale in respect of their goods on Amazon’s online marketplace, in this case on the German site www.amazon.de. Where a product is sold, the contract to purchase the item is concluded between the third party seller and the purchaser, not Amazon. However, Amazon does offer a scheme whereby they will store third party goods in their warehouse and arrange for them to be dispatched upon sale. Coty alleged that Amazon had infringed its rights in the DAVIDOFF trade mark by storing and despatching infringing goods, namely bottles of “Davidoff Hot Water” perfume, on behalf of a third party seller on the Amazon Marketplace.

Coty sued for trade mark infringement before the German courts. The action was dismissed at first instance and on appeal, but Coty appealed further on a point of law to the Federal Court. The Federal Court made quite clear that it considered Amazon was not liable for infringement, but that the outcome of the appeal was dependent on the proper interpretation of Article 9 of the EU Trade Mark Regulation[2], a point on which it sought the CJEU’s input.

Referral

The referring Court sought clarification from the CJEU in relation to Article 9 of the EU Trade Mark Regulation (‘EUTMR’), which sets out the rights conferred on trade mark proprietors. Article 9(3) sets out the acts that a trade mark owner can prohibit. These include “offering the goods, putting them on the market, or stocking them for those purposes under the sign, or offering or supplying services thereunder”. The issue in Coty is whether Amazon’s warehousing of goods on behalf of others constitutes ‘stocking’ for the purposes of Article 9(3).

The German Federal Court referred the following question:

‘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?’

CJEU decision

For a finding of infringement, there must be use of a mark in the course of trade (Article 9(1) EUTMR). Article 9(3) EUTMR sets outs examples of infringing ‘uses’, which include offering the goods, putting them on the market or stocking them for these purposes. In this case, the CJEU considered whether Amazon’s mere storage, without offering or intending to offer the goods for sale, or putting them on the market, would constitute ‘use’ and therefore infringement of Coty’s DAVIDOFF trade mark.

The concept of ‘use’ is not defined in the legislation, but the Court interpreted its ordinary meaning as involving active behaviour and direct or indirect control of the act constituting use. The Court pointed out that only a third party that actually has control over an act of use can stop it and thus comply with the prohibition of infringement.

The Court referred back to its decisions in Google France[3] and L’Oréal[4] in which the Court held that Google and eBay were not liable for their customers’ use of infringing trade marks. A party may make it possible for others to infringe by creating the technical conditions necessary for the use of the infringing sign, and be paid for that service, without themselves being liable for the infringement.

The Court held that in order for Amazon’s storage of the infringing Davidoff perfume bottles to be classified as "use" of Coty’s trade mark, it was also necessary for Amazon itself to be offering the goods for sale or putting them on the market. Failing that, there would be no infringing use by Amazon.

The German Federal Court had made it clear in its question to the CJEU that Amazon did not sell, intend to sell, or put the infringing goods on the market, so the CJEU held there was no use by Amazon of the infringing mark.

What about use beyond the mere stocking of goods?

In the course of the proceedings before the CJEU, Coty argued that the German Court had mischaracterised Amazon in its referral. In Coty’s view, Amazon was portrayed by the referring court as a warehouse-keeper who did not provide any assistance in the sales process. Coty submitted that Amazon’s role in the sales process actually went much further than simply warehousing goods, claiming that Amazon entirely replaced the third party seller in certain aspects of the sales process, and promoted the goods in its own name. In Coty’s view, Amazon’s role went far beyond that of eBay in the L’Oréal case. Coty asked the CJEU to consider whether either the E-commerce Directive[5] or the Enforcement Directive[6] might apply in the current circumstances.

The CJEU chose not to answer Coty’s questions or address the possibility that Amazon’s services may well go beyond that or mere warehousing goods. These questions were not asked by the referring court, so the CJEU held there was no need to answer them.

Interestingly, Advocate General Campos, in his Opinion published in November 2019[7], had chosen to address these additional issues. The Advocate General (‘AG’) opined on the position in terms of infringement of the ‘Fulfilled by Amazon’ offering, in which Amazon plays a more involved role than simply stocking third party goods. The AG’s view was that Amazon does the ‘heavy lifting’ in the sales process in this type of scenario and, as such, plays an active role. The AG concluded that it might be possible for an operator to stock products with the intention of offering them or putting them on the market if that operator is actively involved in their distribution within the framework of a programme like the ‘Fulfilled by Amazon’ service. The AG went on to state that the fact an operator was unaware that its third party customers were selling infringing products would not exonerate that operator from liability when they could be reasonably expected to detect the infringement.

The Court has not followed the Advocate General’s opinion on this issue and, instead, chose not to make any comment on liability in this scenario. This was justified by the Court on the basis that it was not part of the question asked by the referring court. However, the fact that the Court stuck rigidly to answering the question asked by the German Court, when it could have given guidance on this additional issue too, may be interpreted as a tacit rejection of the Advocate General’s view.

There will undoubtedly be a need to provide a clear answer to these questions in the future as it is evident that the lines between storage of goods and assistance in the actual selling process are, in practice, blurred. Whilst a helpful confirmation on the position in terms of stocking goods, the CJEU’s decision in this case is unlikely to be the end of the story.

Key Messages

The decision is a positive outcome for e-commerce marketplaces – mere storage of infringing goods is not infringement. It should, however, be approached with caution. As soon as a marketplace operator crosses the line from merely storing its customers’ goods, and moves into assisting customers in the sales process, with advertising or even driving that sales process, the position in terms of liability for trade mark infringement may differ. The Advocate General thought that a more active role in the sales process in practice may be classified as ‘use’, and therefore infringement, of a trade mark. Although not expressly stating as such, arguably the CJEU rejected the statements of the Advocate General on this point by declining to comment. In any event, it is not clear how active a role a marketplace operator would have to take in order to become liable for infringement themselves, or indeed whether liability would kick in at any point. The Court has left the door open to further discussion, cases and referrals on this particular issue.

Article co-authored by Fareed Anees.



[1] Case C‑567/18 Coty Germany GmbH v Amazon Services Europe Sàrl, Amazon Europe Core Sàrl, Amazon FC Graben GmbH and Amazon EU Sàrl, EU:C:2020:267

[2] Article 9 of Council Regulation (EC) No 207/2009 of 26 February 2009 on the [European Union] trade mark which was repealed and replaced, with effect from 1 October 2017, by Regulation 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark

[3]CJEU judgment of 23 March 2010, Google France and Google, C‑236/08 to C‑238/08, EU:C:2010:159

[4] CJEU judgment of 12 July 2011, L’Oréal and Others, C‑324/09, EU:C:2011:474

[5] Directive 2000/31/EC of the European Parliament and of the Council of 8 June 2000 on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market 

[6]Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights

[7] Opinion of Advocate General Campos Sánchez-Bordona dated 28 November 2019 in case C-567/18, EU:C:2019:1031