Coty Germany GmbH v Amazon Services Europe Sàrl
On 2 April 2020, the European Court of Justice handed down its decision (Coty Germany GmbH v Amazon (C-567/18)) that Amazon would not be liable for infringing Coty Germany’s intellectual property rights where it had stored goods for a third party through its ‘Fulfilment by Amazon’ scheme.
Coty, a distributor of perfumes which holds a licence for the EU trade mark DAVIDOFF (the “Trade Mark”), issued proceedings in the German courts on the basis that Amazon had infringed its trade mark rights. This was based on the argument that, since Amazon had allowed third party sellers to place offers for sale in respect of goods which had not been put on the market in the European Union under the Trade Mark by Coty, or with its consent, Amazon had itself infringed Coty’s intellectual property rights.
Amazon enables a number of ways in which products can be sold on its website. Items are sold by Amazon itself, they are sold directly to consumers by third parties or they are sold by a service known as “Fulfilled by Amazon”. Fulfilled by Amazon allows sellers to warehouse their goods at an Amazon fulfilment centre and when goods are sold it is Amazon who packages the goods and sends them to the customer. Not only does Amazon store the goods but it also provides customer service and deals with returns. It was the Fulfilled by Amazon service which was the focus of the complaint by Coty. It is a pay-per-use service, so Amazon earns income from running this service (from fees for storage and delivery).
At first instance and upon appeal in Germany, Coty’s action was dismissed. Coty subsequently appealed again to the Federal Court of Justice in Germany who referred the following question to the Court of Justice:
‘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?’
In response to this, the European Court of Justice noted that Amazon had merely stored the goods concerned and had not itself offered the goods for sale or put them on the market. The Court of Justice went on to consider whether this storage operation could be considered as ‘using’ the Trade Mark for the purpose, noting that, in order for this to be the case, the use must be in Amazon’s own ‘commercial communication’. It held that this was not the case for Amazon.
The Court of Justice concluded that ‘a person who, on behalf of a third party, stores goods which infringe trade mark rights, without being aware of that infringement, must be regarded as not stocking those goods in order to offer them or put them on the market for the purposes of those provisions, if that person does not itself pursue those aims’.
Coty Germany GmbH v Amazon Services Europe Sàrl is an important decision which clarifies the law concerning trade mark infringement and passing off in particular in cases involving online marketplaces such as Amazon and eBay where they are storing the products of and fulfilling the orders for third party sellers dealing in infringing goods without their knowledge.
Andrew Stone, Senior Associate of Clarke Willmott LLP, notes “This case clarifies the law on trade mark infringement and passing off throughout the EEA where products which are stored and delivered by a third party but where that third party is not actually selling the items in question and does not know whether they infringe a brand owner’s intellectual property rights or not is not liable for any infringing acts that take place. Online marketplaces such as Amazon will be pleased that the law on this area has been clarified. For brand owners it provides certainty that they need to target the actual sellers of the products. The judgment specifically deals with cases where there is a lack of knowledge of the provenance of the goods, so it may need to be clarified in future whether this position changes where a marketplace is placed on notice of the fact that sellers are selling infringing goods via such a fulfilment agreement. In those circumstances they may become liable should action not be taken (after they have been informed of the infringing acts) to prevent such sales by that seller in the future. It will be interesting to see what develops should marketplaces fail to take action against such sellers and brand owners bring claims against them for this failure.”