"Does a person who stores infringing goods for a third party, without having knowledge of the infringing nature of said goods, stock these goods for the purpose of offering them or putting them on the market, when only the third party has the intention to offer the goods or to put them on the market?"
That was the question asked of the Court of Justice of the European Union (CJEU) by the German Federal Court of Justice (GFCJ). The referral related to the case of Coty v Amazon, and concerned the "Fulfilment by Amazon" service (where Amazon store, pick, pack and ship goods to customers on behalf of third party sellers) and third party sales of the DAVIDOFF HOT WATER perfume, for which global beauty company Coty are the exclusive German distributor.
The CJEU recently handed down their decision, and whilst this one saw a victory for Amazon, there are signs that this will not be the last we hear on the subject. Marketplace sellers should be conscious of a potential sea change soon.
We previously wrote about this case referral to the CJEU around a year and a half ago – see here for all the background. In a nutshell, the case arose after Coty, conducting a mystery shopper purchase, discovered bottles of the DAVIDOFF HOT WATER perfume being sold on Amazon Marketplace without their consent and infringing their rights. The perfume was being sold by a third party via the "Fulfilment by Amazon" service, where Amazon undertakes the burdensome task of stocking and shipping the goods for a third party seller.
Coty decided to take action, and ultimately brought a claim against Amazon, alleging that the "Fulfilment by Amazon" service breached Article 9(2)(b) of the Community Trade Mark Regulation / Article 9(3)(b) of the European Union Trade Mark Regulation – the right of a trade mark owner to prevent third parties from "offering (infringing) goods, putting them on the market, or stocking them for those purposes under the (infringing) sign".
Amazon denied liability, stating that they simply handled the goods on behalf of the third party, and were not aware that these were infringing (as it had not received a takedown notice from Coty). The German courts found for Amazon, but requested some guidance from the CJEU, and referred the question noted above.
Decision from the CJEU
In a decision handed down at the start of April, the CJEU didn't beat around the bush and answered the referred question with a rather emphatic "no" – a party who stores infringing goods for a third party, without having knowledge of the infringing nature of said goods, does not stock these for the purpose of offering them or putting them on the market, when only the third party has the intention to offer the goods or to put them on the market. As a result, the activities of Amazon under the "Fulfilment by Amazon" service did not amount to trade mark infringement.
There were two key elements to the decision – the first focussing on whether Amazon were actually "using" the DAVIDOFF HOT WATER mark by storing the perfume bottles, and the second on whether they were pursuing the aims of the relevant provisions – i.e. stocking the goods with the purpose of offering or putting them on the market. In relation to the first element, the CJEU referred to some earlier case law, at one point using the comparison of a service provider who merely fills cans with drinks under the order of a another party, with the cans already bearing a similar trade mark – they are essentially "a technical part of the production process without having any interest in the external presentation of those concerns and in particular the signs thereon". As such, they ultimately decided that Amazon were not "using" the DAVIDOFF HOT WATER mark, noting that this requires some "active behaviour or direct or indirect control of the act constituting use" – this was not the case here, where Amazon were acting on behalf of and under the direction of the third party seller. In terms of the second element, the CJEU already had the answer – the GFCJ finishing their question with "when only the third party has the intention to offer the goods or to put them on the market".
Interestingly, Coty asked a question of the CJEU themselves, asking that they consider potential liability under alternative regulations as a backup to the actual question asked by the GFCJ. However, the CJEU gave short shrift to this, noting that as the GFCJ did not ask that question, there was no need for them to consider or answer it.
The result here is perhaps unsurprising given the closed nature of the question asked of the CJEU, and they opted to stick determinedly within the confines of this. However, there was scope for some more guidance here – especially considering Advocate General Campos Sánchez-Bordona's opinion on the case, which he gave late last year. Whilst he agreed that the answer to the question asked was a "no", he went beyond this and suggested that where a service provider is actively involved in the distribution of goods, they could be liable for trade mark infringement. This is regardless of whether they are aware that the goods are infringing – indeed, given the nature of the role they play, they cannot simply turn a blind eye. In coming to this conclusion, the Advocate General instead focussed heavily on the practical operation of the "Fulfilment by Amazon" service, and the very active role Amazon plays with goods sold in this way.
The opinion of the Advocate General does therefore suggest that, with the right questions, we may well see some different answers on the liability of marketplace sellers. In the meantime, rights holders should continue to adopt a diligent approach to monitoring for infringements and taking appropriate enforcement action with respect to unauthorised goods they find listed on marketplaces, including filing takedown notices.
If you would like advice relating to any of the issues raised in the above article, or have any other trade mark queries, please get in touch with our Brand Protection Team
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.