The mere storage by Amazon of infringing goods for third-party sellers does not constitute a direct trademark infringement

This is not the first time that a dispute between luxury brands such as Coty and a platform such as Amazon has led to questions to the CJEU for a preliminary ruling. For years there has been an ongoing battle between brand owners who want to protect their exclusivity and trademarks and online platforms that try to escape any form of direct and indirect liability. In 2017 the CJEU had to decide whether the prohibition imposed by Coty on online platform sales within a selective distribution system for luxury goods was permitted under competition law. This time the question was whether online platforms could be directly liable for a trademark infringement without actually having knowledge of that infringement.

Background

Coty, a luxury cosmetic company, is the exclusive licensee for the European Union trademark DAVIDOFF. The online platform Amazon offers sellers the opportunity to sell their products through the Amazon website. Sellers can participate in the programme Amazon Logistics. This programme provides ancillary services including the storing of the sellers’ products in the logistics centres of the Amazon companies and shipment to the consumers.

In 2014 a test purchase of a Davidoff Hot Water perfume was conducted on behalf of Coty from a seller who had joined the Amazon programme. The trademark rights in relation to this perfume had apparently not been exhausted, which led to a trademark infringement. Subsequently Coty requested Amazon to provide all perfumes stocked on behalf of the seller in the logistics centres. Amazon delivered thirty perfumes to Coty, eleven of which came from another seller’s stock. After finding out that in relation to twenty nine of these thirty perfumes the trademark rights had not been exhausted, Coty requested the name and address of the second seller. After it became clear that Amazon was not able to confirm the identity of the second seller, Coty brought proceedings against Amazon. Coty was of the opinion that Amazon infringed directly upon the trademark DAVIDOFF.

Coty was unsuccessful both at first instance and on appeal. In both instances the German courts found that Amazon had not directly used the trademark or stocked the perfumes to sell them themselves. After all, Amazon just stored the perfumes on behalf of third-party sellers and was not aware of the trademark infringement. On appeal to the highest German court, the Bundesgerichtshof, the following question concerning the application of Articles 9(2)(b) and 9(3)(b) EU Trade Mark Regulation 2017 arose which was referred to the CJEU:   

“Does a person who, on behalf of a third party, stores goods which infringe trademark 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?”

Advocate General Campos Sánchez-Bordona (“AG”) considered that persons, who have no knowledge of the infringing character of the goods they stock, cannot be held directly liable for the storage of such goods for third-party sellers. However, if that person is actively involved in the distribution of those goods, such as through a program as Amazon Logistics, then he is deemed to stock the goods with the purpose of offering them or putting them on the market. In this sense, it does not matter whether that person possesses awareness or knowledge of the infringing character of the goods, insofar as he can reasonably be expected to take the necessary measures to detect the infringement. In other words, according to the AG a platform like Amazon cannot escape its liability simply by stating that it had no knowledge of the infringement. Platforms involved in the commercialization of the goods are required to act with the greatest possible care. The AG therefore advised the CJEU to rule that a platform such as Amazon can directly infringe upon the trademark rights and must be held liable for the infringement.

Judgment

Although the CJEU usually follows the opinions of the AG, the CJEU chose not to do so in this case. The CJEU considers that, in order for there to be a trademark infringement by the party providing the storage, that party must pursue, like the seller, the aim of offering the goods for sale or putting them on the market. Given that Amazon did not itself offered the goods for sale or put them on the market and that the third-party seller alone pursued that aim, Amazon did it not itself use the trademark DAVIDOFF. Therefore, Amazon did not directly infringe upon the trademark.

The CJEU recalls in its judgment that other provisions of EU law allow legal proceedings to be brought against an online platform for indirect infringement. This includes Article 14 of the e-Commerce Directive on the basis of which an online platform can be held indirectly liable for trademark infringement, unless the platform can invoke the safe harbour exception.

Consequence

It becomes clear that the CJEU is of the opinion that direct trademark infringement by platforms such as Amazon is a bridge too far in this matter. Platforms do no directly infringe upon trademark rights by storing the infringing products insofar as they have no knowledge of the trademark infringement. The CJEU does not follow the reasoning from the AG that, given the special role of online platforms, it can at least be expected that they take reasonable measures to prevent a possible trademark infringement.

This battle between Coty and Amazon has been won by Amazon, but the war between brand owners and online platforms has yet to be decided.