Another victory for Amazon. The well-known online marketplace is not only one of the big winners of the COVID-19 pandemic with consumers massively shifting to online shopping, but it was also exempted from liability for trademark infringement in case of mere storage of infringing goods in a recent judgment of the Court of Justice of the European Union (“CJEU”). In the Coty v Amazon decision (Case C-567/18) issued on April 2, 2020, the CJEU sided with Amazon and clarified that the mere storage of third party seller’s infringing goods – without being aware of such infringement - does not constitute trademark infringement.
The saga goes back to 2014, with Coty, the exclusive distributor of DAVIDOFF HOT WATER perfume in Germany, conducting a test purchase of perfume flasks on www.amazon.de. These “DAVIDOFF HOT WATER” perfume flasks were being sold by a third party using Amazon’s ‘Fulfillment by Amazon’ service, which allows sellers to send their products to Amazon, who will then store, pick, pack and ship them to customers. It turned out that the perfume bottles at issue had been put on the EU market without Coty’s consent (i.e. parallel imports) and therefore infringed the DAVIDOFF trademark.
Subsequently, Coty initiated court proceedings against Amazon before the German Courts. It argued that, by storing and shipping the parallel imports on behalf of the third party seller, Amazon had infringed Article 9(2)(b) of the Community Trade Mark Regulation (207/2009) / Article 9(3)(b) of the European Union Trade Mark Regulation (2017/1001). This article sets out the acts which can be prohibited by a trademark owner, including “offering (infringing) goods, putting them on the market, or stocking them for those purposes under the (infringing) sign”. The issue in this case is whether Amazon’s storage of goods on behalf of third party sellers constitutes ‘stocking’ for the purposes of offering or putting them on the market.
Both the first instance and the appeal court ruled in Amazon’s favour, stating Amazon cannot be held liable for trademark infringement when it stores goods for third parties simply as an intermediary and is not aware of the fact that the goods are infringing trademark rights. Following Coty’s further appeal on a point of law, the Bundesgerichtshof (German Federal Court of Justice) also concluded that Amazon should not be liable for infringement in such cases. Nevertheless, the German Federal Court sought clarification from the CJEU on the interpretation of Article 9 of the European Union Trade Mark Regulation and 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?’
The answer from the CJEU is “no”. It held that, regarding trademark use in the context of infringement, the company storing the goods must do so with the aim of offering the goods for sale or putting them on the market. In the present case, the referring court unequivocally stated that, unlike the third party seller, Amazon has not itself offered the goods concerned for sale or put them on the market. Therefore, Amazon’s mere storage of goods does not constitute ‘trademark use’ within the meaning of Article 9 of the European Union Trade Mark Regulation and cannot give rise to liability for trademark infringement.
Although this decision does not come as a big surprise, it seems that the CJEU has missed an opportunity to give further guidance on the liability of e-commerce platforms which perform an active role in the sales process. Indeed, when such platforms are actively involved in bringing the infringing goods to market, their role clearly goes beyond the usual services provided by a storage company. This broader approach had been taken by the Advocate General (AG) in response to Coty’s argument that Amazon is not merely a storage provider but also choses keywords, manages the sales process and provides the platform. In his non-binding opinion, the AG acknowledged that the ‘Fulfillment by Amazon’ service (promoted under the slogan “send us the goods, we take care of the rest”) involves a significant level of control by Amazon over the goods in question. According to the AG, such direct or at least indirect possession of the goods could amount to “trademark use” may well give rise to liability unless reasonable measures have been taken to detect trademark infringement.
However, the CJEU failed to tackle the issue raised by the AG by strictly limiting its assessment to the boundaries of the question as referred by the German Federal Court. As a result, online marketplaces such as Amazon might still face legal uncertainty in terms of liability for trademark infringement as soon as they cross the line from merely storing the third party seller’s goods and actively participate in the advertising and sales process. This lack of clarity will undoubtedly lead to additional referrals from national courts in the (near) future.