April 16, 2020

Summary

On 2 April 2020, the European Court of Justice handed down its judgment in Coty v Amazon (C‑567/18), a case concerning the liability of Amazon for trade mark infringement. It is a topical judgment, going to the question of when an online marketplace is to be considered liable for the goods offered through its services by third party sellers.

The Court held that a person who on behalf of a third party stores goods which bear infringing trade marks, without knowledge of the infringement, does not infringe the trade mark. This narrow answer reflects the narrow question referred by the national court, but unfortunately does not address the underlying economic reality – which is that an online marketplace, such as Amazon, provides a highly integrated service, not just a warehouse or a marketplace search engine.

Facts and Judgment

Coty Germany, the licensee of the DAVIDOFF trade mark, brought an action against Amazon in Germany for trade mark infringement. A number of products bearing the trade mark were offered for sale in Germany by third party sellers through the Amazon platform.

The action was brought against four Amazon entities, including the Amazon company running the Amazon website as well as the Amazon company operating a warehouse under the “Fulfilment by Amazon” scheme.

In the course of the domestic proceedings, the Bundesgerichtshof (the BGH, the German Federal Supreme Court) referred a question to the European Court of Justice (ECJ) for preliminary ruling. In essence, the Court sought clarification on the meaning, under the Trade Mark Regulation, of stocking goods in order to offer them or put them on the market.

The ECJ held that a person which provides warehouse facilities to a third party is not to be regarded as stocking the goods in order to offer them or put them on the market. Unfortunately, this deceptively straightforward ruling unfortunately obscures the reality of the business model of online marketplaces.

Wiggin Analysis

This judgment addresses the thorny question of the liability of online marketplaces for the products third parties sell through their services. While much of the debate focuses on the contours of the liability limitation for hosting providers, set out in Article 14 of the E-Commerce Directive, this case concerned the question of whether Amazon was liable for trade mark infringement as a primary infringer. As is familiar, the ECJ in the L’Oréal v eBay case held that Article 14 is not available where the online marketplace plays an active role such as to give it knowledge of or control over the information relating to the offers for sale of infringing goods.

As is probably quite well-known, online marketplaces provide a variety of services to their third party sellers. In the particular example of Fulfilment by Amazon, the Advocate General noted in his Opinion that Amazon stores the goods, prepares them for dispatch (sometimes including labelling them, packing them and/or gift-wrapping them). Amazon also provides customer service, handles returns and provides payment processing. Providing these types of “integrated” services, as the Advocate General labelled it, resulted in Amazon having an active role and direct or indirect control over the act constituting use of the trade mark.

It appears, however, that these facts were not sufficiently plead before the ECJ and, as such, the Court restricted itself to considering the Amazon warehouse function in isolation. Had the case been pleaded differently, the judgment might have been very instructive.

In approaching the different Amazon entities separately, the crucial role of Amazon as an online platform is obscured. As the Advocate General pointed out, doing so ignores economic reality. Moreover, it is incompatible with the general EU law principle of equal treatment to equate the integrated services Amazon provides with warehouse or transport services provided by entirely independent businesses.

In short, the ECJ’s judgment provided a very narrow answer to a very narrowly posed question. Within that question, the Amazon entity providing the warehouse service could not be considered as stocking the goods for the purpose of offering them or putting them on the market under the Trade Mark Regulation. By warehousing alone, Amazon did not play an active role in, or have control over, the act of infringement. The upshot is that the very narrow guidance provided by the judgment has limited applicability to the full integrated service provided by an online platform.

 Finally, the impact of the judgment more broadly remains to be seen. In particular, the Digital Services Act is expected to recalibrate the way in which online platforms are responsible for content, goods and services. It is possible that the Court, unlike the Advocate General, chose to limit itself to responding to the very narrow question put before it in order not to pre-empt the legislative process, or even, perhaps, to encourage a legislative solution.

For more on the DSA, please see Wiggin’s analysis here.