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Amazon not liable for storage of infringing goods but questions remain over its fulfilment service

Posted on 08 April 2020

Amazon and other online intermediary retailers have long faced criticism for allowing third parties to sell counterfeit or other IP-infringing products on their platforms. In one such case, Coty discovered its Davidoff Hot Water fragrance being offered for sale on Amazon by unknown third parties, which infringed Coty's trade mark rights. Following a reference to the CJEU by the German Court, the CJEU held that Amazon is not liable for trade mark infringement where it stores infringing goods on behalf of a third party seller if it has no knowledge that those goods are infringing and it didn't itself intend to offer for sale those goods. Whilst this may seem like a victory for Amazon, the CJEU's decision is based on a narrow set of facts and does not take account of the fact that Amazon's involvement in offering the goods for sale may go beyond simply "warehousing" when operating its "Fulfilment by Amazon" scheme. It will be for the German Court to now apply the CJEU's decision and decide whether Amazon's scheme amounts to trade mark infringement.

Background

The infringing fragrances were stored in Amazon warehouses under its "Fulfilment by Amazon" scheme, promoted by Amazon with the strapline "send us your products and let us take care of the rest". Under the Fulfilment scheme, Amazon provides not only storage but also delivery, refunds and payment handling for third party sellers in return for a fee. Arguably, a consumer purchasing an infringing product from Amazon in such circumstances may not even realise they are doing so from a third party seller. In such circumstances, Amazon plays a much more active role than mere warehousing.

After Amazon refused to disclose the details of the sellers, Coty brought infringement proceedings against it in the German courts. The Federal Court of Justice in Germany referred questions to the Court of Justice of the European Union (CJEU) asking whether Amazon’s dealings in the infringing products fell within the prohibition in Articles 9(2)(b) and 9(3)(b) of the EU Trade Marks Regulation.  The question asked was whether Amazon was using Coty's trade marks by stocking them for the purposes of offering the goods for sale, or putting them on the market under the trade marks.

It's important to note that the question put to the CJEU was very narrow. Specifically, it was framed on the basis that Amazon: (i) was not aware that the goods were infringing and (ii) did not itself intend to offer the goods or put them on the market. Coty sought to raise arguments before the CJEU that this was not reflective of Amazon's operation of its Fulfilment Scheme, but the CJEU refused to deal with that issue (saying it was for the national courts to decide), and focused on the narrow scope of the question put to it.

Decision

Within those confines, the CJEU decided Amazon was not liable for infringement under Art (9)(3)(b). It was only providing storage of the goods - it was the third party alone who intended to offer the goods or put them on the market.

The decision is consistent with other CJEU decisions finding intermediary retailers not liable for infringing goods sold by third party sellers (such as L'Oreal v EBay).

However, given the nature of its focus, the CJEU's decision does not reflect the true reality of the services provided by Amazon and it will be for the German national courts to interpret its finding in light of the facts of the case as a whole. The CJEU did leave open the prospect of a glimmer of hope for brand owners as it held that there is a "possibility of considering that [Amazon] use[s] the sign in connection with bottles of perfume which they stock not on behalf of third-party sellers but on their own behalf or which, if they were unable to identify the third-party seller, would be offered or put on the market by [Amazon] themselves." In such circumstances, Amazon may be found liable for trade mark infringement.

Comment

The CJEU's decision will give some comfort to Amazon and other online selling platforms, who continue to avoid liability for trade mark infringement occurring on their platforms where they have no knowledge of it and are not actively involved in offering the goods for sale. For now, brand owners must continue to police such infringements themselves, including taking advantage of schemes which online platforms currently offer to assist brand owners in this fight, such as Amazon's Project Zero, which we reported on here.

However, the German court will now need to apply the CJEU's decision. This will hopefully involve rigorous scrutiny of, and provide clear guidance on, whether sales through Amazon's Fulfilment scheme, as it operates in practice, amount to trade mark infringement.

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