EU Court Says Amazon Not Liable for Unwitting Third-Party Trademark Infringement

By Steve Brachmann
April 9, 2020

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“Despite the CJEU’s affirmation of the ruling that Amazon wasn’t liable in the case brought by Coty, there have been calls from some within the EU to increase Amazon’s duty to ensure that goods sold on its marketplace comply with the law.”

On April 2, the Court of Justice of the European Union (CJEU) issued a ruling absolving e-commerce giant Amazon.com of trademark infringement allegations brought by a German perfume distributor seeking redress for Amazon’s storage and distribution of brand-infringing perfume products sold by third-party sellers. The decision, issued by the CJEU’s Fifth Chamber, holds that Amazon’s mere storage of infringing goods in the context of its online marketplace does not constitute an infringement of trademark rights by Amazon.

Coty Sues Amazon in EU Over Infringing Davidoff Perfume Sales

The case stems from a trademark infringement suit filed by Coty Germany, which holds an EU trademark for “DAVIDOFF” for the sale of perfumes, essential oils and cosmetics. Coty discovered infringement of this brand back in May 2014, when a company test purchaser obtained a bottle of Davidoff-branded perfume from a third-party seller marketing the knockoff through Amazon’s Germany website. Coty successfully served a cease-and-desist on the third-party seller and then requested that Amazon deliver all of the infringing Davidoff products that it stored. Amazon delivered 30 infringing bottles to Coty but then informed the company that 11 of those bottles came from a different third-party seller. Coty asked Amazon to disclose the identity of that seller, but Amazon replied that it was unable to answer that request.

Coty brought an action to seek an order that European subsidiaries of Amazon must desist from stocking or dispatching infringing Davidoff products if Coty didn’t consent to putting those products on the EU market. The case was dismissed by the German regional court where it was filed. An appeals court affirmed that dismissal, finding that Amazon Services Europe neither stocked nor dispatched the accused goods and that Amazon FC Graben, a German-based order fulfillment subsidiary of Amazon, had kept those goods on behalf of third-party sellers.

The CJEU took up Coty’s appeal to answer the question of whether a person who, on behalf of a third party, stores trademark infringing goods without knowing of the infringement, stocks those goods for the purpose of putting them on the market if instead the third-party seller alone intends to put the goods on the market. In order for Coty to prevail on this question and find Amazon liable for infringement, the referring court noted that the determination of this issue would depend upon the interpretation of EU trademark law provisions which confer upon EU trademark holders the exclusive right to prevent all third parties from “offering the goods, putting them on the market or stocking them for [those] purposes” if they don’t have the trademark owner’s consent.

CJEU Finds That Merely Providing Technical Platform Doesn’t Constitute “Using” a Mark

In applying these provisions of EU trademark law to Coty’s case, the CJEU found it relevant that the Amazon entities merely stored the goods concerned without taking any action themselves to offer those goods for sale or put them on the market. Also, the CJEU found that the Amazon entities did not intend to offer those goods for sale or put them on the market. In assessing whether a storage operation constitutes a “using” of a trademark in the course of trade or commerce, the Court pointed out that it had noted in previous cases that the term “using” involves both active behavior and control, whether direct or indirect, of the act constituting the use. The CJEU cited a 2010 decision in which the Court decided that Google AdWords, which allowed parties to purchase ad keywords related to the Louis Vuitton brand that directed browsers to websites selling counterfeit products, operated in the course of trade when permitting advertisers to select ad keywords identical with trademarks but that service providers like AdWords did not themselves use those marks under EU trademark law.

Holdings such as those in the 2010 Google AdWords case led the CJEU to determine that, in the context of e-commerce platforms, the infringing use of trademarks are displayed on those platforms as an action of the seller, which is itself a customer of the platform’s operator, and not by the operator itself. This concept has also been applied in legal cases to alleged infringements committed by third parties at physical facilities, including factories or warehouses. In a December 2011 decision, the CJEU held that the operator of a bottling facility who was paid by a third-party to fill drink cans bearing signs infringing on Red Bull’s trademarks was not itself using the infringing marks. Rather, a service provider who merely executes a technical part of the production process without having any interest in the infringing product’s packaging only created the technical conditions necessary for the infringer to use.

Despite the CJEU’s affirmation of the ruling that Amazon wasn’t liable in the case brought by Coty, there have been calls from some within the EU to increase Amazon’s duty to ensure that goods sold on its marketplace comply with the law. Last November, Manuel Campos Sanchéz-Bordona, an advocate general at the CJEU, delivered a non-binding recommendation on Coty’s case against Amazon advocating for such a duty. While Amazon shouldn’t be held liable for unwitting trademark violations, an opinion which the CJEU followed, Sanchéz-Bordona argued that e-commerce platforms like Amazon which facilitate sales by third-party sellers should diligently check the goods sold on their platforms for any possible legality issues.

Recent Lawsuits Continue to Show Issues with Amazon’s IP Enforcement

Amazon has taken some action designed to rid its platform of at least the most egregious forms of trademark infringement. In early April, Amazon announced an expansion to its anticounterfeiting program conducted with the International AntiCounterfeiting Coalition (IACC) to give brands that are members of the program sales information for known infringers operating on Amazon’s platform. And in some cases, third-party sellers who have had products removed from Amazon over IP claims have filed lawsuits alleging that complaints from IP owners have been fraudulent in nature.

However, Amazon’s own long-standing practices and other ongoing legal actions make it clear that the e-commerce giant has a major counterfeiting problem which will need to be reckoned with someday. One anticounterfeiting nonprofit reported in 2018 that it had obtained emails showing that Amazon CEO Jeff Bezos was knowingly complicit in Amazon’s policy not to delist trademark infringing goods if sold through Amazon’s websites in countries where the trademark isn’t registered. Even if a counterfeit good is removed from Amazon’s U.S. site because of a U.S. trademark, that counterfeit is still reachable by a U.S. consumer who can browse Amazon’s German, French and other national sites through the internet. Amazon’s counterfeiting problem is not an overnight sensation, yet it took the company until February 2018 to first acknowledge its potential legal liability related to its inability to prevent the trafficking of counterfeit goods in financial filings with the Securities and Exchange Commission.

Recent cases continue to add to the growing chorus of brand owners from diverse industries who find their business interests damaged by Amazon. This March, Williams-Sonoma requested to add copyright infringement claims to its trademark suit against Amazon, alleging not only that Amazon engages in unauthorized online advertising of Williams-Sonoma products despite the company’s practice of refusing to license its trademark for online sales, but also that Amazon employed algorithms selecting copyright-protected Williams-Sonoma images to display as product images on Amazon.

Most recently, reigning National Football League MVP Lamar Jackson has also filed a complaint over Amazon’s inability to remove unlicensed merchandise that make use of Jackson’s likeness and persona. In a lawsuit filed in the Southern District of Florida in late March, Jackson asserted various state claims as well as Lanham Act claims for false advertising and endorsement over the sale of clothing items including phrasing associated with Jackson, including “Lamarvelous,” “Action Jackson” and “Not Bad for a Running Back.” Jackson’s suit alleges that the allegedly infringing products are not just items sold by third-party sellers on Amazon’s platform but, rather, that Amazon is directly pirating Jackson’s right to publicity by promoting the items with consumer guarantees such as “ships from and sold by Amazon.com” without ensuring that such items are sourced only from licensed manufacturers.

 

The Author

Steve Brachmann

Steve Brachmann is a freelance journalist located in Buffalo, New York. He has worked professionally as a freelancer for more than a decade. He writes about technology and innovation. His work has been published by The Buffalo News, The Hamburg Sun, USAToday.com, Chron.com, Motley Fool and OpenLettersMonthly.com. Steve also provides website copy and documents for various business clients and is available for research projects and freelance work.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

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