Court of Justice of the European Union rules that Amazon is not liable for trademark infringement by its business partners
06 April 2020
Intellectual property rights
On April 2nd, 2020, the Court of Justice of the European Union ruled that Amazon cannot be held liable for trademark infringement if Amazon stocks and dispatches infringing products for its business partners, i.e. the sellers on Amazon. Keeping infringing products in stock and sending it to customers is better known as fulfilment. This judgment is an unfortunate loss for trademark owners. Fulfilment is a typical result of the new Internet economy and makes trade in trademarked products from non-EU countries much easier. With this case, trademark owners were hoping to obtain the tools to deal with this.
Short history of the case
The judgment of the Court of Justice stems from a German court case between Coty, an international manufacturer and marketer of luxury fragrances and the internet sales platform Amazon. Coty had tracked down a seller on Amazon that was selling perfumes that infringed Coty’s trademarks as it was illegal parallel trade. Coty contacted the seller and settled with the seller. Part of the settlement was that the seller would send all infringing products to Coty. The seller indicated that it was not the seller, but Amazon that kept the seller’s products in stock and sent it to consumers for the seller. The seller requested Amazon to send his perfumes to Coty.
To Coty’s astonishment, Coty received more infringing products (illegal parallel trade) than the seller had reported to Coty. Amazon therefore appeared to have more infringing products in stock than just those of this specific seller. Coty then requested Amazon to provide the details of the other seller, but Amazon refused.
Coty started legal proceedings against Amazon based on trademark infringement because of Amazon stocking infringing products for its business partners, shipping those products for those business partners and also handling returns. Amazon thus facilitated the trademark infringement, according to Coty.
Court of Justice is not following the Advocate General’s opinion
The Advocate General, as the main advisor to the Court of Justice, considered that a trademark proprietor could successfully act against a provider of fulfillment services if this fulfillment provider, in short, did more than merely stocking the infringing products. The fact that the fulfillment provider had an active role, for example because it also handles returns, creates an extra obligation for Amazon as fulfillment provider to avoid trademark infringement.
Contrary to what was generally expected, the Court of Justice did not follow the opinion of the Advocate General. The Court held that the proprietor of a trademark could not take action on grounds of trademark infringement against a fulfillment povider because this fulfillment provider is not using the trademarks itself for its own commercial communications. Amazon had no intentions to market the products itself and therefore cannot be held liable for trademark infringement.
Judgment bad news for trademark owners?
This judgment does not seem to be good news for trademark owners. In our view, the judgment of the Court of Justice is too simple. Fulfilment services make trademark infringements easier and cause serious damage to trademark owners. It is obvious that postal companies or couriers, such as UPS or DHL, which cooperate unknowingly in the logistics of infringing products should not be liable, but the postman should not be liable for the parcels he delivers as he cannot see the contents. Amazon’s story is different. It provides a much larger range of services than just being involved in shipping products. The Advocate General proposed a nuanced solution, in which much more attention had to be paid to the specific services of the fulfillment provider. The Court of Justice unfortunately has ignored this nuanced approach.
This is especially hard to follow, as it is general principle in intellectual property law that an owner can go after everyone in the distribution chain of infringing products to ensure effective enforcement. Therefore, more parties can be liable for the same infringement. The knowledge of infringement always played a more limited role. Only in the situation of a transportation company or the postman, from whom it could not be asked to know the particular of the products involved, an exception existed. The Court of Justice seems not to have taken sufficiently into account that joint liability of those that play an active role, is a basis for effective enforcement. Amazon plays this important part in the distribution chain, but is not really held responsible by the Court. It should, nonetheless, be noted that Amazon, in its first press release, said that it will take its responsibility to fight the trade in illegal goods.
Nevertheless, the judgment also offers an ‘escape’ for trademark owners. The Court of Justice notes that if the fulfillment provider does not know from whom it keeps the products in stock, it may be committing trademark infringement. Therefore, if Amazon is unable to identify the actual owner of the infringing products, Coty can still successfully take action against Amazon.
Ploum is specialized in unauthorized internet sales
Are you facing internet sales of your products for which you have not given permission? Ploum’s IP department has years of experience in opposing unauthorized internet sales via the well-known platforms and is happy to assist you, especially with pragmatic solutions.