Latest on platform liability in the EU – Coty v Amazon

06.04.2020

On 2 April 2020, the Court of Justice of the European Union (the “CJEU”) delivered their judgment in Coty v Amazon[1]. The case is one which was referred from the German Federal Court of Justice and considered whether Amazon is infringing by storing third-party goods which infringe trade mark rights.

The CJEU held, in line with other decisions concerning infringement by platforms and marketplaces, that a company which stores goods on behalf of a third-party seller, who is not aware the goods infringe trade mark rights, does not use that mark provided it does not have the aim of offering the goods for sale or putting them on the market.

Background 

Coty are a perfume distributor who hold a licence for the EU trade mark DAVIDOFF. Coty found ‘Davidoff Hot Water’ perfumes for sale by a third party seller on Amazon’s marketplace which had not been placed on the market in the EU by the trade mark proprietor or with its consent and were therefore not exhausted.

In the event of a sale on the Amazon marketplace, the contract is between the third-party sellers and the purchasers, but in some cases the goods are stored in a warehouse and passed onto external delivery providers by an Amazon group company.

Coty alleged that two Amazon group companies are committing trade mark infringement by allowing third-party sellers to place offers for sale of infringing goods on their website, stocking the goods and despatching them once ordered. The German High Court and Court of Appeal both dismissed the action brought by Coty, holding that one group company did not stock or dispatch the goods in question and the other (the warehouse owner) had only kept the goods on behalf of the seller.

Coty then appealed to the Federal Court who stayed the proceedings and referred the following question to the CJEU:

“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 decision

In his opinion, which was delivered in November 2019, the Advocate General considered the scenario given in the referred question and also hypothetically carried out a broader analysis where other elements of Amazon’s role in the sales process were included. He decided that where it could be said that a company goes further than a normal storage company and plays an ‘active role’, this could constitute ‘use’ and therefore be infringing behaviour.

The CJEU, however, limited its analysis to the question and facts as referred by the German Federal Court, which included a finding that Amazon merely stored the goods concerned, without themselves offering them for sale or putting them on the market and that they did not intend to offer those goods for sale or put them on the market either.

Article 9(2)(b) of Regulation No 207/2009 and Article 9(3)(b) of Regulation 2017/2001  (the “Articles”) both provide that “offering the goods, putting them on the market or stocking them for these purposes under that sign, or offering or supplying services thereunder” is prohibited. The CJEU was therefore required to determine whether storing the goods was ‘use’, in particular as ‘stocking’ in contravention of the Articles. The trade mark regulations do not themselves define the concept of use, so the CJEU turned to decided case law in their analysis and the judgment gives a good summary of the position to date in relation to ‘use’ in this context.

In Daimler[2]and Mitsubishi[3]the Court has previously pointed out that ‘using’ involves active behaviour and direct or indirect control of the act constituting the use. Here, the CJEU goes further and confirms that the Articles refer exclusively to active behaviour on the part of the third party.

Previous decisions (such as Google France and Google)[4] have also clarified that use of a sign by a third party, implies at the very least that the third party uses the sign in its own commercial communication. A person can allow its clients to use signs which are identical or similar to a trade mark without itself using them. More specifically in relation to e-commerce platforms, the CJEU has previously held (in L’Oréal[5]) that the use of identical or similar signs in offers for sale displayed in an online marketplace is made by the sellers and not the operator itself.

The CJEU also referred to an earlier decision[6] where it found that a service provider who simply executes a technical part of a production process without having any interest in the external presentation, is not itself ‘using’ those signs and is only creating the technical conditions necessary for the third party to use them. Creating these technical conditions and being paid to so do does not mean that the party itself uses the sign. It has also previously been decided that a warehouse-keeper who provides storage services in relation to goods bearing a third party trade mark is not necessarily to be regarded as using the sign[7].

The Articles in question relate specifically to the offering of goods, their being put on the market and their being stocked ‘for those purposes’. Therefore, in order for storage of  goods to be ‘using’ the signs in question, it is necessary for the storing party pursue the aim of offering the goods or putting them on the market itself. Without this element, the CJEU held that it could not be the case that the act constituting ‘use’ of the trade mark is carried out by the storing party, or that the sign is used in that party’s own commercial communication. As noted above, the German Courts have explicitly stated that Amazon had not offered the goods concerned for sale or put them on the market, so it follows that Amazon do not themselves use the sign in their own commercial communication.

Consistent with its case law, the CJEU held that the answer to the question referred was that the Articles must be interpreted as meaning that a person who, on behalf of a third party, stores goods which infringe trade mark rights, without being aware of that infringement, must be regarded as not stocking those goods in order to offer them or put them on the market for the purposes of those provisions, if that person does not itself pursue those aims.

The CJEU did go on to make clear that this conclusion was without prejudice to the possibility that Amazon may use the sign in connection with bottles of perfume which they stock on their own behalf or if they were unable to identify the third-party seller.

In the event that the Court answered the referred question in the negative, Coty asked them to consider whether the activity of an operator of an online marketplace in the circumstances falls within the scope of the safe harbour provisions in the E-Commerce Directive and, if not, whether such an operator must be regarded as an ‘infringer’ as referred to in the Enforcement Directive in the context of intermediary injunctions. The CJEU declined to answer this because it had not been raised by the referring court, but they did note that it should be “borne in mind that it is apparent from settled case-law that, where an economic operator has enabled another operator to make use of the trade mark, its role must, as necessary, be examined from the point of view of rules of law other than Article 9…”, such as those identified by Coty.

Comment

The court is unequivocal that they do not consider service providers for third parties to be actively using a trade mark by simply storing and distributing goods which will be a relief for online e-commerce platforms who do stock goods on behalf of others.

This decision is unsurprising given the previous CJEU decisions regarding online marketplaces, such as L’Oreal, although it is likely to only apply in a narrow set of circumstances and each case will still be determined very much on its facts.

It would have been interesting and the result may have been different if the referring question had either been worded differently, or if the Court had taken a similar view to the Advocate General and considered the question more broadly. It is most likely that another reference will be made in the future which covers a wider range of the activities carried out by a company and who may play a more active role in the sale and distribution of goods for a third party. Until then, not much has been changed by this decision, and each case will still have to be considered individually.

[1] Coty Germany GmbH v Amazon Services Europe Sarl (C-567/18)
[2] Daimler (C‑179/15)
[3] Mitsubishi Shoji Kaisha and Mitsubishi Caterpillar Forklift Europe (C‑129/17)
[4] C‑236/08 to C‑238/08
[5] L’Oréal and Others (C‑324/09)
[6] Frisdranken Industrie Winters (C‑119/10)
[7] TOP Logistics and Others (C‑379/14)

Jeremy Blum

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Sara Sefton

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