CJEU delivers important ruling on marketplace liability in Coty Germany v Amazon
The Court of Justice of the European Union (CJEU) has just released its decision in Coty Germany v Amazon (C-567/18). This decision is the latest… Read more
The Court of Justice of the European Union (CJEU) has just released its decision in Coty Germany v Amazon (C-567/18). This decision is the latest in a line of important rulings concerning the law of intermediary liability for intellectual property infringements. It has potentially significant implications for brand owners, online marketplaces and retailers alike.
Intermediary (or secondary) liability is one of the most controversial legal issues at present. In our ever-more digital, interconnected and complex economy and wider society, there is ever-greater scope for one person to become “mixed up” in the unlawful activity of another.
A key battleground is the marketplace and, especially, the online marketplace. Brand owners have long struggled to stem the flow of counterfeit and “grey” goods at source, so have increasingly sought legal solutions targeted at intermediaries within the digital economy, such as Amazon, eBay, Google, YouTube and Internet service providers (ISPs). This has been met, largely, with success. Although, generally, an intermediary cannot be liable for another person’s infringement without knowledge of the relevant infringement, once the intermediary is “fixed” with knowledge of the infringement, they will be legally obliged to take swift and effective steps to stop it.
Brand owners, naturally, have tried to push the limits of the legal solutions available against intermediaries. For example, in recent months the UK courts have developed additional solutions such as dynamic blocking injunctions and orders to require ISPs to take steps against the circumvention of technological protection measures (TPMs).
Coty Germany (licensee of the DAVIDOFF brand) sued several Amazon companies in the German courts. The dispute arose after Coty made test purchases from Amazon.de of perfume products that infringed the EU trade mark for DAVIDOFF. The products were offered for sale by third-party sellers (i.e. not by Amazon). Amazon was not aware at the time of sale that the products were infringing. Coty asked Amazon to disclose the details of the sellers, which Amazon refused to do (presumably due to data privacy concerns). Coty then sued Amazon in Germany for trade mark infringement, requesting that Amazon cease to stock or despatch certain DAVIDOFF-branded perfumes in Germany if marketed without Coty’s consent.
Coty brought the action against several Amazon entities, including Amazon Services Europe Sàrl, which runs the site, as well as Amazon FC Graben GmbH, which operates a warehouse under the “Fulfilment by Amazon” scheme. This scheme allows a third-party seller to delegate to Amazon the warehousing and delivery logistics of goods stocked on their behalf by Amazon, although the third-party seller (not Amazon) remains the person that contracts with the end customer. In other words, Amazon was not the primary seller/infringer, at least on paper. It is already well-established law (from cases such as Google France and L’Oréal v eBay) that mere advertising on behalf of a primary infringer will not – in itself, without another factor (such as knowledge or active involvement in the infringement) – constitute trade mark infringement. Consequently, the actual product listings on the Amazon website were not under scrutiny.
Therefore, the question that the German supreme court (Bundesgerichtshof) referred to the CJEU was deceptively simple. Essentially, the CJEU had to decide whether Amazon’s warehousing of infringing products fell within Article 9(3)(b) of the EU Trade Marks Regulation, that is:
“offering the goods, putting them on the market or stocking them for those purposes under the sign…”
The CJEU decided (strictly within the scope of the question it had to answer) that by warehousing the goods and advertising them on its site, Amazon was not liable for trade mark infringement. However, this apparently simple headline obscures significant nuance and many unanswered questions.
- Continuing a trend from recent important decisions such as SkyKick (KL commentary here), the CJEU’s decision is less radical than the preceding Opinion given by the Advocate-General (AG). AG Campos Sánchez-Bordona had advised the CJEU to rule that Amazon should be liable for trade mark infringement because of the “Fulfilment by Amazon” service. In his view, this service results in Amazon running an “integrated store” in which Amazon plays an active role in the selling process, including preparation for delivery, advertising, answering queries and providing refunds. This would result in Amazon stocking infringing goods for the purpose of offering them for sale / putting them on the market. The CJEU, however, disregarded these facts because they emerged in argument before the CJEU, and did not appear within the narrow question asked (and information provided) by the referring court. While the CJEU’s decision appears to be correct on its own terms, the CJEU has missed a great opportunity to clarify the position of the operators of online marketplaces that provide integrated/end-to-end services for third party sellers. It is possible that the CJEU simply was not prepared to grasp the nettle yet. This is unsurprising because had the CJEU said that Amazon was liable for infringement, this would have had far-reaching effects for many companies and the wider infrastructure of online retail.
- Within the narrow scope of this claim, Amazon’s storage of the goods in a warehouse was not enough to cause Amazon to be stocking the goods for the purpose of offering them or putting them on the market. By warehousing alone, Amazon did not play an active role in, or have control over, the act of infringement. The CJEU therefore did not answer the important question of the level of involvement that is required for a marketplace to be liable as a primary infringer (and it is entirely possible that had the claim been run differently, Amazon would have been liable in this way).
- The crucial point in this case is that had Amazon been liable because of Fulfilment by Amazon, it would have been liable as a primary infringer (not as an intermediary). Coty’s claim (as argued in front of the CJEU) did not depend on knowledge of the infringement (because Amazon was not aware at the time of the infringing acts), but rather on Amazon’s active role in the infringing acts. This point is the natural extension of the CJEU’s judgment in L’Oréal v eBay but, unfortunately, the CJEU did not consider it. Were Amazon to be liable as a primary infringer, it is highly likely that the “hosting” safe harbour under Article 14 of the eCommerce Directive would not assist Amazon.
- In its judgment the CJEU included an important reminder: this decision does not rule out the possibility that Amazon may have been (and others may be) liable on alternative basis e.g. under the IP Enforcement Directive. In other words, intermediary liability is still very possible at least.
- In light of this, it is interesting to wonder whether marketplaces like Amazon could in future become subject to an “equivalent or similar goods” takedown obligation, along the lines of the recent Glawischnig-Piesczek v Facebook (A general monitoring obligation remains unlikely, at least for as long as technological tools are not sufficiently advanced to achieve this seamlessly and cheaply).
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