Coty v Amazon trade mark battle – Court of Justice of the European Union Judgment

By Michael Sweeney, Director of Service Delivery & Legal Counsel at Corsearch

Key Take Outs:

• Long-awaited CJEU Judgment in luxury goods house Coty’s trade mark battle with Amazon
• Amazon’s storage of fake goods does not amount to trade mark infringement
• Many aspects of Amazon’s role in offering counterfeits not examined and remain up for challenge

Global e-commerce platform Amazon is not liable for “mere storage” of counterfeit goods in its warehouses, according to a Judgment handed down on 2 April 2020 by the Court of Justice of the European Union (“CJEU”).

By merely storing counterfeit goods, Amazon was not “pursuing the aim of offering goods for sale or putting them on the market” and had not used Coty‘s trade marks “in its own commercial communication”. Coty’s trade marks were therefore not infringed.

The decision – at first glance – represents a setback for brands in the ongoing battle to protect their trade marks online. However, as with all legal cases involving trade marks, the devil is in the detail…

Background

Coty sued Amazon alleging infringement of the Davidoff trade mark. Coty’s position (broadly) was that Amazon’s practice of storing and dispatching fake Davidoff fragrances (on behalf of third party sellers) gave rise to liability for trade mark infringement.

Both the first instance and appeal court held that Amazon had not stocked the goods with the intention to sell them itself (it was doing so on behalf of third parties) and had not actually used the Coty trade mark in a trade mark sense (a key limb of the test for infringement). Attributing liability to Amazon in respect of an infringement it wasn’t aware of would be to extend liability too far.

Undeterred, Coty sought guidance from the CJEU on the following, narrowly framed question:

“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 under Article 9(3)(b) EUTMR, 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 Advocate General’s Opinion (December 2019) appeared heavily to indicate that, on these facts, Amazon may potentially be liable (in particular noting that if a party actively contributes to the distribution of infringing goods – for example through Amazon’s fulfilment program – then the legislative provisions governing stocking of goods for the purpose of putting them on the market are engaged).

Judgment

The 2 April 2020 Judgment therefore comes as something of a surprise and appears to buck the trend towards enhanced platform liability (in particular Birkenstock v Amazon, Louboutin v Amazon Europe and PVH v Facebook).

It focusses tightly on the idea that in order for Amazon’s practice of storing of goods bearing trade marks to amount to “use” of the trade mark, it has to “pursue the aim of putting the goods on the market”. Without this, Amazon is deemed not to be using the mark. Nor is the sign being used as part of Amazon’s “commercial communication”.

On this basis, Amazon was found not to infringe Coty’s trade marks.

Implications

While Amazon has (predictably) declared the result to be a resounding victory (commenting through its press channels that it “continues to invest heavily in fighting bad actors and is committed to driving counterfeits to zero”), trade mark owners and consumers can still derive some comfort. Amazon has by no means been given carte-blanche following this ruling.

First, the CJEU was asked a narrow, tightly-focused question and was careful to give a narrow, tightly-focused answer (centering on the storage arrangements for specific goods being offered for sale by a specific Amazon Marketplace seller). The question does not reflect the entirety of the facts in play (notably the role of “fulfilled and shipped by Amazon”). This leaves large swathes of the Amazon ecosystem available for further legal scrutiny as brands continue to seek to protect their rights and their consumers from infringement which Amazon appears otherwise content to allow. It remains to be seen whether a Court would give a similar ruling on liability if the involvement of an online platform as a whole and in the context of the sale and supply of counterfeit goods is placed under examination.

Second, the concluding remarks in the Judgment make clear that trade mark owners are still able to proceed under an alternative, legislative heading (including the IP Enforcement Directive) leaving open the possibility of securing relief against platforms, notwithstanding this recent decision. This concluding statement reiterates the narrow approach taken by the Court and appears to concede that there is still much to examine in this area.

Corsearch comment

Simon Baggs, President, Brand & Content Protection at Corsearch commented, “the laser-focused scope of the question asked by the German Court is reflected in this Judgment. The reality is that only a tiny fraction of Amazon’s business has been scrutinized here. Trade mark owners should not be disheartened and should remain steadfast in their pursuit of holding major platforms to account. There is significant scope for further legal scrutiny of the Amazon ecosystem. Brands can continue to seek established legal remedies in order to protect their consumers from the appearance of counterfeits on Amazon. Nothing in this Judgment alters that position.”