Does Amazon infringe trade mark rights, when it handles the transportation of branded goods?

 

Brand owners policing the internet are alive to instances of trade mark infringement, including on third-party internet platforms such as Amazon and eBay. Back in 2016, Coty sought to prevent retailers and distributors from selling its luxury brands through Amazon, as it preferred to control sales in high-end bricks-and-mortar shops. The luxury brand industry breathed a sigh of relief when the Court of Justice of the European Union (CJEU) ruled that the restriction did not breach competition laws, as long as it did not discriminate against particular resellers.

 

 

In this latest action, Coty aims to hold Amazon responsible for the stocking of trade mark infringing goods, regardless of whether Amazon knew about the alleged infringements. This liability could possibly endanger Amazon’s business model, when we think about the sheer scale of its warehouse volume. On the other hand, it is questionable whether Amazon should be able to free itself from the responsibility every off-line shop owner has to carry. The German Court has again referred the decisive question. At the time of writing, the date of the hearing of that Case C-567/18 remains to be determined.

 

Kicking up a stink

The defendant, Amazon, facilitates sales agreements between third party suppliers and buyers in such a way that it optionally takes care of the stocking and shipping of goods through the service “shipping via Amazon”. The plaintiff, Coty, is a licensed distributor of the EU trade mark DAVIDOFF 0876874. Coty acquired a bottle of “Davidoff Hot Water Edt 60 ml” via a test purchase, which turned out to infringe trade mark rights. It requested that Amazon hand over all remaining goods and inform Coty about the third party suppliers. Amazon handed over 30 bottles of perfume, but claimed it could no longer retrace the source and therefore was not able to disclose further details.

 

The question and its relevance

The tricky part is that Amazon itself is not party to the sales contract. It only facilitates the deal via its stocking and shipping arrangement. In this context, the Highest German Civil Court (BGH) has asked 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?”

 

Simply put: Does Amazon infringe trade mark rights, when it only handles the transportation of black boxes?

 

In the past, there have been comparable cases of possible intellectual property infringements through online providers, where those agents only acted as a platform between the buyer and the infringing third party distributor. The question of the platform’s responsibility is by no means fully resolved. However, one can make out a tendency to disburden these platforms from control responsibilities. The courts of first (LG München I, Urteil vom 19.01.2016 – 33 O 23145/14) and second (OLG München, Urteil vom 22.03.2017 – 29 U 745/16) instances in Germany did not follow Coty in its view that Amazon’s responsibility for its business model encompasses the accountability for third-party sellers’ unlicensed goods.

 

Strictly speaking, it is correct that a violating action by Amazon is hard to pin-point. They do the exact same thing (stocking and shipping), whether the product is licensed or not; whether this is legal or not comes down to the honesty of the third party seller. However, can it be right to allow for a business model, which, by design, frees the beneficiary from his or her controlling responsibility?

 

In its referral to the CJEU, the senate of the BGH clearly states its inclination to answer the preliminary ruling question with a “No”. It does not see a responsibility in the mere stocking and shipping of the relevant goods and draws a comparison with patent case law, where the question of responsibility of a forwarding agent or warehouse keeper has already been negated.

 

Comment

In the patent case mentioned by the referring German Court, an “only” forwarding agent was sued to destroy patent infringing mp3-players (BGH, 17.09.2009 - Xa ZR 2/08 mp3-Player-Import). The German court however did not hold him responsible for providing further technical information about the goods. Furthermore, he was not obliged to inspect goods for a possible infringement that he merely transported. However, from our point of view this result cannot be copy-pasted to the Coty/Amazon situation, as it is much more difficult to disclose an infringement in a patent case than in a trade mark case, where the agent does not need to technically examine the product, but “only” has to safeguard clean channels of distribution. In the patent case, the court stated that the agent could be obliged to technically examine the product for an infringement, as soon as he was notified about irregularities. In Coty vs. Amazon, Amazon denied to disclose further details about the source of the perfumes, even though it had received a take-down notice.

 

Unfortunately, another interesting aspect of this case is well-hidden in the request for a preliminary ruling, as the wording of the question put before the ECJ does not reflect it. One does not need to split hairs to understand this argument, even though it seems slightly technical at first glance. Previous instances have dealt with Article 9(b) and (c) as describing one action. But if one distinguishes between the elements of Article 9(2)(b), which states “offering the goods, putting them on the market or stocking them for these purposes under that sign” and Article 9 (2)(c), which states “importing or exporting the goods under that sign”, it does not seem far-fetched to subsume Amazon’s behaviour at least under Article 9(2)(c). However, this goes beyond the framing of the question as it was brought before the CJEU.

 

In summary, Amazon is not off the hook yet, even though the German courts of first and second instance have ruled in favour of the multinational ecommerce company’s business model.