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Coty Germany vs Amazon

Liability of platform operators for trademark infringements

27 September 2020

Although the European Court of Justice (“CJEU”) did not find Amazon, the platform operator, liable for trade mark infringement by a third-party seller using its platform in the recent case of Coty Germany vs Amazon, platform operators will not necessarily always escape accountability for such trade mark infringements. The CJEU has outlined further legal avenues to be considered against an intermediary platform provider when considering trade mark infringement.

The CJEU's concept of "use" with regard to physical storage of goods from third parties

The CJEU’s recent judgment in Coty Germany vs Amazon *1, following a question referred by the German Federal Court of Justice (“BGH”), turned on whether Amazon had made “use” of an infringing trade mark sold on its platform in providing its platform services. “Use” in this case involved a platform operator providing a “marketplace” and storing goods in its warehouses for third-party sellers without becoming a party to any purchase agreement itself. In the event of a sale, the respective goods were dispatched to the purchaser via an external service provider (i.e. not by Amazon).

The CJEU issued a preliminary ruling stating that “a person, who, on behalf of a third party, stores goods which infringe trade mark rights, without being aware of that infringement” does not “use” the trade mark for the purposes of Article 9(1) and (2) of Regulation 207/2009, the substance of which is reproduced in Article 9(3)(b) of Regulation 2017/1001. In light of previous decisions, the court held that the mere act of storing goods for third-party sellers cannot be regarded as “using” the trade mark due to the absence of any active behaviour and necessary intention to offer the goods or put them on the market. Even if the platform provider creates the technical conditions necessary for the use of a sign and is being paid for that service, it is the third party alone who intends to offer the goods in the sense of the above provisions.

Accordingly, in Coty Germany v Amazon, the plaintiff’s claim for injunctive relief based on the respective provisions had no prospect to succeed. However, the court’s ruling did highlight additional legal avenues which may be pursued in future cases.

Liability in the light of E-commerce and Enforcement Directives

In an important, but passing, remark, the court recalled that “where an economic operator has enabled another operator to make use of the trade mark” its role must be considered in light of rules of law other than Article 9 of the 2007 and 2017 Regulations - such as Article 14 (1) of Directive 2000/31 on e-commerce (“ECD”) and the first sentence of Article 11 of Directive 2004/48 on enforcement of intellectual property rights (“IPRED”). While the interpretation of such provisions was not the subject of the German court’s order for reference, and therefore not addressed in this case, more detailed statements can be found in previous CJEU rulings. *2

Article 14 of Directive 2000/31

The ruling also refers to Article 14 ECD which is intended not to give rise to, but to limit the liability of intermediary service providers with regard to the storage of customer data according to the so-called “notice and take down” principle. However, its implications may well be considered to further clarify the responsibility of platform operators. Accordingly, the liability exemption applies if the provider (i) does not have actual knowledge of illegal activity or information and, as regards claims for damages, is not aware of facts or circumstances from which the illegal activity or information is apparent; or (ii) upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information.

Were a platform operator is to be held liable for the sale of trade mark infringing products by third-party sellers under Member State law, it would be necessary to consider whether Article 14 applies. As set out in the CJEU ruling in L’Oréal vs eBay, the following two prerequisites must be met for the Article 14 privilege to apply.

Firstly, the privilege may only apply to a service provider if it limits itself to providing its service neutrally by means of purely technical and automatic processing of the data entered by customers. Otherwise, corporate groups operating on the premise of a division of labour could circumvent trade mark law by outsourcing individual services to external service providers. Amazon offers the “Fulfilment by Amazon” scheme under which various Amazon companies are actively involved in the distribution of the third-party products, for example through advertising, labelling, and packaging. It is therefore questionable to describe the role of Amazon as purely “passive”.

Secondly, even if the role of the platform operator is considered to be passive, the privilege will be excluded if the platform operator, upon obtaining knowledge or awareness of an infringement, fails to take immediate and reasonable measures to end the infringement. This “awareness” can result from the operator discovering such facts or knowledge on its own initiative or being notified about an infringement. With regard to the level of involvement in the sale of infringing goods, settled case-law imposes stricter control obligations vis-à-vis third-party sellers if the platform operator plays a rather active role.

Article 11 of Directive 2004/48

Article 11 IPRED places a general obligation on the Member States to ensure that “where a judicial decision is taken finding an infringement of an intellectual property right, the judicial authorities may issue against the infringer an injunction aimed at prohibiting the continuation of the infringement.”

As clarified in L’Oréal vs eBay, the respective orders issued by the national courts can include preventive measures against platform operators as long as they are effective, proportionate and dissuasive and do not create barriers to legitimate trade. Such measures include, for example – the obligation to facilitate the identification of thirdparty sellers using their services.

Were a platform operator to be found guilty of trade mark infringement, the remedy provided for under Article 11 IPRED could apply.

Conclusion

The question referred to the CJEU by the BGH in Coty Germany vs Amazon was posed under the premise that Amazon itself did not pursue the aim of stocking infringing goods in order to offer them or put them on the market, and was limited to focusing on the effect of warehousing on the platform operator’s liability. Therefore, the underlying wider issue of platform operators circumventing trade mark law by operating on the basis of outsourcing the dispatching of goods to external service providers while still being actively involved in the distribution process was unfortunately not addressed. It remains to be seen how this business model will be assessed by national courts as well as the CJEU in the future.

 

1 CJEU Ruling C-567/28, Coty Germany vs Amazon.
2 See, inter alia, ECJ Ruling L’Oréal vs eBay C-324/09; ECJ Ruling Google France and Google C‑236/08 to C‑238/08; ECJ Ruling Frisdranken Industrie Winters, C‑119/10.