CJUE rules Amazon is not liable for storage of counterfeit goods.

By Serena Bertinetto.

On 2 April 2020, the Fifth Chamber of the Court of Justice of the European Union (“CJEU”) delivered a highly-anticipated preliminary ruling in a case initiated by Coty Germany GmbH (“Coty”) against several Amazon group companies (“Amazon”) in 2014.

The request for a preliminary ruling was made by the Bundesgerichtshof (i.e., the German Federal Court of Justice). The German Court requested the CJUE to determine whether, pursuant to EU law, a company can be held liable for trademark infringement, for storing goods on behalf of a third-party seller for the express purpose of offering them on the market, if such goods are infringing intellectual property rights.

The case arises from an investigation made by Coty back in 2014.

Coty, a well-known distributor of perfumes and cosmetics, holds a license for the EU registered trademark “DAVIDOFF”. In 2014, one of Coty’s investigators made a test purchase for a Davidoff Hot Water fragrance on Amazon’s third-party marketplace (the “Amazon Marketplace”).

The Amazon Marketplace provides, inter alia, the so called “Fulfilment by Amazon” scheme: under such scheme, goods for sale are stored by Amazon in its warehouses; subsequently, the goods are dispatched by Amazon itself or by different external service providers.

After receiving a counterfeit product from Amazon as a result of its test purchase, Coty decided to file a trademark infringement lawsuit against Amazon.

The case was then referred to the CJEU in order to ascertain whether, pursuant to Article 9(2)(b) of Regulation No 207/2009 and Article 9(3)(b) of Regulation 2017/1001, a company that, on behalf of a third-party seller, stores goods infringing trademark rights (if unaware of such violation) is itself using the mark.

The CJEU concluded that “in order for the storage of goods bearing signs identical, or similar to trade marks to be classified as ‘using’ those signs, it is also necessary […] for the economic operator providing the storage itself [i.e., in this case, Amazon] to pursue the aim referred to by those provisions, which is offering the goods or putting them on the market”. Should this condition miss from the equation, the mere storage of counterfeit goods cannot be defined as “use of a trademark” (see the CJEU’s judgment, points 45-46).

It appears, indeed, that the core of the CJUE’s logic revolves around the idea that “the fact of creating the technical conditions necessary for the use of a sign and being paid for that service does not mean that the party offering the service itself uses the sign” (see the CJEU’s judgment, point 43, also quoting other CJEU precedents on this issue).

At last, while not all relevant stakeholders may agree with the CJUE’s conclusions, this decision appears to have finally clarified some aspects of online marketplaces’ scope of civil liability when dealing with counterfeit goods.

We will have to wait to see if and how this approach will evolve, especially in those cases where Amazon (as well as other online marketplaces) play a more active role in the distribution of goods and products.

Check out a copy of the full decision at: https://bit.ly/2JAXYnp.