There are some actors and some goods that seem to pop up in intellectual property cases time and time again. One of them is Coty Germany, the German branch of cosmetics giant Coty (known to every European competition lawyer). The other is a fragrance by Davidoff (known to anyone who ever went to Boots and to trademark lawyers as well).

What happened?

In it’s highly-anticipated decision, the European Union’s highest court sided with Amazon. It held that it is not enough for an e-commerce platform operator, such as the $1 trillion titan that is Amazon, to merely store and distribute orders consisting of unauthorized or infringing goods in order to be liable for trademark infringement. The 2014 case started after a Coty investigator ordered the company’s Davidoff Hot Water fragrance from Amazon’s third-party marketplace, only to receive an allegedly infringing product. Important point: the order was “Fulfilled by Amazon.”

Coty owns a licence to the EU trademark “Davidoff”. The company filed a trademark infringement lawsuit against Amazon in German courts, taking issue with the internet giant’s sweeping fulfillment program. Under it, Amazon enables its third-party sellers to store their products in its fulfillment centers, and after a sale takes place on its marketplace platform, “packs, ships, and provides customer service” in connection with that item.The case therefore underlines the tension between luxury goods companies seeking to preserve their luxury image and online platforms, such as Amazon and eBay, fighting against online sales hindrances. The “grey market” has become an ever bigger issue in the luxury sector in the past years.

Amazon argued that it should not be liable because it was just a seller and therefore simply an intermediary. The German lower courts cleared Amazon. The Federal Court however, in accordance with it’s obligation to do so from Art. 267 TFEU, refered some questions about the interpretion of the EU Trademark Regulation to the Court of Justice of the European Union (“ECJ”).

ECJ denies use of the Davidoff trademark

In particular, the ECJ answered the question of whether a company that stores infringing goods for a third-party seller for the purpose of offering them or putting them on the market is liable for infringement. In its decision, a panel of judges for the ECJ held that an operator is not an “infringer” in accordance with EU trademark law when the operator “on behalf of a third party, stores infringing goods in order to offer them or put them on the market … [but] does not itself pursue those aims” itself.

The ECJ has now ruled that an undertaking which stores the goods only infringes the trade mark if, like the seller, it pursues the purpose of offering the goods for sale or putting them on the market. In the present case, the Federal Court of Justice has unambiguously pointed out that the two Amazon companies concerned have neither offered the goods for sale nor put them into circulation themselves. The third party alone had pursued this objective. Consequently, the Amazon companies did not use the Davidoff mark themselves.

However, the ECJ points out that other provisions of EU law allow legal action against an intermediary who has enabled an economic operator to use a trade mark illegally. In particular the directives relating to electronic commerce and the enforcement of intellectual property rights are relevant.

German courts will have to clear these specifics however. The ECJ only rules on concrete questions on the interpretation of the European treaties and secondary EU law.

Implications of the decision

While the decision does pose a win for Jeff Bezos’ company, the ruling might lead to future problems.

When Coty requested that Amazon send it all of the allegedly infringing products, the latter could not identify the relevant sellers for particular bottles of perfume. This suggests that the American company may have mixed up different batches of perfume within the Fulfilment by Amazon service.

This seemingly harmless issue might prove to be significant later on. The Court indicates that if platforms cannot identify every supplier, courts may regard them as being sold by Amazon itself. Consequently, Amazon would indeed be liable.

It seems inevitable that Amazon will have to make changes to its Fulfilment by Amazon service. But until a court actually forces them, it may just be business as usual.


Image: Photo by Christian Wiediger on Unsplash