Could Amazon be in ‘Hot Water’ following the AG Opinion?

The success of Amazon as an online platform and retailer is undisputed. Part of their service is to allow sellers to list products for sale and use the distribution and delivery network provided by Amazon through its 'fulfilled by Amazon' service (abbreviated to 'FBA'), which allows sellers to sell their goods internationally and to a wide customer base.

However, Amazon and other online platforms may be in hot water, following an Opinion handed down by Advocate General, Campos Sánchez-Bordona, in Coty Germany v Amazon, C-567/18 recently.

The Opinion provided a new take on how e-commerce platform owners operate, and the responsibility they need to take when considering the issue of trade mark infringement.

Following the purchase of a 'Davidoff Hot Water' perfume made by a 'mystery shopper' in 2014; Coty attempted, and failed (both at first instance and on appeal) to sue Amazon for trade mark infringement. The reasoning behind the judgment was that having considered Articles 9(2) and (3) of European Union Trade Mark Regulation ('EUTMR') it was shown that firstly, Amazon had not stocked the goods with the intention to sell the goods themselves, and secondly, they did not use Coty's trade mark. The claim was unsuccessful on the grounds that to hold Amazon liable for an infringement that they were oblivious to, would be extending liability too far.

Despite this decision, a referral was made to the Court of Justice of the European Union (CJEU). The Advocate General agreed with the points made by the Commission in relation to the previous case law, whilst seemingly pushing for there to be increased responsibility on e-commerce platform owners.

The Advocate General considered the consequences if one were to follow both Article 9(2)(b) and 9(3)(b) EUTMR and provided two distinct categories:

• The first category was where a subject (1) had no awareness of the infringing nature of the goods which they stock and (2) they do not intend to offer or put the goods on the market themselves, it should follow that there is no liability.
• If a subject actively contributes to the distribution of the goods, then they are deemed to 'stock' the goods within the meaning of the provisions.

This stance emphasises the importance of distinguishing between online marketplaces that actively contribute to the distribution of goods and that of a warehouse storage facility where the purpose is storage alone.  When both requirements are satisfied together, the Advocate General considered that liability should be placed on the e-commerce platform owners.  The Advocate General stated:

Amazon “can be expected to show particular care in terms of control of the lawfulness of the goods they trade,” In other words, they “cannot simply discharge their responsibility by attributing it exclusively to the seller, precisely because they are aware that, without this control, they can easily serve as a channel for the sale of illegal, counterfeit goods, pirated, stolen, or unlawful or unethical in any other way, infringing the property rights of third parties."

With an ever-increasing demand for product availability online, it appears logical that the platforms of such goods should have an enhanced responsibility for ensuring that products sold and distributed by them do not infringe intellectual property rights.  Such rights are already recognised where goods are unlawful in other ways (such as those which breach health and safety legislation for example); why therefore should the same responsibility not apply where trade marks are infringed?

The CJEU usually follows AG's opinions, so we would expect this Opinion to be followed; however this decision is likely to have serious ramifications for e-commerce platform owners who will be watching this decision very closely. Rachel Pearse, Senior Associate in the Intellectual Property team said that "this is a thought-provoking decision from the Advocate General and one which will be supported by brand owners and manufacturers alike.  It highlights that online platforms which do more than just provide the means for sellers to list goods such as actively distributing or promoting the goods, are likely to be exposing themselves to the risk of trade mark infringement.  Having benefitted from immunity from this type of liability for several years the tables appear to be turning and we are now starting to see online platforms introducing new policies in a bid to eradicate counterfeit goods from their services (such as Amazon's Transparency Code which provides consumers with the ability to verify the authenticity of the products that they purchase).  Whilst policies such as this wouldn't necessarily provide a defence to trade mark infringement, by using customers to identify any counterfeit goods, any unscrupulous sellers may be deterred from offering such goods for sale on the platform and of course infringements are brought to Amazon's attention at an early stage so that further sales may be prevented."