Trademark infringement: Liability for counterfeit goods

Recent case involving Amazon provides the answer on trademark infringement

The question has recently come before the European Courts as to whether a company fulfilling orders for goods on behalf of another can be liable if those goods breach the intellectual property rights of a third party. The Court of Justice of European Union (CJEU) has recently handed down a decision in Coty Germany GmbH v Amazon (C-567/18),  that  Amazon are not  liable for trademark infringement for goods which they store on behalf of third parties. This will come as disappointing to big named brands which are constantly firefighting against the sale of fake and counterfeit goods and positive news for those providing storage and fulfilment services on behalf of third parties.

Trade mark infringement most frequently occurs where a registered trade mark is used in the course of trade without the proprietor’s consent. For example, a sign used by the infringer is identical to the registered trade mark and is used in relation to goods or services which are identical to those for which the trade mark is registered.

Coty Germany are a perfume distributor and they hold a licence for the EU trade mark “DAVIDOFF”. It came to Coty Germany’s attention that a counterfeit perfume the “Davidoff Hot Water Perfume” was being sold on Amazon through its Amazon Fulfilment service. The Amazon Fulfilment service allows third party sellers to store their products at an Amazon warehouse and when the product is sold, Amazon will package it, ship it and provide the supporting customer service in relation to that product.

Coty Germany issued a cease and desist letter to Amazon and requested the counterfeit perfumes to be sent to Coty Germany.  Amazon returned the bottles of perfume but they were unable to tell which stock belonged to which seller.

Coty Germany deemed Amazon to be responsible for selling the counterfeit products and therefore issued proceedings against Amazon in Germany for trademark infringement. The German court referred the case to the CJEU.

The CJEU focused on whether “a person who, on behalf of a third party, stores goods which infringe trade mark rights, without having knowledge of that infringement, stocks those goods in order to offer them or put them on the market for the purposes of those provisions, even if it is only the third party who intends to offer those goods or put them on the market.”

The CJEU had to determine whether Amazon would be liable for the infringement and this depended on the interpretation of Article 9(2)(b) the EU Trade Mark (EUTM) Regulation (207/2009) and Article 9(3)(b) of Regulation (EU) 2017/1001.

The CJEU determined that Amazon merely stored the goods they did not put the goods up for sale or on the market nor did they intend to put the goods up for sale or market them either. The CJEU assessed whether storing the goods constituted “use” of the trademark, however, neither legislation defines the term “use”. In previous cases, it has been noted that the term “use” involves “active behaviour and direct or indirect control of the act constituting the use”. Importantly, the Courts suggested that where a person’s aim is not to put the goods on the market nor offer them for sale, then the person storing the goods on behalf of a third party cannot be held to have committed trademark infringement.

The CJEU ruled that a person who, on behalf of a third party, stored goods which infringed trade mark rights, without being aware of the infringement, could not be regarded as storing those goods in order to offer them or put them on the market therefore there was no infringement of Article 9(2)(b) the EU Trade Mark (EUTM) Regulation (207/2009) and Article 9(3)(b) of Regulation (EU) 2017/1001, if that person does not itself pursue those aims.

The CJEU judgement is consistent with the judgement in L’Oréal v eBay [2009] EWHC 1094 (Ch), where the High Court held that eBay was not jointly liable with individuals for the sale of infringing or counterfeit products on its auction site. However, before Coty Germany v Amazon was referred to the CJEU, the Advocate General stated in his Opinion that a company is not automatically exempt from taking responsibility to detect infringement because they didn’t have knowledge of the infringement. Particularly in instances where companies such as Amazon are actively involved in the distribution of the goods. Otherwise, online platforms could be utilised as a channel for the sale of infringing goods. It is not clear from his Opinion what those steps might be and the extent to which that would pose a burden on such fulfilment service providers. This potentially leaves the door open for future claims made against companies like Amazon who provide a fulfilment service.

In terms of the CJEU judgement, many brand and trademark owners will be unhappy with this result as they try to push e-commerce platforms to take more responsibility and control to help tackle the sale of fake and counterfeits goods. However, businesses who provide fulfilment services and store goods on behalf of third parties will be relieved to know that they won’t be liable for any trademark infringements where they do not themselves offer or market the products.

How can we help?
For strategic advice on intellectual property and trademark infringement, please contact our commercial team.

Mark Chapman
Partner, Commercial
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This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

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