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23 July 2020

Online marketplaces : simply « storing » products

Comments on the Court of Justice of the European Union’s decision from April 2, 2020 (http://curia.europa.eu/juris/document/document.jsf;jsessionid=97C35647F5F95E4E612B7E311A199033?text=&docid=224883&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=10513335 )

The Court of Justice confirmed that an online marketplace (such as Amazon, Le Bon Coin, eBay or Rue du Commerce, for example), which stores for a third party products counterfeiting a brand without being aware of the counterfeiting taking place, could not be considered as being the “owner” of those products, as determined by Trademark law. Only the seller (and original supplier of the counterfeit products, who is also a client of the marketplace platform) could be charged with counterfeiting: on that basis, the marketplace responsibility could not be questioned, even if the group it belongs to actively participates in commercialising these products.

This decision follows the particularly positive jurisprudential trend towards digital players, a trend that has been going on for over a decade.

In this particular case, the Coty Germany GmbH company is a licensee of the EU brand DAVIDOFF, which protects cosmetics and perfumery products.

Amazon Services Europe, the well-known marketplace, gives to third party sellers the possibility to post offers on the “Amazon-Marketplace” section of the website <www.amazon.de>.

When a sell takes place, the contract is made between the seller and the buyer. The products are stored by companies belonging to the Amazon group, as part of the “Shipped by Amazon” program. The shipping is dealt with by delivery providers.

The Amazon group brings together the seller and the buyer of the products, and takes care of their storage.

On May 8, 2014, the Coty company decided to perform a test purchase by ordering, through the www.amazon.de website, a perfume sold with the brand DAVIDOFF on it, and made available by a third party seller. The product was shipped by Amazon as part of its program.

Thinking that the services offered by the Amazon group companies were violating the rights of the DAVIDOFF brand, Coty asked for the two companies to refrain from storing or shipping, or from having someone store or ship, in Germany, in the course of trade, DAVIDOFF perfumes if those products were put on the market without its consent.

As part of the counterfeit procedure, the German Federal Court of Justice (Bundesgerichtshof) asked the Court a prejudicial question (a procedure which enables a national jurisdiction to ask the Court of Justice for its interpretation or the validity of the European Union law during a conflict of which it is in charge).

The question was presented as follows to the German Federal Court of Justice:

‘Does a person who, on behalf of a third party, stores goods which infringe trade mark rights, without having knowledge of that infringement, stock those goods for the purpose of offering them or putting them on the market, if it is not that person himself but rather the third party alone which intends to offer the goods or put them on the market?’

The Court of Justice thus had to ensure that two dispositions of the European law work together: the first one refers to rights belonging to the EU brand, the other to the “e-commerce” guideline:

  • A trademark is an exclusive right enabling an economic player (Coty) to have the use of the DAVIDOFF brand forbidden in the course of trade for specific products, this use being for example to offer those products, put them on the market or stock them in those ends under the DAVIDOFF sign, or to offer or provide services under its sign (article 9.3 of the Regulation 2017/1001 from June, 14 2017 on European Union Trademark);
  • The non-responsibility of e-commerce providers, whose activity consists in storing information given by one of the service recipients, and that are unaware of the illicit nature of the said information (article 14 of the Guideline 2000/31/CE from June 8, 2000, in regards to specific judicial aspects of the information company).

In this matter, the Court of Justice confirmed the non-responsibility of e-commerce companies and marketplaces.

In a previous ruling, the Court of Justice already considered that the mere fact of putting sellers and buyers in touch through an online marketplace is not “a use of the sign as part of a commercial exchange”(http://curia.europa.eu/juris/document/document.jsf?text=&docid=107261&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=10451796). This effectively means that the market place does not use the brand in the course of trade. Only the sellers (who are also the marketplace’s clients) who are using the litigious sign, are doing so, and not the marketplace editors themselves.

The Court of Justice also came to the conclusion that the provider of a product storage service was also not using, in the course of trade, the litigious sign when the instructions were given from a third party and if the provider does not have control on its use (http://curia.europa.eu/juris/document/document.jsf?text=&docid=165921&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=10452573). Only the third party that controls, directly or indirectly, the sign use is in capacity of stopping it and thus of conforming to the said interdiction (http://curia.europa.eu/juris/document/document.jsf?text=&docid=174760&pageIndex=0&doclang=EN&mode=req&dir=&occ=first&part=1&cid=10460018).

In this context, the Court of Justice considers that, in regards to the facts as established by the German Federal Court of Justice:

“a person who, on behalf of a third party, stores goods which infringe trade mark rights, without being aware of that infringement, must be regarded as not stocking those goods in order to offer them or put them on the market for the purposes of those provisions, if that person does not itself pursue those aims.”

Even if it this ruling is in accordance with past jurisprudence, it can still be criticised for a few reasons.

First of all, it leads to the idea that the provider storing the products is not “owning” the products accused of being counterfeits, which appears to be in contradiction with article 9.3 of the Regulation 2017/1001 from June, 14 2017, under European Union trademark.

On the other hand, the Court of Justice estimated, through a legal lens, that the Amazon Services Europes and Amazon FC Graben GmbH companies were autonomous and functioning distinctly from one another, without taking into account the fact that they belong to the same group or are coordinated in the distribution of counterfeit products. However, it is the entire chain – and their use of logistical services – that helps the spreading of counterfeiting. It is unfortunate that the Court of Justice did not agree to examine these arguments as presented by Coty.

The division of the distribution process enables the Amazon group to avoid from being held responsible, and even gives them, in a way, a form of impunity.

When they see a product that is likely to be a counterfeit being sold on an online marketplace, one can advise brand owners to quickly ask for the help of Industrial Property Attorneys specialised in trademark law in order to analyse the available options. Should you have any questions, feel free to contact us!