Advocate General takes stock and delivers opinion on the liability of online platforms for the storage and transportation of products
The Advocate General (AG), Manuel Campos Sánchez-Bordona, recently handed down his opinion in Coty Germany GmbH v Amazon Services Europe S.a.r.l. and others (Case C-567/18). This was a German referral to the CJEU regarding Amazon's liability for stocking and transporting goods. This is an interesting case as it is the first time the business model of fulfilment service providers has been considered at such a high level in an IP context.
The Advocate General (AG), Manuel Campos Sánchez-Bordona, recently handed down his opinion in Coty Germany GmbH v Amazon Services Europe S.a.r.l. and others (Case C-567/18). This was a German referral to the CJEU regarding Amazon's liability for stocking and transporting goods. This is an interesting case as it is the first time the business model of fulfilment service providers has been considered at such a high level in an IP context.
Please note, the AG's Opinion has not been made available in English and therefore this blog is based on a translation.
Background
Coty made a test purchase from Amazon of its Davidoff Hot Water aftershave. The aftershave was genuine and therefore considered to be a parallel import (a non-counterfeit product imported from another country without the owner's consent). In this situation, Coty's rights had not been exhausted so the sale of such product was infringing.
The seller had used Amazon's 'Fulfilment by Amazon' option, which means that the goods were stored in a fulfilment centre and then packaged and shipped by Amazon. Amazon denied any liability and explained that they simply stored the products for third party sellers and did not use the trade mark in the course of trade. Coty's claims were dismissed at both first and second instance.
However, the German Federal Court of Justice (the Bundesgerichtshof) took a different approach and decided to refer a question to the CJEU. Before doing so, the German Federal Court of Justice said that holding Amazon liable for stocking infringing goods without any knowledge of the infringement would appear to stretch the limits of liability. However, they also indicated that the 'Fulfilment by Amazon' option does go beyond pure storage and transportation and queried whether it could go so far as to be considered 'possession' or even 'offering' of the goods.
CJEU referral
The Bundesgerichtshof referred the following question:
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?
Essentially the question was whether Amazon infringes trade mark rights when it only handles the transportation for a third party (and therefore does not know whether the goods infringe)?
AG's Opinion
The AG stated that Amazon does not infringe Coty's trade mark rights when it stocks and transports goods for marketplace vendors. However, he went on to say that even if a company has no knowledge of an infringement, it is not exempt from the responsibility of taking steps to detect the infringement – particularly when the company, such as Amazon, is actively involved in the commercial distribution of the products. Otherwise, online platforms could essentially serve as a channel for the sale of illegal, counterfeit, stolen or unethical products. It is not clear from the Opinion what those steps might be and the extent to which that would pose a burden on such fulfilment service providers.
Comment
If the CJEU decides that a company or group of companies like Amazon goes further than simply the neutral storage and transportation of goods but should take responsibility for a wider range of activities along the process, this could be a significant development in relation to the scope of direct liability for online platforms (beyond the L'Oréal case). We are of course familiar with the ever-growing body of case law in relation to the scope of direct liability of online platforms for users' activities in the copyright arena (the first being Pirate Bay) which Article 17 of the new Copyright Directive (which has to be implemented by 7 June 2021) attempts to address, and it continues to pervade other areas of IP law.
We will have to wait for the CJEU's ruling (and can expect a decision in around two to four months' time) but in any case, it will ultimately be up to the German national court to make a final ruling, depending on the factual circumstances of this case.
Please note, the AG's Opinion has not been made available in English and therefore this blog is based on a translation.
Background
Coty made a test purchase from Amazon of its Davidoff Hot Water aftershave. The aftershave was genuine and therefore considered to be a parallel import (a non-counterfeit product imported from another country without the owner's consent). In this situation, Coty's rights had not been exhausted so the sale of such product was infringing.
The seller had used Amazon's 'Fulfilment by Amazon' option, which means that the goods were stored in a fulfilment centre and then packaged and shipped by Amazon. Amazon denied any liability and explained that they simply stored the products for third party sellers and did not use the trade mark in the course of trade. Coty's claims were dismissed at both first and second instance.
However, the German Federal Court of Justice (the Bundesgerichtshof) took a different approach and decided to refer a question to the CJEU. Before doing so, the German Federal Court of Justice said that holding Amazon liable for stocking infringing goods without any knowledge of the infringement would appear to stretch the limits of liability. However, they also indicated that the 'Fulfilment by Amazon' option does go beyond pure storage and transportation and queried whether it could go so far as to be considered 'possession' or even 'offering' of the goods.
CJEU referral
The Bundesgerichtshof referred the following question:
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?
Essentially the question was whether Amazon infringes trade mark rights when it only handles the transportation for a third party (and therefore does not know whether the goods infringe)?
AG's Opinion
The AG stated that Amazon does not infringe Coty's trade mark rights when it stocks and transports goods for marketplace vendors. However, he went on to say that even if a company has no knowledge of an infringement, it is not exempt from the responsibility of taking steps to detect the infringement – particularly when the company, such as Amazon, is actively involved in the commercial distribution of the products. Otherwise, online platforms could essentially serve as a channel for the sale of illegal, counterfeit, stolen or unethical products. It is not clear from the Opinion what those steps might be and the extent to which that would pose a burden on such fulfilment service providers.
Comment
If the CJEU decides that a company or group of companies like Amazon goes further than simply the neutral storage and transportation of goods but should take responsibility for a wider range of activities along the process, this could be a significant development in relation to the scope of direct liability for online platforms (beyond the L'Oréal case). We are of course familiar with the ever-growing body of case law in relation to the scope of direct liability of online platforms for users' activities in the copyright arena (the first being Pirate Bay) which Article 17 of the new Copyright Directive (which has to be implemented by 7 June 2021) attempts to address, and it continues to pervade other areas of IP law.
We will have to wait for the CJEU's ruling (and can expect a decision in around two to four months' time) but in any case, it will ultimately be up to the German national court to make a final ruling, depending on the factual circumstances of this case.