Online marketplaces and liability for trademark infringement

Websites that provide a platform for third parties to sell products now represent some of the world’s most successful businesses. But, the fast-moving nature of e-commerce means that issues around trademark infringement are only now being addressed. Casper Hemelrijk outlines a recent ruling by the Court of Justice of the EU.

While online marketplaces facilitate the fulfilment of the orders, the sales agreement is concluded between the third-party sellers and the customer. By facilitating the sale, however, is the online marketplace also liable for instances of trademark infringement? That was the key question before the Court of Justice of the EU (CJEU) in the ongoing dispute between Coty Germany GmbH and Amazon Europe.

A grey area for grey market goods

Amazon Europe offers sellers the opportunity to list their products for sale on the ‘Amazon-Marketplace’ and to use Amazon’s fulfilment centre to store and ship the products once sold. 

A test buyer for Coty Germany, which holds the license to sell Davidoff perfumes and cosmetics, identified perfumes for sale on by an unauthorised seller. The trademark rights for the products (Davidoff Hot Water EdT 60 ml) had not yet been exhausted, and Coty took action against Amazon.

EU Trademark Regulation (EUTMR) allows a trademark owner to take action against any party that uses the trademark in an infringing manner. The question before the courts in the ensuing dispute was whether the storage and shipping of the products should also be regarded as infringing use.

The CJEU ruling: good news for online marketplaces

First, the CJEU discussed that the trademark owner has the right to prohibit others from offering infringing goods, putting them on the market or stocking them for the purposes of sale, under the EUTMR. However, Amazon has neither offered nor marketed the products itself, nor does it intend to do so. Amazon merely takes care of the technical provisions and receives a compensation for those services.

According to the CJEU, therefore, the fact that Amazon had the products in its warehouse in stock does not constitute infringing use. Keeping the products in stock can only be prohibited if the company actually markets them or intends to do so. As a result, there has been no infringing use of the trademark by Amazon.

While, this judgement is clearly good news for the various online marketplaces, it does not mean that trademark owners no longer have an option to hold such marketplaces liable. For example, there are routes to take action through the nationally implemented e-Commerce Directive and the IP Enforcement Directive. In addition, the different online marketplaces have also established their own methods and takedown procedures for enforcing IP rights. 

How to protect your brand online

It’s important to keep in mind that online brand protection differs from its offline counterpart in several important respects. In particular, your online brand protection strategy should respond adequately to the speed and scale at which infringement occurs. Find out how to update your strategy to fit your business' needs in our webinar on Online Brand Protection.

All major marketplaces have set up complaint systems to facilitate takedown procedures, and their individual rules must be observed if brands are to enforce their rights on them. Automation is important to take the administrative headache out of such procedures, but it’s not a 'magic bullet' solution. The trained judgement and nuanced experience of an IP attorney is essential if your online brand protection is to be a precision strike as opposed to a scattershot attempt. 

Novagraaf has developed an online brand protection service that brings together monitoring and enforcement in one centralised platform, and leverages attorney advice in order to ensure every enforcement action is proportionate to the facts of the case and relevant to the corresponding jurisdiction.

Find out more on our dedicated microsite, speak to your Novagraaf attorney or contact us below. 

Casper Hemelrijk is a Junior Associate in Novagraaf’s Amsterdam office.

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