The Court of Justice of the European Union has ruled that etailer Amazon is not liable where third-party sellers use the online marketplace for the sale of grey-market product.
Amazon was taken to court by perfume distributor Coty Germany, which holds a licence for the EU trademark Davidoff.
It claimed that Amazon had infringed Coty Germany’s trademark rights by storing and dispatching bottles of Davidoff Hot Water perfume that were offered for sale by third-party sellers on the etailer’s marketplace. The bottles were not, however, put on the EU market with Amazon’s consent.
As such, the European Court has ruled that the “mere storage by Amazon” of goods that infringe trademark rights does not constitute an infringement by Amazon of those trademark rights.
What is grey-market trading?
This is a market in which goods have been manufactured by or with the consent of the brand owner but are sold outside of the brand owner’s approved distribution channels.
The judgement said: “A company which, on behalf of a third-party seller, stores goods without being aware that they infringe trademark rights does not itself use that trademark, so long as it does not pursue, like the seller, the aim of offering the goods for sale or putting them on the market.
“In order for there to be an infringement of the rights in the trademark by the company providing the storage, that company must pursue, like the seller, the aim of offering the goods for sale or putting them on the market.”
An Amazon spokesman said: “Amazon continues to invest heavily in fighting bad actors on our store and is committed to driving counterfeits to zero. German courts have ruled in our favour in the first two instances of this proceeding, and based on our initial understanding of the judgement, we welcome the decision from the ECJ [Court of Justice of the European Union].”
Stephen Sidkin, head of ecommerce and technology at law firm Fox Williams, told Drapers: “At first blush the European Court’s judgment earlier this month looks favourable to Amazon so much so that it has welcomed the ruling. But it is important to bear in mind that third party platforms (such as Amazon)”:
- Will still be liable under existing EU law for the sale of grey market product if the platform has actual knowledge or is presumed to have knowledge (for example as a result of a brand having given a “take down” notice to the platform) and the platform fails to respond quickly.
- Must not themselves be pursuing the aim of offering the goods for sale or putting them on the market (e.g. if Amazon started selling its own products).