Court of Appeal
The Court of Appeal has handed down a significant judgment concerning the targeting of global e-commerce websites and trademark infringement.(1)
In the case, the claimants (Lifestyle) owned various UK and EU trademarks consisting of the words "Beverly Hills Polo Club" or a logo comprising those words together with a device of a horse and rider (the trademarks). The trademarks were registered for a variety of goods, including clothing.
A commercially unrelated entity owned corresponding registered trademarks in the United States. It sold goods identical to those for which the trademarks were registered (and identical to the goods actually being sold by Lifestyle) under signs identical to the trademarks (the US branded goods). The US branded goods were sold on the amazon.com e-commerce website.
Lifestyle claimed that the defendants (Amazon) had infringed the trademarks by advertising, offering for sale and selling the US branded goods to consumers in the United Kingdom and the European Union and issued proceedings under article 9(2) of EU Regulation 2017/1001 (in respect of its EU trademarks) and section 10(1) of the Trade Marks Act 1994 (in respect of its UK marks). Without admitting liability, Amazon put in place a number of technical restrictions designed to address Lifestyle's concerns, but Lifestyle argued that those restrictions did not go far enough.
It is well established in case law(2) that a trademark owner can only succeed in "double identicality" infringement if six conditions are satisfied, the first of which is that there must be "use" of an identical sign by the defendant "within the relevant territory". The Court of Appeal had to decide, therefore, whether:
- the listings of the US branded goods on amazon.com (the listings) amounted to use of identical signs in the United Kingdom and the European Union (in other words, whether the listings had been "targeted" at the United Kingdom and the European Union); and
- sales made to UK and EU consumers constituted use of identical signs in the United Kingdom and the European Union (regardless of whether the listings had targeted those territories).
At first instance, the High Court held(3) that there was no "use" in either scenario. In respect of the listings, Mr Justice Michael Green held that targeting imported the notion of "taking deliberate aim" at consumers in another country and he was not satisfied that the listings did that. In his view, consumers who found their way to the listings:
will have deliberately sought to do so and will not have been put off by the prohibitively high shipping and import costs and know that they are buying such products from the US and from the US website of Amazon.(4)
In light of that, "such a consumer knows full well that they are viewing or shopping on the Amazon website that is primarily directed at US consumers".(5) The judge seemed to have been swayed by argument that a requirement that the listings be removed would amount to censorship of the Internet and deprive UK and EU customers of information which the judge felt they were entitled to see.
In respect of the sales of the US branded goods, the judge considered Amazon's contractual terms and conditions. Under these, title to the goods was said to pass to the purchaser in the United States, and the purchaser was also the deemed "importer" of the goods into the United Kingdom or the European Union. The judge was satisfied, therefore, that jurisdictionally sales could be said to take place in the United States and so there had been no use of the sign in the United Kingdom or the European Union during the sales process.
The infringement claim was dismissed in its entirety. Lifestyle appealed.
The Court of Appeal overturned the High Court's ruling. Lord Justice Arnold gave the leading judgment with which the other judges agreed.
Arnold LJ initially reviewed and approved the existing case law on targeting,(6) confirming that what must be assessed is not whether a website as a whole targets a territory but whether the particular offers for sale (ie, the listings) do. He also confirmed that mere accessibility of a website in a territory will not necessarily mean that the website is targeted at that country. The assessment of targeting, he said, was to be considered objectively from the perspective of average consumers in the United Kingdom and the European Union in parallel with an evaluation of all the relevant circumstances. These included:
- the appearance and content of the website;
- whether it was possible for UK/EU consumers to buy goods or services from the website;
- the nature and size of the trader's business;
- the characteristics of the goods or services in issue; and
- the number of visits made to the website by UK/EU consumers.
Arnold LJ held that the listings did amount to use by Amazon in the United Kingdom and the European Union of signs identical to the trademarks (in other words, the listings had been targeted at the United Kingdom and the European Union). He assessed a consumer's typical journey on amazon.com, from initially searching for and viewing the listings through to buying the US branded goods. He highlighted what the consumer would see at each stage of the journey, including a number of references to "this item ships to the United Kingdom" and "deliver to the United Kingdom" in the search results and on the product details page.(7)
In respect of the "review your order" page (which Lifestyle and Amazon had agreed was an offer for sale), Arnold LJ said:
If one asks whether that offer was targeted at the UK, in my view it is manifest that the answer is yes. The purchaser is located in the UK, the shipping address is in the UK, the billing address is in the UK, the currency of payment is GBP and Amazon will make all the necessary arrangements for the goods to be shipped to and imported into the UK and delivered to the consumer in the UK. I do not understand how it can seriously be argued that this offer for sale was not targeted at the UK, notwithstanding the valiant attempt of counsel for Amazon to do just that.(8)
Arnold LJ criticised the approach taken by the High Court judge, commenting that "it seems . . . he was diverted by the arguments as to the targeting of the amazon.com website as a whole, and did not conduct an analysis of the targeting of each of the types of act complained of".(9) He also said that the judge had been wrong to accept Amazon's argument that because amazon.com was directed at US consumers, the relevant webpages displaying the listing had not been targeted at UK/EU consumers, saying:
this does not follow [because] even if amazon.com is primarily directed at US consumers, it is plainly not restricted to them . . . in any event, the question is not whether amazon.com as a whole is targeted at the UK/EU, but whether the relevant uses of the sign are. As discussed above, the fact that the generality of a website is not targeted at the UK/EU does not exclude the possibility that specific uses of the sign on that website are.(10)
Arnold LJ was also critical of the High Court's view that targeting imported the notion of taking deliberate aim at consumers in another country. He said: "[T]his is not correct: the question is whether there is use of the sign in the relevant territory, and there is no requirement for subjective intent on the part of the operator of the website."(11)
In respect of the sales of the US branded goods, Arnold LJ held that if the listings constituted use of signs identical to the trademarks in the United Kingdom or the European Union then so did the resulting sales. He held that he was supported in this view by the Court of Justice of the European Union's judgment in Blomqvist,(12) which he said was clear authority for the proposition that the sale of goods under a sign by a foreign website to a consumer in the United Kingdom or the European Union constitutes use of the sign in the relevant territory, and that this is so even if there is no antecedent listing, offer for sale or adverts targeting consumers in that territory.
In light of the finding that Amazon had infringed the trademarks by virtue of both the listings and the sales of the US branded goods, Arnold LJ held that Lifestyle was entitled to seek an injunction against Amazon and financial relief, most likely via summary assessment given the relatively small level of financial loss suffered by Lifestyle.
This is a significant ruling in that Amazon itself has primary liability for trademark infringement in the United Kingdom, and the implications of the judgment will extend to other global marketplaces and websites. There is an important limitation, however, in that the mere visibility of a listing will probably not be enough for the website to incur liability. The context of the offer for sale and the customer journey will be key and factors such as the offer to ship to a particular country, payment details in local currency and actually delivering the products to that location will all be taken in account on the question of targeting. Subject to that, the decision represents a shift in the balance of power to rights holders, and websites will be required to respond to notice and takedown requests and implement geo-restrictions without delay.
For further information on this topic please contact Gill Dennis or Tom Nener at Pinsent Masons by telephone (+44 20 7418 8250) or email ([email protected] or [email protected]). The Pinsent Masons website can be accessed at www.pinsentmasons.com.
(1) Lifestyle Equities CV and another v Amazon UK Services Limited and others  EWCA Civ 552.
(2) Interflora v Marks and Spencer plc  EWCA Civ 1403.
(3) Lifestyle Equities CV and another v Amazon UK Services and others  EWHC 118 (Ch).
(4)  EWCA Civ 552 at paragraph 174.
(6) Including Merck KGaA v Merck Sharp & Dohme Corp  EWCA Civ 1834 and Argos Ltd v Argos Systems  EWCA Civ 2211.
(7)  EWCA Civ 552 at paragraphs 75 and 76.