German court seeks to clarify whether a fulfilment service is liable for its users’ infringements

The German Federal Court of Justice has asked the Court of Justice of the European Union (CJEU) to clarify whether fulfilment service providers should be liable for a third party’s trade mark infringement, even if they’re unaware it’s been committed. The CJEU’s ruling could have a significant impact on how Amazon and others provide the service.

The case arose from a claim made by Coty, the exclusive distributor of DAVIDOFF HOT WATER perfume in Germany. Coty had identified certain DAVIDOFF HOT WATER eau de toilette being sold on the Amazon Marketplace, as parallel imports (i.e. genuine products that had been imported into the market from a third country without the consent of the trade mark owner). The seller of these products was using Amazon’s ‘Fulfilment by Amazon’ service. This allows sellers to send their products to Amazon, who will then store, pick, pack and ship them to customers.

Willing partner or innocent party?

Coty argued that, by storing and shipping the parallel imports on behalf of the seller, Amazon had infringed Article 9(2)(b) of the Community Trade Mark Regulation (207/2009) / Article 9(3)(b) of the European Union Trade Mark Regulation (2017/1001). These regulations allow trade mark owners to prevent third parties from “offering (infringing) goods, putting them on the market, or stocking them for those purposes under the (infringing) sign”.

Amazon argued that it was not in breach of these provisions, as it was merely handling the goods on behalf of a third party, and in any event it did not know the goods in question were infringing, as it hadn’t received any “takedown notice” from Coty.

Amazon cleared – for now

The German court found in favour of Amazon. It concluded Amazon should not be liable for trade mark infringement when it stores goods for third parties and does not know that the goods are infringing a trade mark. It referred to the fact that the contract for the sale of the goods is directly between the seller and the end customer. It also based its reasoning on a previous patent decision, which found a haulier did not possess the goods for the purpose of putting them on the market, where he was unaware that they were infringing.

Clarification requested

Nevertheless, the German Federal Court of Justice has requested clarification on the issue from the CJEU, asking:

“Does a person who stores infringing goods for a third party, without having knowledge of the infringing nature of said goods, stock these goods for the purpose of offering them or putting them on the market, when only the third party has the intention to offer the goods or to put them on the market?”

Is a change in the law imminent?

We await the CJEU’s decision with interest. It seems reasonable that a person who merely provides a storage and fulfilment service should not be liable for the acts of persons who use that service, provided they are not aware of any wrongdoing.

However, the digital landscape is changing and EU lawmakers do appear to be becoming less tolerant of players who gain financially whilst their services are used to infringe third party rights.

In the meantime, if you’re a rights holder you need to be sure you are making effective use of takedown procedures. You should also consider marking your products with details of the authorised area for resale, so it’s clear when they are being sold as parallel imports. This may make it harder for intermediaries to claim they are not aware of an infringement.