In-house counsel say that e-commerce platforms must be assessed as more than merely storage providers as the Court of Justice of the EU prepares to re-consider the question of e-commerce liability for trademark infringement.
The CJEU is to re-consider the issue later this year in Christian Louboutin v Amazon, although the exact date has yet to be confirmed. The referral, from the Luxembourg District Court, asks whether trademark use can be attributed to the hosting platform and whether such use can be considered active.
Counsel recently said a new referral might be needed after a “disappointing” CJEU interpretation in another case – Coty v Amazon – in April last year.
That dispute returned to Germany’s Federal Court of Justice (FCC) which, in January this year, confirmed that Amazon was not liable for infringement.
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Speculating on the latest referral, counsel in the fashion and consumer goods industries say two things must happen if there is to be clarity – the court must focus on Amazon’s specific business model, not just on the general concept of a storage provider, and the political will for reform must be there.
However, sources say these are far from certain.
Fashion designer Christian Louboutin, famed for his (trademarked) red-sole shoes, initiated proceedings against Amazon in Luxembourg over listings of allegedly counterfeit goods in 2019. In April this year, the court asked the CJEU to consider whether Amazon should be liable.
Litigation on this topic, and subsequent referrals to the CJEU, has yielded conflicting answers so far.
A 2011 CJEU ruling in L’Oreal v eBay indicated that online marketplaces may not be exempt from liability for counterfeit goods sold on their sites. However, in April last year, in Coty v Amazon the same court found that the mere storage by Amazon of trademark-infringing goods without knowledge does not constitute infringement.
Second time lucky?
“Rather than answering in a clear way, the CJEU may say that it is for the national court to decide whether a person would perceive a trademark to be used by a website operator (as opposed to an advertiser on that website),” they say.
However, the fact that the issue has at least been raised again has been welcomed.
Another in-house source says they are pleased that another brand owner is stepping up to the plate, because Amazon’s involvement in every element of the sales process, including controlling the source of goods, should prevent it from benefitting from e-commerce safe harbours.
The consumer head of IP adds that the problem with the Coty case was that the specific question posed by the FCC was too narrow.
“If you take the Amazon entity responsible for storing products alone, and have findings of fact that the entity has no knowledge of the infringement and no intention to offer the goods on the market, it is too difficult to find liability.”
Others agree that merely focusing on the concept of a storage provider will not suffice.
Måns Sjöstrand, global head of IP at watch maker Daniel Wellington in Sweden, says he hopes the Louboutin case will be approached more holistically by looking at Amazon’s de facto business model and the various aspects involved in a consumer purchase transaction.
The CJEU has the opportunity to examine the very sophisticated structure of platforms such as Amazon, adds Carmen Castellano, partner at Acuminis in Milan.
“It will be interesting to see how the CJEU tackles the issue concerning platforms which not only provide ‘intermediary’ services but also deal with the preparation of the goods for delivery, advertising and promotional activities, and the post-sale services to customers such as refunds.
“It would be a surprise if the CJEU maintains the opinion that such platforms only carry out a ‘storage activity … without being aware of that infringement’, she adds.”
An Amazon spokesperson told Managing IP that it is confident that the CJEU will confirm existing case law – that marketplaces are not generally liable for third-party products.
Political will
Sjöstrand notes that the resolution of the Louboutin case may tie in with the finalisation and implementation of the proposed Digital Services Act (DSA).
“It usually takes around 12 to 18 months to resolve a referral so it may well be that the CJEU’s answers are due around the same time as the DSA is finalised.
“It remains to be seen if the DSA will make drastic changes to liability exemptions, but if EU policy makers are to change this then the CJEU may have to take any upcoming or proposed legislative changes into account or risk the ruling becoming outdated very quickly,” he says.
Sjöstrand says he hopes that the CJEU’s determination will evolve from the L’Oreal case and the opinion of Advocate General (AG) Manuel Campos Sánchez-Bordona in the Coty ruling.
In his 2019 opinion, Campos Sánchez-Bordona advised the CJEU to rule that, if a subject (Amazon) is actively involved in the distribution of allegedly infringing goods, it will need to take a more active approach to ensure goods are not counterfeit. However, the CJEU rejected this advice.
As correctly pointed out by the AG in the Coty case, the structure put in place by Amazon does not seem to fit the purpose of merely stocking goods for sale, under Article 9(3)(b) of the EU Trademark Regulation, says Castellano.
“The specific referral might allow a more detailed analysis by the CJEU in this respect and offer a potentially different solution.”
Sjöstrand notes that there could be “a lot of politics” in the build-up to the decision and that any favourable ruling for brand owners may hinge on what level of platform accountability policy makers want to see.
However, the head of IP warns that since Amazon is “extreme” in its level of involvement in the sales process, any favourable guidance from the CJEU may not be applicable to other platforms.
“Whilst this case has the potential to give more clarity, it is unlikely to be the last reference we see,” he adds.
If he’s right, IP owners that hoped this might finally be the case to provide much-needed closure may well be disappointed.
