‘Targeting’ in Lifestyle Equities v Amazon – online retail platforms and brand owners take note!
Charlotte Colthurst of Bird & Bird explains why the territorial aspect of trademark rights ownership creates complications in infringement cases where there are multi-jurisdictional sales involved
In our increasingly globalised online shopping world, it is easy to endlessly browse and purchase products from one country or another through online marketplaces and shops. Over the past couple of years, there have been a number of cases that have made brand owners more aware of how their products make their way around the world, where they are being sold to and from, and to whom. The latest case in the UK is between a brand owner, Lifestyle Equities, and an online marketplace giant, Amazon.
The Lifestyle Equities v Amazon case deals with the alleged infringement by Amazon of the Beverly Hills Polo Club (BHPC) trademarks, owned by Lifestyle Equities in the UK and EU (this article will reference the UK throughout for simplicity.) The case is going to the UK Supreme Court and is the first case to do so on the question of what amounts to ‘targeting’ for the purpose of trademark infringement.
A trademark infringement case with complications
To quote the judge at first instance ( EWHC 118 (Ch)), this is not a normal case of trademark infringement. This is a case of trademark infringement in the context of online marketplaces, and whether advertisements, offers for sale and sales of US-branded products through various Amazon channels, which were visible and accessible to customers located in the UK, constituted targeting UK consumers and therefore amounted to trademark infringement in the UK.
A further complicating factor in this case is the ownership of the trademark rights in question.
Trademark rights are territorial, so it is possible, as in this case, that one brand owner holds rights to a trademark in one jurisdiction (for example, the UK) and another commercially unrelated owner holds rights in the same trademark in another territory (for example, the USA).
Lifestyle Equities owns the rights in the UK and BHPC Associates LLC (commercially unrelated) holds rights in the USA. (Although the reason for this is based on a family dispute, hence the rather unusual ownership split). Lifestyle Equities did not permit US-branded BHPC goods, manufactured and marketed in the US by the US owner, to be advertised or offered for sale to customers in the UK.
A key issue is whether Amazon targeted UK customers by advertising and offering for sale US-branded goods on its US website (and other sites), whereby UK customers could view the listings and purchase the goods.
The High Court ruled in Amazon’s favour. The judge considered that customers would know that if they purchased goods on amazon.com, primarily a US site, they would be conducting a sale in the US, not least because the terms and conditions state as such and there would be high import fees/shipping costs.
Court of Appeal decision
In the Court of Appeal of England and Wales ( EWCA Civ 552), the High Court decision was overturned, and the court found in favour of the brand owner. It ruled that Amazon had infringed Lifestyle Equities’ rights, by advertising, offering for sale and selling the goods in question through its US/global websites to customers in the UK.
The court noted that when the customer is going through the process of purchasing a product, they are made aware of UK-specific delivery, shipping and billing options and shown costs associated with the sale in pounds sterling. Sales therefore targeted the UK.
The court also noted that regardless of whether there was specific targeting, the sales into the UK constituted use of Lifestyle Equities’ trademarks in the UK, and were therefore infringing.
The most recent development is that the UK Supreme Court has granted Amazon leave to appeal this decision.
An issue of growing importance
In the context of this case, online marketplaces and brand owners should continually assess how and where their goods are sold, and who owns the relevant trademark rights and in what territories. Not all online offers for sale of a product that are accessible by consumers in a jurisdiction will constitute use of a trademark in that jurisdiction; the risk lies in the detail of the sale process, taking actions that constitute specific targeting of a country and/or a resulting sale.
The growth of online shopping and the e-commerce market is not slowing down, and this issue is only going to become more relevant and nuanced. The result of the Supreme Court’s assessment will be important for clarifying how brand owners and retail platforms should deal with online customer journeys and multi-jurisdictional sales. The decision will be eagerly anticipated.