CJEU back in ‘Hot Water’ – when are infringing goods being ‘offered’?

DAVIDOFF HOT WATER is the name of a perfume and as such registered as an EU trade mark. Coty is the exclusive licensee for this trade mark and distributes the perfume in Germany. In 2015, the CJEU ruled that Coty could request the personal details of a bank account’s owner after said bank account was used for selling (trade mark) infringing products on eBay [see Katpost on CJEU decision here and on subsequent FCJ decision here]. 

Kat testing the water temperature

Now, HOT WATER returns to the CJEU, once again following a referral from the FCJ (case No I ZR 20/17). This time, Coty made a test purchase of a perfume labelled “Davidoff Hot Water EdT 60 ml” on Amazon Marketplace. The seller had used Amazon’s ‘Fulfillment by Amazon’ option. Amazon describes this option as follows:

“With Fulfillment by Amazon (FBA), you store your products in Amazon's fulfillment centers, and we pick, pack, ship, and provide customer service for these products.”

The test purchase made by Coty turned out to be a parallel import. Parallel imports are non-counterfeit products that are imported from another country, and in this case from outside the EU. Due to lack of exhaustion, the sale of such products is infringing since it lacks the rights owner’s consent.

Coty asked Amazon to cease and desist from owning or shipping DAVIDOFF HOT WATER perfumes for the purpose of putting them on the market when said products have not been exhausted in the European market.

Amazon denied any liability, arguing that it merely stored the perfumes for third party sellers and thus did not use the trade mark itself. It would also not be liable for aiding and abetting the Marketplace sellers, since it had no knowledge of the infringing nature of the products. Indeed, Coty did not inform Amazon about the infringements in the sense of a ‘takedown notice’.

 

A bottle of DAVIDOFF HOT WATER

Both the courts of first and second instance dismissed Coty’s claims. They found that Amazon did not stock the perfumes for the purpose of offering the goods or putting them on the market. Thus, Amazon’s actions in the ‘FBA’-process could not be considered a prohibited act under Art. 9(2)b of the Regulation on the Community trade mark (Regulation (EC) No 207/2009), or Art. 9(3)b of the Regulation on the European Union trade mark (Regulation (EU) 2017/1001). Both Regulations are cited because the case originated before the newer Regulation came into force. However, the court finds both norms to have the same meaning, citing its ‘form-strip II’-decision.

The FCJ found that indeed, any liability of Amazon for infringements of Marketplace vendors who use the FBA option would depend on the question whether Amazon acts in breach of Art. 9(2)b / Art. 9(3)b. It therefore stayed the proceedings and sent the following question to the CJEU:

“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?” [be advised, this is a Kat-translation of the German referral, the official text is not yet available in English]

While Coty argued that Amazon had a commercial interest in the Marketplace vendors’ activities and thus should be treated as if Amazon itself had stocked the goods for the purpose of putting them on the market, the FCJ disagreed. The judges emphasise that the contracts for purchasing the goods are made directly between the end customer and the respective Marketplace vendor.They also cite a patent-related decision (MP3-Player-Import) in which the haulier of patent infringing goods was not found to be possessing the goods for the purpose of putting them on the market and find this reasoning to be applicable to the case at hand.

Holding Amazon accountable for infringing goods that are stocked for Marketplace vendors without any knowledge of the infringing nature on Amazon’s side would overstretch the limits of liability, the FCJ closes its argument. However, the court seeks clarification from the CJEU.

Provided that ­– according to the previous instances – nobody except Coty itself is able to tell whether the products were intended for sale in the EU/EEA, the FCJ’s reasoning appears sensible. This Kat will keep you informed of future developments in the case!