Can Amazon be directly liable for trade mark infringement? A new CJEU referral

Is it a trade mark infringement to, e.g., advertise, offer, stock and ship goods carrying a sign identical or

similar to a registered sign? The answer is not a difficult one to provide: Articles 10 TMD and 9 EUTMR clearly indicate that these activities amount to prima facie infringement.

Things, however, get more complicated when the same question is asked with reference to an online marketplace, e.g., Amazon. Can such a platform be regarded as playing an active role and be directly liable for trade mark infringement if what is being promoted, sold, stocked and shipped through it is a counterfeit item?

This, in a nutshell, is the key issue at the heart of the very interesting referral to the Court of Justice of the European Union (CJEU) in Louboutin, C-148/21 (there is also another trade mark case concerning Louboutin, C-184/21, but the relevant questions are not yet available). This referral from Belgium was made in the context of proceedings that the famous red sole trade mark owner had initiated against Amazon over third-party listings of counterfeit shoes on the latter’s platform and their stocking and delivery by Amazon through its Fulfilment by Amazon (FBA) programme.

The referral is important for two main reasons:

• First, because national litigation has given contrasting answers to the question of whether an online marketplace may bear direct liability for trade mark infringement in relation to third-party listings;
• Secondly, because so far the CJEU has not explicitly gone as far as holding that the operators of an online platform may be directly liable for trade mark infringement together with users of their services. The situation, in this respect, appears different from copyright, where the direct liability of platform operators for copyright infringing-activities has been established, first, by the CJEU in its Pirate Bay decision [Katposts here] and is now ‘codified’ (but on this point we’ll know more when the CJEU releases its YouTube/Cyando judgment next month; on the AG Opinion, see here) in Article 17 of the DSM Directive [Katposts here].

National litigation: again … Louboutin

Back in 2019, The IPKat reported on what looked like a ground-breaking decision issued in Belgium in the context of separate proceedings from those at the basis of the present referral. 

A Brussels first instance court ruled that Amazon was directly liable for the infringement of the trade mark rights in Louboutin’s red sole mark (also at the centre of the CJEU referral in C-163/16; [Katposts here]). Specifically, the court considered that use of the mark in third-party ads displayed on Amazon’s marketplace relating to counterfeit goods and the subsequent shipment of such items by Amazon through its own FBA programme constituted direct infringement by the platform itself.

The decision was partly reversed on appeal last year (Court of Appeal of Brussels (9th Chamber), Amazon Europe Core sàrl, Amazon EU sàrl and Amazon Services Europe sàrl v Mr. C. Louboutin, 25 June 2020, published in Ing. Cons. 2020/2, p. 509).

The Brussels Court of Appeal ruled that Amazon was not liable for third-party ads, though it would be for ads relating to its own products. In relation to Amazon’s stocking and shipping programme, the court applied the teachings of the CJEU in a number of cases – including the then most recent judgment: Coty (also concerning FBA) – and ruled out any direct liability of the platform.

The (non-)liability of online marketplaces (yet)

In the already mentioned Coty judgment, the CJEU limited itself to answering – in the negative – the question referred by Germany’s Federal Court of Justice:

Does a person who, on behalf of a third party, stores goods which infringe trade mark rights, without having knowledge of that infringement, stock those goods for the purpose of offering them or putting them on the market, if it is not that person himself but rather the third party alone which intends to offer the goods or put them on the market?

In that case, what is (way) more interesting than the ruling is the Opinion of Advocate General (AG) Campos [Katpost here].

The AG considered that, if a platform actively contributes to the distribution of infringing goods, then it should be concluded that such platform (at least) stocks those goods within the meaning of Article 9(3)(b) EUTMR. In this respect, it would be irrelevant whether the platform has knowledge of or awareness of the infringing nature of the goods sold by its users, as long as it could be reasonably expected from it to act to detect the infringing activity.

The IPKat's favourite Louboutin model

The AG lamented the lack of information regarding the relevant factual scenario in the background proceedings: in a context like the one described by the referring court, Amazon would not stock goods for sale within the meaning of Article 9(3)(b) EUTMR. However, based on the parties’ observations and the hearing, it might be that FBA is actually more complex than how the referring court indicated: the model could actually be that of an ‘integrated store’ in which Amazon plays an active role in the selling process. The corollary would be that Amazon has an absolute control over said process.

Within FBA, the companies which are part of the Amazon group do not just stock and transport the goods in a neutral fashion: rather, they undertake a much broader range of activities. These include the preparation of the goods for delivery and their delivery, advertising and promotional activities, information to customers, and the refund of the price of faulty goods. Amazon also receives payment for the goods sold, which it then transfers to the seller’s bank account.

The AG concluded that in such a context Amazon would be playing an active role and be directly liable for infringing activities, having satisfied the requirements under the proviso. Importantly (and correctly), the AG also noted that, in the event that Amazon was found directly liable for trade mark infringement under that provision, the hosting safe harbour in Article 14 of the E-commerce Directive would not apply. This is nothing new, pointed out the AG: it was clarified by the CJEU as early as in L’Oréal.

Final remarks

Considering the discussion above, the new CJEU Louboutin referral is one to watch attentively. The resulting judgment may help shed further light on the (thorny) question of how far the degree of sophistication of the services provided to sellers by an online marketplace can go without amounting to own infringing activities of the platform.

Even if no specific question is asked on this point, it would be also a welcome clarification on the side of the CJEU to address whether a platform that does directly undertake trade mark-restricted acts may remain nonetheless eligible for the hosting safe harbour. This is particularly important, also considering the ongoing discussion around the proposed DSA, which has been presented as a 'crystallization' of CJEU case law: on the one hand, the Proposal refers the safe harbour protection to “any type of liability” (recital 17); on the other hand, it excludes the applicability thereof to “any service that is not an intermediary service” (Article 1(4)). How to reconcile these two? Can a platform perform restricted acts itself and be still regarded as an intermediary (a host service)?

Readers interested in providing comments on the Louboutin case to the UK Intellectual Property Office, can email policy@ipo.gov.uk by 18 May 2021.