3 April 2020TrademarksRory O'Neill

Coty v Amazon a mixed bag for e-commerce platforms, say lawyers

The Court of Justice of the European Union’s (CJEU)  Coty v Amazon ruling will come partly as a relief to e-commerce brands, but could be seen as a missed opportunity too.

This was the view of lawyers speaking to WIPR after the CJEU decided yesterday, April 2, that Amazon was not liable for unknowingly storing goods which infringed the trademarks of perfume brand Coty.

The case related to Amazon’s ‘Fulfilled by Amazon’ service, through which it stores and delivers third-party sellers’ goods.

The court held that Amazon could not be held liable if it was not aware of the infringement.

Joel Smith, head of IP at  Herbert Smith Freehills, said that the test for liability was all about “what level of control and influence Amazon had” over the infringing goods.

The more responsibility a platform takes in the sale and distribution of the third-party goods, the more open they are to a trademark challenge, he said.

The decision would reassure contract manufacturers, Smith said, who according to this ruling would still be “closer to an intermediary” and not liable for direct infringement.

Laura Orlando, HSF's managing partner in Italy, said the ruling should be seen in the context of previous CJEU rulings on the commercial relationship between luxury brands and e-commerce platforms.

"Back in December 2017, the CJEU had already ruled on a case specifically involving Coty and Amazon (case C-230/16), and concluded that it is lawful to prohibit sales on Amazon to protect a luxury brand," Orlando said.

"The main focus points of that case were luxury goods, selective distribution agreements and platform bans. One aspect the court focused its attention on is the fact that the lack of a contractual relationship between the supplier of the luxury goods and the third-party platform could be problematic in case of enforcement," she added.

Rosie Burbidge, partner at Gunnercooke in London, said there was "merit to Coty’s argument that once you start being more intimately involved in the storage and distribution of goods you take on more responsibility for associated infringing activity".

But, she said, holding Amazon liable could have damaging knock-on effects for smaller e-commerce platforms.

“Some e-commerce brands like Alibaba have been really pro-active on the due diligence front,” she said, but cautioned: “while Amazon almost certainly has the resources to do something similar, smaller e-commerce platforms won’t necessarily be in the same position.”

Tom Lingard, partner at  Stevens & Bolton, argued that online marketplaces and brand owners would be frustrated that the CJEU had not provided greater clarity on the ‘Fulfilled by Amazon’ service.

“They’ll be disappointed that the court has not clarified once and for all the question of how active a role the marketplace can take before it risks liability for infringement,” Lingard said.

“This has not been put to bed, so marketplaces should keep an eye on the issue as further cases on this point are bound to follow,” he added.

Trademark lawyers were likely to welcome the decision, Burbidge said, if only because it “re-establishes what we all considered to be the status quo” at a time of uncertainty across the IP world.

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