‘Online retailers have work to do’: Amazon loss raises risks for non-UK sellers
First-ever ‘targeting’ case at the Supreme Court ends in loss for Amazon | 'Backdoor sale of identical goods to UK trademarked goods' shut | Lifestyle Equities’ lawyer explains what it means for rights owners and online marketplaces.
In a precedential decision, the UK Supreme Court has unanimously dismissed Amazon's appeal in its case against Lifestyle Equities, concerning the cross-border marketing and sale of goods on the internet.
This was the first time that the issue of ‘targeting’ has been considered by the Supreme Court and is the “highest level as to what the principal should be,” said Andy Lee, partner, head of IP at Brandsmiths, which represented Lifestyle Equities.
Lifestyle Equities is the owners and exclusive licensee of UK and EU trademarks for the ‘Beverly Hills Polo Club’ brand.
Corresponding US trademarks are owned by another unrelated entity and Amazon was accused of selling those “identical goods” on its US website.
The court decided, on March 6, 2024, that Amazon targeted consumers in the UK by displaying the US branded goods on its US website and marking them available for shipment to the UK, which infringed the UK/EU marks—maintaining the injunction and order for an inquiry into damages.
The case deals with “essentially two conflicting issues of territorial trademarks and the online global trade landscape,” explained Lee.
Trademarks are limited to their registered territory, but with the prevalence of online platforms like Amazon, where goods are accessible worldwide, “how should we manage the tension between territorial rights and the borderless nature of e-commerce?” he questioned.
The court considered what the test should be and looked at whether Court of Appeal’s factors for considering if something is targeted were correct.
“The decision gives definitive guidance to businesses, and lawyers to advise them, but each case will be fact specific”, Lee added.
‘Blow to Amazon’
Jemma Green, legal director in Addleshaw Goddard's IP team, described the decision as a “blow” to Amazon, with the case expected to cause a “ripple effect” throughout the industry.
“I expect that a lot of online retailers have been following this case closely and will have been hoping for the opposite outcome,” Green added.
Dennis Lee, IP and technology partner at BDB Pitmans, said the judgment will have “far reaching implications” and the “backdoor that allowed the sale of goods identical to UK trademarked goods without a licence, appears to have been shut; and rightly so.”
The decision was also described as “good for brand owners” by Faye McConnell, senior associate at Browne Jacobson. Global marketplaces “often cause headaches” in brand enforcement where trademark rights are national, she added.
“Platforms often try to absolve themselves of responsibility for infringements, but they have evolved far beyond a true marketplace and need to take responsibility for helping brands protect their rights,” McConnell said.
Brandsmiths’ Lee believes the decision was “fair” as big online retailers have to “take some more responsibility to respect trademark rights as they can damage the brand, due to their size and reach”.
Court of Appeal clarifies 'targeting'
At the heart of the appeal was the application of EU and UK trademark law to the cross-border marketing and sale of goods on the internet.
Lifestyle alleged that Amazon targeted UK/EU consumers by advertising and offering for sale goods on its US website, infringing its trademark rights.
While the High Court initially dismissed Lifestyle's claims, the Court of Appeal sided with Lifestyle, granting an injunction and permitting an inquiry into damages—a decision Amazon then appealed.
Nick Aries, partner at Bird & Bird, explained the court had acknowledged that the law had to “chart a safe course” between watching trademark protection become “entirely illusory” in the context of internet marketing and sale, and creating an “exorbitant extension into the international sphere of the territorial jurisdiction” to protect trademarks.
“The court conducted a review of the steps the average consumer would take when purchasing the marked goods. It concluded that the factors indicating that the goods were targeted at UK consumers greatly outweighed the factors pointing the other way.
“Its decision appears to have left the law on ‘targeting’ unchanged providing welcome clarity for businesses,” added Aries.
The Supreme Court “regretfully” didn’t go further to rule on whether Amazon would have infringed the UK brand owners’ rights by simply selling and delivering goods through its US website to UK shoppers rather than targeting them, said Dennis Lee.
For online businesses, especially those operating in multiple countries like Amazon or on a smaller scale, it is crucial for them to carefully consider how they present their products, said Andy Lee.
“Some might opt for a completely risk-free approach, but regardless of their size, being mindful of how goods are offered is essential.
“Online businesses are going to have to take a much more cautious approach to how their goods are presented and who they deliver to, putting more onus on them to try and respect and trademark rights,” he added.
Average UK consumer
The court examined whether the average consumer in the UK would consider Amazon's US website to be directed at them.
Factors such as messages offering delivery to the UK, specifying goods available for shipment, and a page allowing orders for UK delivery played a crucial role in the court's decision.
The judgment highlighted multiple indications that pointed to Amazon specifically aiming at UK consumers, which were seen throughout the consumer's journey from the landing page, to then completing the purchase.
These included a message stating "deliver to the United Kingdom" on the landing page, pop-up boxes indicating that the displayed goods were available for delivery to the UK, and the labelling of these goods accordingly.
The pointers were seen as Amazon intentionally directing its efforts towards UK consumers.
“Many online retailers have a lot of work to do if they want to avoid the risk of infringing the rights of UK brand owners," argued Green.
To make its decision, the court had to conduct a multi-factorial analysis of whether the average UK consumer would consider that the marked goods were targeted at them—“ accessibility was not enough,” confirmed Aries.
The court also clarified that an appellate court should not interfere with a first instance judge's decision unless there is a legal error or flaw in the evaluation process.
In this case, the Supreme Court conducted a fresh assessment due to its disagreement with the lower courts' conclusions.
Lifestyle's additional argument that Amazon infringed trademarks by selling and delivering goods through its US website to UK/EU consumers was not addressed by the court, as the primary focus was on the targeting issue.
Takeaways for businesses
Businesses must now review their platforms to ensure they make intentional decisions in automating how they reach consumers and how they control these efforts to minimise the risk of legal issues, according to Green.
She explained that for brands, this gives them more power to stop website operators located outside the UK from targeting UK consumers.
In a broader sense, this expands the English court's jurisdiction, increasing the protection of UK trademarks in marketing and online sales that involve cross-border activities.
Additionally, websites that ship to the UK will now need to be clear that they are not ‘targeting’ UK shoppers. If a website does target UK shoppers it would need to be sure that the goods sold do not infringe any UK trademark rights, clarified BDB Pitmans’ Lee.
He suggested the judgment “leaves the door open” for non-UK websites to sell products in the UK without the necessary UK trademark rights, as long as they don't target UK customers.
However, “the practice of offering seamless shipping into the UK would now seem a very high risk for website operators to take,” added Lee.
Amazon was represented by Hogan Lovells.
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