According to a recent decision of the Court of Justice of the European Union (CJEU), the mere storage by Amazon, in the context of its online marketplace (‘AmazonMarketplace’), of goods which infringe trade mark rights does not constitute an infringement by Amazon of those trademark rights.
By judgment of 2 April 2020, the CJEU (case C-567/18) ruled on a preliminary question submitted by the German Federal Court of Justice (BGH) in the context of proceedings involving Coty (as the licensee of the Davidoff trade marks) and two companies of the Amazon group, regarding whether or not a company which, on behalf of a third-party seller, stores goods without being aware that they infringe trademark rights, uses that trademark even if it does not directly pursue the aim of offering the goods for sale or of putting them on the market.
In interpreting Article 9(2) of Regulation No. 207/2009 and Article 9(3) of Regulation 2017/1001, the Court pointed out that, according to its ordinary meaning, the expression ‘using’ involves active behaviour and direct or indirect control of the act constituting the use. The Court further noted that only a third party who has direct or indirect control of the act constituting the use is effectively able to stop such a use and therefore comply with prohibition inherent in trade mark rights, whereas the mere fact of creating the technical conditions necessary for the use of a sign and being paid for that service does not mean that the party offering the service itself uses the sign (see § 37, 38 and 43).
In light of the above, the CJEU concluded that “in order for the storage of goods bearing signs identical, or similar to trademarks to be classified as ‘using’ those signs, it is also necessary (…) for the economic operator providing the storage itself to pursue the aim referred to by those provisions, which is offering the goods or putting them on the market”. Therefore, when the economic operators do not themselves offer the goods for sale or put them on the market, they do not themselves use the sign in their own commercial communication (§ 45-47).
The CJEU therefore answers the question referred by the German Court as follows: “Article 9(2)(b) of Council Regulation (EC) No 207/2009 of 26 February 2009 on the [European Union] trade mark and Article 9(3)(b) of Regulation (EU) 2017/1001 of the European Parliament and of the Council of 14 June 2017 on the European Union trade mark must be interpreted as meaning that a person who, on behalf of a third party, stores goods which infringe trade mark rights, without being aware of that infringement, must be regarded as not stocking those goods in order to offer them or put them on the market for the purposes of those provisions, if that person does not itself pursue those aims”.
Although presently the subject matter of much interest, it still has to be understood whether this CJEU decision will in fact prove to be a breakthrough decision. There is indeed the possibility that it will remain a statement with little or no factual implication, determined by the Court’s obligation to limit its scrutiny to the boundaries of the very questions posed by the referring judge. It seems in fact that the BGH’s questions prevented the CJEU from taking into account Coty’s allegations concerning Amazon’s participation in the acts of offering to the public and in the advertising of the infringing products. In fact, in the decision at hand the Court itself recalls that other provisions of EU law, specifically the E-commerce Directive No. 2000/31/EC and the Enforcement Directive No. 2004/48/EC, allow legal proceedings to be brought against an intermediary who has enabled an economic operator to use a trade mark unlawfully. So that it is but to be given for granted that the BGH, in the case ahead, will not hold Amazon responsible for trademark infringement. All will depend on how the German court will interpret the underlying facts and whether and to what extent the intermediary Amazon will be considered to have had an active role.
In the landmark case L’Oreal v. Ebay (CJEU, 12 July 2011, C-324/09), the CJEU clarified that the ISP is not exempted from liability within the meaning of Article 14 (1) of the E-Commerce Directive, when the ISP has an active role allowing it to have knowledge or control of the data stored and “provides assistance which entails, in particular, optimising the presentation of the offers for sale in question or promoting them”. It was added that the ISP should be considered to have an actual knowledge pursuant to Article 14(1) of the E-Commerce Directive when “it was aware of facts or circumstances on the basis of which a diligent economic operator should have realised that the offers for sale in question were unlawful and, in the event of it being so aware, failed to act expeditiously in accordance with Article 14(1)(b)”.
As far as Italy is concerned, recent case law has extensively analysed the liability of ISPs. According to recent cases of the Court of Rome and Milan, the exemption from liability of the ISP according to Art. 14 (1) of the E-Commerce Directive:
- applies only to mere passive hosting providers. According to a recent key decision of the Italian Supreme Court (ruling n. 7708 of 19 March 2019) the hosting provider should be considered “active”, when it performs activities such as filtering, indexing, organising and exploiting illegal content by means of targeted advertisements;
- does not in any event operate when the right owners have notified the infringement to the provider. Even though it is not subject to a general obligation to monitor, the ISP cannot be exempted from its liability if it is made aware of the infringement by the right owner. In this case the ISP is responsible if it does not take action in order to remove the content and instead continues to provide the service which enables the illegal conduct.
The exemption from liability of Amazon acting as a marketplace was specifically excluded by a decision of the Italian Competition Authority (ICA). The case did not concern trade mark infringement, but rather the violation by the companies selling their products in the Amazon environment of the obligation to provide consumers with complete pre-contractual information according to the Italian Consumers’ Code. However, one does not see why the general principle established therein should not apply in case of trade mark infringement as well (Italian Competition Authority, 9 March 2016 No. 25911 “Amazon-Market Place”).
The ICA inter alia stated that for an ISP to be exempted from liability under Article 14 of Directive 2000/31, the ISP must qualify as an ‘intermediary service provider’ within the meaning of Section 4 of Chapter II of the Directive, i.e. it must be a neutral entity. That is not the case where the ISP, instead of merely supplying the service in a neutral manner by means of purely technical and automatic processing of data, acts in such a way to gain knowledge of, or control over, those data.
On that basis, the ICA acknowledged that while operating its marketplace Amazon normally plays an active role since: (i) Amazon stores the information provided by its customers on its server; (ii) Amazon is rewarded for this activity by collecting a percentage of the transactions made in the marketplace; (iii) Amazon processes data provided by sellers; (iv) Amazon arranges the methods of sale; (v) Amazon intervenes in the relationship sometimes arranging the shipment of goods or even the right of withdrawal; (vi) Amazon provides a payment platform; (vii) Amazon monitors the performance of sellers; (viii) Amazon filters contacts between sellers and consumers and, if requested by sellers; (ix) it provides assistance to optimize or promote certain offers for sale (§ 73-75).
Therefore, according to the ICA, consistently with recent Italian case-law, Amazon does not occupy a neutral position between the seller and the potential clients. In contrast, Amazon plays an active role which makes it aware and in control of the data and information concerning the sales. Therefore, the exemption provided by Article 14 of the E-Commerce Directive should not apply.
In conclusion, it is to be seen whether the BGH will depart from the above principles, thus deviating from the present European case-law scenario. For the time being, things seem to remain untouched as far as the standard for ISP liability is concerned, including in trademark infringement cases.