Although it has been widely heralded as a victory for Amazon, the recent Court of Justice (CJEU) ruling in Coty v Amazon[i] fails to address fully the impact of the “Fulfilment by Amazon” programme on Amazon’s potential liability for infringements on its service. As a result, it leaves online retailers and marketplaces facing an uncertain risk of liability in the future.
Luxury online
The case, which involves the high-end beauty house Coty and its Davidoff ‘Hot Water’ perfume, arises in the context of increasing difficulties faced by luxury goods companies in controlling infringements online. The infringements in such cases may involve fake branded goods or, as in this case, genuine (grey market) goods sold without the brand owner’s consent - potentially by unauthorised sellers outside the brand owner’s selective distribution network or from countries outside the European Economic Area. Coty discovered such infringing grey market bottles of its Hot Water perfume being sold by an Amazon marketplace seller in Germany through the Fulfilment by Amazon service. Following the seller’s undertaking to cease and desist, Coty asked Amazon to return the relevant bottles, whereupon Amazon sent them 50 bottles. It then transpired, however, that 11 of the bottles were not from the relevant seller’s stocks and that Amazon was unable to tell which seller’s stocks these 11 bottles came from[ii]. Coty took the view that the Amazon companies concerned were responsible for the infringements and sought an order requiring them to stop stocking and dispatching perfumes which had been put on the market without Coty’s consent. The German court referred questions to the CJEU about the extent of the online market place’s liability in this situation.
A narrow approach
The CJEU took a narrow approach. It restricted itself to the limited terms of reference provided by the German court and came to the – unsurprising - general conclusion that simply storing goods on behalf of another does not attract liability for infringements of which the person storing is unaware. By contrast, the Advocate General (AG) [iii] had taken a broader approach, taking into account arguments put forward by Coty about the nature of the Fulfilled by Amazon programme; the AG had concluded that this programme involved a high degree of involvement by Amazon in the offering and marketing of the goods going beyond simply storing them. On this basis the AG had advised that where Amazon are providing the goods via the Fulfilled by Amazon package, they will be liable unless reasonable measures have been taken to detect infringements.
Implications of the decision
While Amazon will welcome the CJEU’s decision, brand owners and online retailers alike would arguably have been better served by clear guidance from the CJEU about the level of fulfilment activity which is likely to result in intermediaries such as Amazon, eBay and others being liable for infringements on their services. We can expect further cases on this important point to follow.
A particularly difficult point for Amazon in this case is that they were unable to identify the relevant sellers for particular bottles of perfume, suggesting that they may have mixed up batches of perfume being sold by different sellers within the Fulfilment by Amazon service. The Court indicates in its discussion that, if this is the case, the perfumes may be regarded as being sold by the relevant Amazon companies themselves rather than on behalf of the individual sellers, leading to liability for the infringements on this basis. It seems inevitable that Amazon would have to make changes to its Fulfilment by Amazon service if and when a court makes a finding on that basis, but for now it looks like business as usual.
In the context of Brexit, it is also important to be aware that potential changes to the rules on free movement of goods post Brexit may result in changes to which goods will be regarded as infringing grey market goods in the future.
Tom Lingard