CJEU rejects warehousing liability under trade mark law

Out-Law News | 07 Apr 2020 | 11:52 am | 2 min. read

Businesses that store goods on behalf of others cannot be held liable under trade mark law for trade mark infringement where the goods stored infringe trade mark rights, so long as they have no plans to advertise or sell the infringing goods themselves, the EU's highest court has ruled.

In a judgment directly relevant to Amazon and the storage services it provides to other retailers, the CJEU ruled that, under EU trade mark laws, mere warehousekeepers cannot be considered to stock infringing goods for the purpose of offering them or putting them on the market if they have no knowledge of the infringement and where it is third parties alone and not them that intends to offer the goods or put them on the market.

Trade mark law experts Florian Traub and Alexander Bayer of Pinsent Masons, the law firm behind Out-Law, said the CJEU's ruling might not be applicable to other retail storage providers, however.

The CJEU issued its judgment in response to a question referred to it by the Federal Court of Justice in Germany, which is considering a dispute over trade mark infringement claimed by luxury goods manufacturer Coty against Amazon.

Before the German court, luxury goods manufacturer Coty has claimed that subsidiaries of Amazon infringed its trade mark rights by enabling the sale of 'Davidoff' branded perfume for which it owns trade mark rights, without its permission.

Businesses that hold trade mark rights in the EU are able to exercise control over how their brand is exploited. The law gives them the right to determine how their branded goods are first placed on the EU market and to take action against rival goods bearing identical or similar branding to their trade marks.

However, under the EU's E-Commerce Directive, online platforms cannot be held liable for others' illegal activity on their platforms, such as trade mark infringement, where they act as mere hosts and have no actual knowledge of the activity.

"The CJEU’s judgment seems, on first glance, to give a carte blanche to online retailers not to be held liable for trade mark infringement for goods which they merely store without being aware of the infringement," Traub said. "However, the judgment must be seen in light of the factual circumstances of the case."

A core factor in this case was that Amazon's storage business operations were considered as being separate from its sales platform business.

Traub said: "In cases where there are multiple businesses in a group but a blurring of lines in relation to which corporate entity is offering goods for sale, and where it is not easily discernible for the consumer to ascertain which party is responsible for the sale, courts are likely to take a bird’s eye view and find the retailer liable for the infringement."

Bayer said: "The CJEU's ruling considered the liability of warehousekeepers under trade mark laws. Retailers should beware other EU laws that provide other avenues for brand owners to establish secondary liability."

The EU's Intellectual Property Rights Enforcement Directive provides rights holders with a right to be able to apply for an injunction against intermediaries whose services are used by a third party to infringe an intellectual property right.