Today’s article takes a look at a recent intellectual property case involving Amazon and the Court of Justice of the EU. The court finds that online marketplaces like Amazon can be held liable for trademark infringement, keep reading to learn more.

 

This is a highly significant case due to the status and profile of Amazon as a company, which is the largest e-commerce website in the world. Amazon’s logistics have helped it to become the first choice for people in the UK, with the ability of consumers to order products for next day delivery for no extra cost, setting it apart from competitors.

 

Despite this, not all products are sold by Amazon itself, with Amazon itself essentially functioning as a marketplace for merchants to sell their products. This results in a different level of quality among sellers, with some being better than others.

 

The finding by the Court of Justice (CJEU) holds online marketplaces to account by finding that online marketplaces like Amazon can be held liable for counterfeits sold by third parties. This is a landmark case which is contrary to an earlier opinion given by the Advocate General. It is important to remember that in terms of the application of this decision in the UK, Court of Justice decisions are not binding for the Courts of England and Wales, however these decisions do remain influential.

 

Background

 

The claimant in the case, Christian Louboutin, is a French designer of luxury shoes and handbags. He owns his own brand Christian Louboutin, and his brand is best known for their high-heeled women’s shoes. Christian Louboutin originally brought cases against Amazon in a Belgian and Luxembourg court in 2019 because Amazon had displayed ads for red-soled shoes. The reason why this was an issue is that Louboutin is famous for its red-soled shoes, to the extent that they are in fact registered as a trademark within the EU. It is also registered as a trademark in Belgium, Luxembourg and the Netherlands.

 

Louboutin discovered that a third-party seller, not Amazon itself, was selling counterfeit versions of Louboutin’s iconic red-soled high-heeled shoes. The company did not authorize his own products to be sold on the Amazon platform or Amazon’s third-party sellers. Louboutin believed that Amazon violated the exclusive rights of the Louboutin trademark, despite not selling the counterfeit product directly themselves. They therefore blamed Amazon for not making it clear whether a good is sold directly by Amazon or a third party.

 

Following the case being brought before the Court of Justice of the European Union, this led to preliminary questions as to the possible liability of Amazon for infringement resulting from the use of the illustrious red sole trademark. The colour red corresponds to Pantone code 18-1663TP or “Chinese red”. The uses of the trademark in question include:

 

  • The use of the trademark in the context of commercial advertising
  • The trademark being displayed in an undifferentiated manner, obstructing transparency as to the origin of the products.
  • The use of the trademark during the storage and the dispatch, by Amazon, of counterfeit products bearing the said trademark and sold by third parties.

 

Court decision

 

The European Court of Justice held that one party’s unauthorized use of the same trademark as the other party’s trademark in fact means the use of the trademark. As a result, they found that the presence of the trademark in question on the Amazon platform does violate Article 9(2a) of the EU Trademark Regulation (Regulation No. 2017/1001).

 

Among other things, the Court noted that such use may give users of the online marketplace the impression that the advertisement for the product does not come from a third-party seller, but from the operator of the marketplace (Amazon). Amazon operates a “hybrid business model” in which it acts as both a marketplace operator and a third-party logistics service provider, which leaves consumers potentially sceptical about the source of infringing goods (whether it’s Amazon or a third-party seller).

 

Briefly, the court held that Amazon is different from online platforms such as eBay. This type of e-commerce only provides a “market environment” and does not participate in promotion, payment and delivery, while Amazon is deeply involved in it.

 

Therefore, although Amazon should not be liable for infringement, it does not mean that Amazon is exempt from infringement allegations on the basis of joint responsibility. This also means that if there is a trademark infringement problem on the Amazon platform in the future, it is not only the problem of the third-party merchants, but the Amazon platform can also be responsible for the infringing and counterfeit products sold by the third party.

 

Our thoughts

 

This case is likely to be a divisive one. On the one hand, many argue that Internet giants like Amazon have too much power and authority over the online marketplace anyway, and therefore the decision is welcomed. Certainly, brands like Louboutin would also welcome this decision, which reduces competition by removing imitations of their products.

 

On the other hand, many might argue that the decision goes too far. By increasing bureaucracy and oversight because of Amazon bearing responsibility for advertising counterfeit products on their marketplace, this could result in costs being passed on to the consumer, as well as reducing their choice. It could also be argued that it is harsh to punish the marketplace directly for trademark infringements by a third-party seller.

 

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