Next round of Coty v. Amazon: All flames extinguished? German Federal Court of Justice rules on platforms’ liability

22nd July 2021

German Federal Court of Justice, judgement of 21.01.2021, I ZR 20/17 – Davidoff Hot Water IV

Some cases never end – and Davidoff Hot Water (partially known as Coty v Amazon) might just be one of those. However, its fourth return to the German Federal Court of Justice (“FCJ”) – and two detours to the Court of Justice of the European Union (“CJEU”) – have brought it one step closer to the finish line.

The FCJ once again had to address the question of platform liability for trade mark infringements. It ruled both in favour and at the expense of Amazon: The mere stocking of infringing goods, here in the context of an online marketplace, does not amount to trade mark infringement. However, the operator of a platform can be held liable for having failed to comply with its duty of care after having been made sufficiently aware of an infringement.

Background

Cosmetics company Coty is the exclusive licensee for the “DAVIDOFF” brand for perfumes. As such, it sued platform operator Amazon for trade mark infringement due to the sale of Grey Market “Davidoff Hot Water” perfumes by third party sellers on Amazon Marketplace – a Grey Market product being an illegal import from outside the European Economic Area (“EEA”).

In the case at hand, Coty had made a test purchase of a perfume which was found to be a Grey Market product. The seller had used the “Fulfillment by Amazon” option, so the goods were stored in one of Amazon’s warehouses. Coty settled the issue with the seller and notified the operator of Amazon Marketplace of it, requesting that the stored goods would be returned. Amazon complied with the request and sent 30 bottles of perfume to Coty. Some of these products originated from another seller’s stock with Amazon and turned out to be Grey Market-products as well. Coty therefore requested the disclosure of that seller’s details, a request which Amazon did not comply with.

Coty then sued the Amazon entities operating the Marketplace and the warehouse for trade mark infringement. It requested an injunction and further information on the respective sellers and details about all perfumes stored at the same location.

The Munich Regional Court and subsequently the Munich Higher Regional Court dismissed Coty’s action. Upon appeal, the FCJ established an essential question critical to the infringement test: Does a person store goods “for the purpose of offering them for sale or putting them on the market” if it stores these goods on behalf of a third party without having knowledge of the infringement and without intending itself to offer the goods or put them on the market?

The FCJ referred the question to the CJEU as it required the interpretation of article 9(3)(b) EUTMR. The CJEU, in its notable decision Coty v Amazon, clarified that the mere stocking of infringing goods did not amount to trade mark infringement, if the operator of the warehouse neither had knowledge of the infringement, nor the intention of putting these goods on the market themselves. Please see further details about this decision in our article here.

The Davidoff Hot Water IV-decision

In accordance with the CJEU’s interpretation, the FCJ confirmed that neither the operator of Amazon Marketplace, nor the operator of the warehouse had offered the infringing goods on the market within the meaning of article 9(3)(b) EUTMR. The operator of the warehouse did not have knowledge of the infringement and did not intend to distribute the goods on its own account, whereas the operator of the Marketplace had never been in possession of the goods in question. Both could therefore not be held primarily liable for the infringement.

However, the FCJ confirmed that Amazon could be liable for a breach of its duty of care under the regime of Störerhaftung. It would then also be liable for information on the sellers and details about the infringing products. A duty of care generally arises once the platform provider has been made aware of a clear infringement. There is no general monitoring obligation. In the case at hand, Coty had notified the operator of Amazon Marketplace of the infringement and had referenced the infringing offer in their notice, but they had not notified the operator of the warehouse. The FCJ refused to attribute the knowledge of the Marketplace operator to the warehouse operator.

With regards to the operator of the Marketplace, the FCJ found that the denial of a duty of care could not be justified on the grounds that the infringement was not evident from the contested offer on the Marketplace. It would not have been an unreasonable requirement for Amazon to contact the seller to obtain more information about the relevant goods. The factual findings, however, did not suffice to establish a breach of duty of care and the FCJ therefore referred the case back to the Munich Higher Regional Court to make those further factual findings.

Implications

This decision is in line with previous case law and implements the requirements for trade mark infringement set out by the CJEU in Coty v Amazon. It clarifies that the mere stocking of infringing goods by itself does not amount to a trade mark infringement.

However, the decision further shows that even if there is no trade mark infringement following the criteria set out by the CJEU, right holders can still pursue claims against platforms in Germany based on breach of duty of care. The FCJ thereby stresses the importance of duty of care as a separate liability regime, depending on a substantiated notice of the infringing offer by the right holder. Platform operators will have to pay more attention to these notices in the future, particularly with regards to information that they can easily collect themselves. They will have to communicate with right holders and potential infringers and cannot rely on automated processes. In turn, this should promote communication between the stakeholders in their pursuit of reducing infringing content online.