In a much-awaited decision involving the German arm of cosmetics giant Coty (which owns the Davidoff brand) and Amazon, the European Union’s highest court quite recently ruled in favor of Amazon. By siding with Amazon, the Luxembourg-based Court of Justice of the European Union (CJEU) stated that the $1 trillion e-commerce titan is not at all liable for both storing and distributing orders revolving around counterfeit goods.
The Trademark Case, brought by the US cosmetics company – Coty’s German unit, outlines the tension between widely known brand names seeking to safeguard their brand exclusivity and sprawling e-commerce platforms such as eBay and Amazon fighting against curbs on their business. For quite some time now, luxury brand makers have begun questioning the scope of e-commerce platforms’ responsibility for the content transmitted or products sold on their respective official websites.
Amazon found itself in a German court after Coty alleged that the e-commerce giant infringed upon its Trademark Rights by stocking the Davidoff perfume for third-party sellers. Coty further stated that Amazon should be duly held responsible for committing such practices. The “Fulfilled by Amazon” scheme of the online retail giant enables it to stock and deliver goods for third-party sellers, which is indeed a critical part of its overall business model.
The German court then decided to seek guidance from the CJEU, which, in turn, ended up supporting Amazon. The CJEU stated that the mere storage of goods (which infringe upon the rights of the trademarks) by Amazon on its online marketplace doesn’t constitute an infringement by Amazon upon those trademark rights. It further said that Amazon has never offered such goods for sale or put them on the market, which leads to another point that the Amazon companies have never used the Davidoff mark themselves.
The trademark case, following the preliminary ruling, shall now be handed back to Germany’s federal court.
Amazon welcomed the CJEU’s decision by saying that it shall continue investing heavily to fight all the bad actors on its online store and put in sincere efforts to drive the counterfeits to zero. Coty, on the other hand, said that it is undoubtedly imperative for the luxury brands to be allowed to control the online sales of their offerings efficiently. It further added that every virtual marketplace follows different criteria and though, the online world is a crucial growth channel, it is also equally important to maintain the framework of selective distribution over here, as well.