Responsibility on the Online Marketplace: Why Amazon Can’t Just Wash Its Hands of Design Right Infringements

Home > Responsibility on the Online Marketplace: Why Amazon Can’t Just Wash Its Hands of Design Right Infringements

In the ever-growing jungle of e-commerce, rights holders repeatedly encounter the problem of their intellectual property being infringed. Since it’s often a real challenge to identify the actual culprits, the focus is increasingly shifting to major online platforms like Amazon to take action against unlawful content.

The Düsseldorf Regional Court, with its judgment (14c O 67/23), has intensified the liability debate for online marketplaces in Germany. In a case where third parties sold lamps on Amazon that infringed design rights, Amazon was held liable as a perpetrator. The court based its decision on the CJEU standards from the trademark infringement proceedings initiated by Christian Louboutin against Amazon (C-148/21 and C-184/21).

Distinguishing Between Own and Third-Party Content – Perpetrator and Interferer Liability

Generally, in the liability question of internet platforms, the distinction between content and host providers is crucial. Content providers, offering their own content, are fully liable as perpetrators, including for injunctions, damages, and disclosure. Host providers, presenting third-party content, enjoy certain privileges under §§ 7 to 10 TMG and are only liable in their role as interferers. An interferer contributes to the infringement without being a perpetrator or participant and, according to the Federal Court of Justice (judgment of 22.07.2010, Az. I ZR 139/08), is also only liable if it is legally and factually possible and reasonable for them to prevent the indirect infringement and they have violated reasonable inspection obligations.

Amazon as a 'Hybrid' Online Marketplace

Amazon operates an online trade where it sells products and goods both in its own name and as a virtual marketplace for third-party providers. Unlike other platform operators like eBay, which merely provide a marketplace without their own sales activities, Amazon combines this service with direct merchandise distribution. This constitutes a ‘hybrid model’ compared to the aforementioned providers. Another peculiarity is that the shipping of products sold on the online marketplace can be handled either by the merchants or by Amazon. In the latter case, Amazon stores the goods in its own distribution warehouses and ships them to the buyers, known as ‘fulfillment by Amazon’ (FBA). This dual role brings a special liability situation.

Context of the Decision Before the CJEU

The focus of the decision was on the iconic Louboutin shoes with their red soles (Pantone color 18-1663TP). The red soles of the shoes are not just a trademark but also a registered design, identified by the Pantone color 18-1663TP. This color has achieved iconic status in the luxury shoe market and the fashion world in general. It serves not only as an aesthetic element but also has significant brand recognition and commercial value.

The lawsuit was based on Article 9(2)(a) of the EU Trademark Regulation. Louboutin argued that Amazon, by hosting these ads from third-party sellers without his consent, had “used” a sign identical to the contested trademark for goods identical to those for which the trademark was registered. This was primarily through the placement of advertisements on Amazon’s online sales platform but also extended to possession, shipping, and delivery of such marked goods. Thus, Amazon was directly liable.

These cases brought up fundamental questions about the “use” of a trademark in the context of online marketplaces. Accordingly, the CJEU was presented with several questions in these proceedings. In the specific context of these cases, it was about clarifying the following (simplified) preliminary questions:

The CJEU's Decision: Unified Presentation is Key

The CJEU’s answer in December 2022: a marketplace operator “uses” an infringing sign itself and can be held directly liable if a normally informed and reasonably attentive consumer gets the impression that there is a connection between the affected brand and the services of the marketplace. This is particularly the case when the internet user might think that Amazon is the one distributing the branded goods in its own name and for its own account. It is relevant that Amazon uniformly presents the offers published on its own platform by displaying ads for its own offers together with those of other merchants on its own marketplace, with Amazon’s logo appearing as a renowned distributor on all these ads, and that Amazon offers additional services to the merchants in the distribution of the branded goods, including storing and shipping them. In summary, the CJEU considered that Amazon integrates trademark-infringing signs into its own commercial communication as part of third-party offers and “uses” them itself, because it is not distinguishable for the consumer on Amazon’s website which offers come from the company and which are offered by third parties. However, it should be noted that the CJEU in a preliminary ruling procedure only clarifies an abstract legal question and provides a binding interpretation of Union law. The specific application of Union law to an individual case remains the task of the national courts. However, these standards created the conditions for the recent decision of the Düsseldorf Regional Court.

New Line of the CJEU?

This was not the first time the CJEU determined whether online marketplaces can be held directly liable for trademark infringements by third-party sellers using their marketplaces. In the case of Coty Germany GmbH vs. Amazon (C-567/18), the CJEU had already dealt with this question. Coty, a perfume distributor holding a license for the EU trademark DAVIDOFF, found ‘Davidoff Hot Water’ perfumes on Amazon’s marketplace that were not placed on the EU market by the trademark owner or with their consent. In this proceeding, however, the CJEU decided in April 2020 that Amazon could not be held liable as a perpetrator for the infringement of Coty’s Davidoff trademark in connection with the unauthorized sale and shipment of perfumes by a third-party seller via the Amazon marketplace. The court sided with Amazon in a decision that largely focused on the fact that the infringing perfume products were shipped directly by the seller and not by Amazon.

Conclusion

The decision of the Düsseldorf Regional Court is the first to apply the CJEU’s standards in the Louboutin case beyond trademark law to design law. This development signals a willingness of the courts to use the CJEU’s principles extensively, which represents a positive turn for rights holders after the disappointing outcome of the Coty-Amazon case.

Despite Amazon’s adjudged perpetrator liability, online sellers remain liable for their own offers of infringing products. However, the judgment strengthens the position of rights holders against marketplace operators. It makes clear that platform operators like Amazon are now more obliged to respect protective rights and prevent unlawful offers.

For rights holders, this judgment offers a more effective way to take action against large online platforms, rather than pursuing elusive individual infringers. It is an important step towards greater accountability of platforms, especially those operating on a hybrid model and selling both their own products and allowing third-party sellers to sell via their website, as is also the case with Saturn, Otto, and Zalando.