Trade mark infringement: Amazon inadvertently hits its target
Online businesses should take note of a recent Court of Appeal decision, in which Amazon was found to have infringed BEVERLY HILLS POLO CLUB (BHPC) trade marks by targeting and making sales of US branded goods to consumers in the UK and EU (Lifestyle Equities CV v Amazon UK Services Ltd  EWCA Civ 552). The decision also provides a helpful reminder of the relevant case law and the key principles of targeting.
Lifestyle Equities CV is the owner and exclusive licensee of various UK and EU trade marks relating to the BHPC brand. These include word and logo marks relating to various goods, including clothing. BHPC Associates LLC owns the corresponding BHPC trade mark rights in the US. The defendants are members of the Amazon group, which requires no introduction.
Lifestyle brought a claim against Amazon, alleging that its trade marks had been infringed by Amazon advertising, offering for sale and selling US branded goods to consumers in the UK and the EU. Lifestyle also claimed that Amazon was jointly liable with the end seller of the products, for the importation of US branded goods into the UK and EU. Lifestyle argued that it had never consented to US-branded goods being placed on the market in the UK or EU.
Amazon argued that its US website, www.amazon.com (the US website), was only targeted at US consumers, and that the UK and each EU country had their own targeted website.
High Court decision
The High Court dismissed Lifestyle’s claims (www.practicallaw.com/w-029-7710). It was necessary for the court to consider whether the adverts and offers for sale complained of constituted use in the course of trade in the relevant territory; that is whether they were targeted at the UK and the EU, under Article 9(2)(a) of the retained EU version of the EU Trade Marks Regulation (2017/1001/EU) (UK EUTM). Under Article 9(3) of the UK EUTM, adverts, offers for sale, sales and importations will constitute “use” of a sign. The court then had to consider whether, even if the adverts and offers were not so targeted, sales made to UK and EU consumers would constitute use of the sign in the UK and the EU.
The High Court agreed with Amazon’s argument that the US website had not targeted UK and EU consumers and therefore held that Amazon’s use of signs identical to the BHPC marks did not amount to use in the course of trade in the UK and the EU. It held that factors such as the average consumer, advert viewing figures, volume of website traffic and the subjective intent of Amazon were relevant and could be taken into account.
Targeting and context
Lifestyle appealed, arguing that the High Court had erred in law, by wrongly:
- Stating that the US website should uniquely target the territory in question.
- Imposing a requirement that the US website operator should subjectively intend to target the territory in question.
- Assessing the contexts of the various uses complained of.
- Treating highly relevant factors relied on by Lifestyle as largely irrelevant.
- Proceeding on the basis that Lifestyle’s case was that the US website targeted the world.
Court of Appeal decision
The Court of Appeal allowed the appeal. It confirmed that the question of whether there has been use of a sign in the relevant territory should be assessed objectively but that the following factors will also be relevant:
- Any evidence as to the subjective intention of the user in question.
- The perspective of the average consumer of the relevant goods.
- The different specific types of use complained of (Merck KGaA v Merck Sharp & Dohme Corp  EWCA Civ 1834; Argos Ltd v Argos Systems Inc  EWCA 2211, www.practicallaw.com/w-017-7490).
Adverts and offers for sale
The court disagreed with Amazon’s argument that the US website was only targeted at US consumers, and the UK and each EU country has their own targeted websites. Even if the US website was primarily directed at US consumers, as it was not restricted to them alone, the possibility that specific uses on the US website also amounted to targeting the UK and EU markets was not precluded.
The court found that all adverts and offers for sale in evidence constituted infringing uses of the relevant signs in the UK and the EU. In reaching this conclusion, the following factors were relevant:
- The homepage of the US website notified consumers that they could buy in eight different languages, in over 60 different countries and that goods could be delivered to the UK.
- The search result webpages and product detail webpages indicated that goods could be delivered and shipped to the UK.
- The order review webpage showed that where a potential buyer was located in the UK, with the shipping address in the UK, the billing address in the UK and the currency of payment as pounds sterling, Amazon would make all of the necessary arrangements for the goods to be shipped to and imported into the UK (including a pre-estimate of import duties) and delivered to the consumer in the UK.
Sales and importation
The court reiterated the words of the European Court of Justice in Blomqvist v Rolex SA, that in the case of a sale to a person in the EU it is not necessary to consider whether there has been prior targeting of EU consumers (C-98/13). Therefore, Amazon’s sales of US branded goods to UK and EU consumers constituted use of the signs in the relevant territory, and therefore amounted to infringing uses, even if the adverts and offers for sale did not.
At first instance, the parties had disagreed as to whether Amazon was jointly liable with the delivery carriers for the importation of US branded goods into the EU and the UK. However, during the appeal, Lifestyle had accepted that, if it was successful on the issues of targeting and sales, it was unnecessary for the court to determine this issue. The court, in declining to make a decision either way, noted that this is an important but not straightforward issue and so “should be decided in a case where it matters”.
Impact on businesses
Lifestyle Equities will have a significant impact on the liability of businesses operating websites across borders and their potential to be liable for intellectual property infringements. Going forwards, businesses will need to consider:
- Carrying out enhanced due diligence before working with third parties.
- Implementing geo-blocking on websites, to ensure that they are only accessible to the target market.
- Making changes to their websites to avoid being caught out for inadvertently targeting consumers in different territories. In this regard, Lifestyle Equities provides plenty of detail on what is likely to amount to targeting, and the correct legal tests to be used to assess whether this use may amount to an infringement.
- Including warranties and indemnities in contracts with third parties, requiring confirmations that goods can be sold in all markets in which the business operates, and addressing liability where issues arise.
© 2022 Thomson Reuters (Professional) UK Limited. This article first appeared in the June 2022 issue of PLC Magazine: http://uk.practicallaw.com/resources/uk-publications/plc-magazine.