In the judgment handed down in Lifestyle Equities CV & Anor v Amazon UK Services on January 27, 2020 the English High Court found in favour of Amazon, concluding that the Amazon.com website did not “target” the UK.
The court also held that sales through the website could not be prevented by the brand owner.
The four models of “sales into the UK” that were relied upon were:
- Sales on Amazon’s UK/EU websites by Amazon itself (ie, where Amazon is listed as the seller).
- Sales on Amazon’s UK/EU websites where the sale is fulfilled by Amazon (ie, the seller is a third party, but the product is in Amazon’s warehouse and Amazon undertakes all the despatch work).
- Sales on Amazon’s UK/EU websites where the sale is fulfilled by the seller rather than Amazon (but Amazon sends all the emails and looks after the sales process.).
- Sales on amazon.com.
Lifestyle Equities owns the ‘Beverly Hills Polo Club’ trademark outside the US, and it had complained about the sale of its “US” products with this mark on each of the four channels listed above.
Between one to three of these sales were from the international store (ie, amazon.com) which was shown when people visited the amazon.co.uk website.
The issue of visibility
Lifestyle Equities brought the case hoping to secure an order that the products should no longer be visible to UK/EU consumers.
Amazon asserted that it could not limit the items which a consumer in the UK/EU could see. It also said that its website amazon.com did not target the UK/EU despite the company’s knowledge of when consumers were visiting the site from the UK/EU. These visitors’ personalised web experiences included options such as the use of local currency and order shipments from the US.
The key issues, from Justice Michael Green’s point of view, focused on whether the websites used the trademarks “in the course of trade”; whether the amazon.com website “targeted” the UK or EU; and whether the head company of Amazon was liable for the acts of the other Amazon companies.
Use in the course of trade
For most trademark specialists the question of whether Amazon was using the marks in the course of trade would be answered in the affirmative. You might conclude that it was using the marks to market the goods, and as part of any sale.
Justice Green concluded otherwise and referred to Blomqvist v Rolex (2014) which looked at whether customs regulations apply to the entry into the EU of individual counterfeit items sold on websites based outside the EU to EU-based citizens.
“FOR MOST TRADEMARK SPECIALISTS THE QUESTION OF WHETHER AMAZON WAS USING THE MARKS IN THE COURSE OF TRADE WOULD BE ANSWERED IN THE AFFIRMATIVE.”
He concluded that Blomqvist “elevated” the sale of a watch to an act of infringement when there was no indication of why the sale should be taken as having been in the EU, or why a sale constitutes the use of a trademark.
He also noted that while placing goods on the market was defined as an act of infringement in this judgment, the actual sale of goods was not, and that it could be seen throughout the decision that the judge in the particular case was dubious as to whether “selling” is an act of infringement.
A ruling that went astray
This is a fundamental mistake: if you come from the position that the sale of goods is not necessarily an act precluded by the legislation, you will easily go astray.
During the legal proceedings, Lifestyle Equities referred Justice Green to the passages of the authoritative work, “Kerly’s Law of Trade Marks and Trade Names” (16th edition, 2020). In that work Blomqvist was stated to be authority for the proposition that the sale is the infringing act when it is made within the consumer’s member state—even where the website cannot be held to have infringed in its marketing of the items due to a lack of targeting.
Lifestyle Equities referred the judge to other cases, including Cartier International v British Sky Broadcasting Limited (2014), in which Justice Richard Arnold stated that there could be no dispute about whether the websites advertising products to the public were using the marks in the course of trade in the UK. Justice Green rejected this as authority.
In fact, he went further in misunderstanding Blomqvist and understood that it also supported A v B (C-772/18, 2020), a case which suggested that a purely personal act (such as gift-giving) should not be classed as “use in the course of trade”.
Justice Green found that Amazon was not using the mark in the course of trade, and strongly suggested that this was because the end user was not engaging in commercial activity. This cannot be correct: while the end consumer may not be engaging in commercial activity, Amazon is.
A ‘wrong’ conclusion
Justice Green also looked at targeting in relation to amazon.com. By this point, the judge had been referred to Cartier, in which Justice Arnold had concluded that the website www.cartierlove2u.com was “targeted at (among others) UK consumers, as can be seen from the following: it is in English, sterling is among the currencies in which prices are displayed and orders from the UK are accepted and fulfilled”.
Given that amazon.com is in English, displays prices in sterling (if the user opts for this) and accepts and fulfils orders from the UK, one might have thought there was a natural conclusion to be reached.
However, Justice Green suggested that targeting is not the appropriate test as the English Court of Appeal had imposed the average consumer test without any basis.
As a result, he rejected the test proposed by Lifestyle Equities and instead favoured the test proposed by Amazon which included the subjective intent of Amazon and the visitor numbers. He concluded that despite all the changes Amazon makes to its website to accommodate UK/EU-based consumers, they would understand it to be a site primarily aimed at US consumers.
“THE DECISION PRODUCES MORE QUESTIONS THAN ANSWERS BUT, IF IT IS CORRECT, IT WILL THROW OUT HUGE AMOUNTS OF CASE LAW ON TARGETING.”
Such a conclusion is wrong. Not only does it suggest websites will attract liability in only one jurisdiction despite operating to multiple jurisdictions, it ignores the evidence of the objective features and whether they would lead a consumer to believe that a website was intended for them.
The judge appears to have been swayed by the decision in BDO v BDO Unibank, (2013) as the only relevant decision—despite the availability of Cartier, a decision about the applicability of the court’s jurisdiction to international websites.
The criteria which Justice Arnold found were sufficient in Cartier were found in this case, along with several further objective criteria which pointed towards the site being aimed at the UK.
Justice Green appears to have made a strange conclusion: that one needs to look at the listing itself to conclude on targeting. That cannot be right as a blanket ruling—while an advert may point towards or away from a finding of targeting, the main thrust of the website must play a part: in this case, the availability of prices in pounds or euros and the apparent availability of shipping to the UK/EU applied across the board.
To multiply the effect, the judge concluded that a clause in the terms of sale of items stating that all sales occurred in the US meant that the sales occurred in the US and there could be no liability elsewhere for the sales.
More questions than answers
The only way to possibly draw the threads together (if the Court is correct) would be if it found that Amazon was liable alongside the consumer for the importation of goods bearing the mark. If that were the case, the question would then be whether an individual could be liable for importation for personal uses, which this court seems to suggest cannot be the case. If that deprived the brand owner of the right to take action on sales, it would be a difficult pill to take.
But the terms in the user agreement for Amazon is likely to regulate only the contractual position of the purchaser and not preclude a claim for tortious acts by third parties. Merely saying in the terms and conditions that the sale occurs in the US does not preclude a finding (such as in Blomqvist) that it occurs in the UK/EU.
The decision produces more questions than answers but, if it is correct, it will throw out huge amounts of case law on targeting. If a website has lots of visitors from other countries so that the country in question is not a significant part of the visitor numbers, this case suggests it cannot be “targeting” and there is no relief.
It also suggests that if the website is selling to members of the public, it is not using the mark in the course of trade and there is no infringement; if they are using a subsidiary then only the subsidiary will be liable. It is a very worrying decision if it is followed.
Aaron Wood is trademark attorney at the London office of Blaser Mills Law. He can be contacted at: arw@blasermills.co.uk