BHPC is boxed in
Joel Smith discusses why the judge rejected the Claimants’ arguments entirely. [2021] EWHC 118 (Ch), Lifestyle Equities CV & Another v Amazon UK Services Ltd & Others, High Court, 27th January 2021.
This case involved a dispute between the owners of the Beverly Hills Polo Club (BHPC) brand and Amazon in relation to the listing and sale of genuine, branded products on Amazon.com for sale to consumers in the UK and the EU.
The High Court provided a reminder of its approach to determining whether a website is targeting consumers in the UK, meaning that the UK court has jurisdiction to determine a claim for trade mark infringement.
Party positions
The Claimants, Lifestyle Equities CV and Lifestyle Licensing BV (Lifestyle), were the owner and exclusive licensee, respectively, of the well-known BHPC trade marks in the UK and EU. Both companies are owned and controlled by one Mr Haddad. Complexity arose because the ownership of the BHPC brand globally is split between the US and the UK/EU. In the US, the trade marks for BHPC are owned by BHPC Associates LLC, a company controlled by Mr Haddad’s brothers.
Lifestyle brought proceedings for trade mark infringement and/or passing off against various Amazon entities (not just the UK entity, but two US entities and two Luxembourg entities). It alleged that the BHPC goods, lawfully manufactured, marketed and sold in the US with the consent of the US trade mark owner, were being listed and sold through Amazon.co.uk and Amazon.com to UK and EU consumers, thereby infringing the trade mark rights of Lifestyle in the UK and EU and amounting to passing off.
The evidence appeared to suggest that BHPC Associates LLC did not object to the sale of the products outside the US, in contrast to Lifestyle, which was extremely concerned about the sales and claimed that this form of “counterfeiting” was destroying its business in the UK and EU.
BHPC branded goods were listed and could be purchased in the UK/EU through four of Amazon’s business models. These were: Amazon Exports-Retail, through which goods purchased from Amazon.com could be shipped to the UK; FBA (Fulfilled by Amazon), where third-party sellers list their products on Amazon.com but Amazon handles the payment, shipping and delivery; MFN (Merchant Fulfilled Network), through which third parties sell internationally to customers in the UK by advertising on Amazon.com and whereby Amazon takes payment but does not arrange shipping and delivery; and Amazon Global Store, where a customer on Amazon.co.uk or Amazon.de can access listings on Amazon.com.
All of these Amazon business models were examined by the Court. For the purposes of the trial, the parties agreed for the Court to examine a representative transaction (made by carrying out a test purchase) for each of the four Amazon business models to determine questions of liability.
Liability question
The Court focused exclusively on the question of liability for trade mark infringement, as it found that the case on passing off added nothing and that the parties had not advanced further argument on this point.
Targeting was the main issue in the case. The Court referred to Lord Justice Floyd’s comments in Argos Ltd v Argos Systems Inc.1, where it was made clear that targeting was essentially a jurisdictional requirement when it came to assessing whether trade mark law in the UK was engaged. The mere fact that a website is accessible to consumers in the jurisdiction is not sufficient. The consumers must be targeted.
The Court went on to consider the useful summary of EU law set out by Lord Justice Kitchin (as he then was) in Merck KGAA v Merck Sharp & Dohme Corp & Others.2 The question of targeting must be considered objectively from the perspective of consumers in the UK, looking at all relevant circumstances such as the size of a trader’s business, the nature of the products and the number of visits made by customers to the trader’s website. It also includes taking into account the subjective intention of the trader concerned, as considered in the Argos case. There, Floyd LJ thought that the intention of the website operator was a relevant factor if the operator took deliberate steps to target internet activity in a jurisdiction and to market to consumers there (such as by including the UK in a list or map of territories covered).
The question here was whether the listing of the product itself on Amazon.com targeted consumers in the UK/EU, not whether the whole of Amazon.com did so. The Court found that whether you looked at it from the consumer’s perspective, or at the (limited) data as to sales and viewings from Amazon’s, it was clear that the products listed were not targeted at these consumers. As the evidence from the Claimants showed, the number of sales were small, but the Claimants’ case was aimed primarily at blocking all visibility of the listings to UK/EU consumers. The complaint essentially amounted to an objection to the mere accessibility of the listings on the websites (and the information within those listings), rather than an attempt by the Defendants to target consumers in the UK/EU.
Use considered
The Court took a detailed look at the case law related to “use” of a trade mark and also whether use was “in the course of trade”. In particular, it considered the case of Blomqvist v Rolex SA3, in which the question was whether the purchase and import from outside the EU of a counterfeit Rolex watch by an individual in Denmark amounted to a commercial activity that could be prevented by EU customs regulations. The Court here concluded that sales of goods that take place outside the UK/EU but to consumers in the UK/EU (and which are not preceded by targeted offers or advertisements for sale, and whether or not they are from an online seller) are not in themselves “use in the course of trade” within the UK/EU and do not constitute infringements of UK/EU trade marks. In fact, here the individuals were purchasing the BHPC goods in a purely private capacity, which cannot be an infringing use in the course of trade.
Joint liability
The Court reminded itself that the law on joint tortfeasance by common design is as stated in Sea Shepherd UK v Fish & Fish Ltd.4 As Lord Neuberger stated there: “Three conditions must be satisfied. First, the defendant must have assisted the commission of an act by the primary tortfeasor; secondly, the assistance must have been pursuant to a common design on the part of the defendant and the primary tortfeasor that the act be committed; and, thirdly, the act must constitute a tort as against the claimant.” However, given the conclusion on use in the course of trade, there could be no joint liability between the individual and any of the Defendants. Similarly, given that the Court found none of the third-party sellers liable (based on targeting), it followed that none of the Amazon parties could be jointly liable with a third-party seller. The case on joint liability therefore failed.
The Court declined to rule on the question of quantum in relation to trivial infringements pre-2019 by the Amazon Global Store, which the Defendants admitted, but instead encouraged the parties to agree the order rather than order an inquiry as to damages.
Useful review
This case involves a useful further review of the law on the liability for online sales platforms advertising and selling branded products from outside the UK to consumers in the UK, and whether an online platform may be liable for supplying or fulfilling the supply of those branded products. It looks in detail at the law on targeting, which spells out that there is no jurisdictional basis to find trade mark infringement in the UK if the listing on the website does not target UK consumers, but is merely accessible by such consumers – even if some of those consumers may go on to purchase the products.
Although the Claimants tried to make the case that Amazon was seeking to supply counterfeit products, which they alleged undermined their business in the UK/EU, the judge rejected that notion completely. He found that Amazon had acted entirely reasonably at all times, including by attempting to put in place a set of product restrictions to prevent the cross-listing, sale and shipping of certain BHPC products to consumers in the UK/EU. The Claimants were attempting to block the visibility of the goods for commercial reasons, partly to do with the split ownership of the brand.
The case is on appeal and will be heard shortly.
1 [2018] EWCA Civ 2211, para 48
2 [2017] EWCA 1834
3 [2014] C-98/13
4 [2015] UKSC 10
Key points
- This case provides a useful review of the law on liability for online platforms outside the UK advertising and selling branded goods to UK consumers
- The key to establishing the jurisdiction of the UK courts is to see if UK consumers were “targeted”, not merely that a site based overseas is accessible in the UK
Joel Smith is a Solicitor, Intellectual Property, Media and Technology
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