Court opinion is clear
[2022] EWCA Civ 552, Lifestyle Equities CV and another v Amazon UK Services Ltd and others: This decision also has wider implications for distribution consent, suggests Giles Parsons.
[2022] EWCA Civ 552, Lifestyle Equities CV and another v Amazon UK Services Ltd and others, Court of Appeal, 4th May 2022This decision also has wider implications for distribution consent, suggests Giles Parsons
Key points
- When amazon.com offers to sell products to UK consumers in pounds sterling and arranges for shipping to the UK, it is targeting the UK and so making use of the trade marks on those goods in the UK
- Further, if amazon.com sells infringing goods from the US to UK customers, that is an infringing sale
Mark owners that want to prevent cross-border sales should determine whether distribution agreements include consent for such sales.
Here, Lord Justice Arnold has given a very clear judgment: when amazon.com offers to sell products to UK consumers in pounds sterling and arranges for shipping to the UK, it is targeting the UK and so making use of the trade marks on those goods in the UK.
Further, if amazon.com sells infringing goods from the US to UK customers, that is an infringing sale.
Lifestyle Equities, the first Claimant, is a litigious business that owns and licences EU and UK trade marks for “Beverley Hills Polo Club” (BHPC) clothing.
The US marks for “Beverley Hills Polo Club” are owned by an unrelated party. Lifestyle Equities complained that amazon.com was offering and selling US branded goods to consumers in the UK and EU, and in doing so, infringed the UK and EU trade marks.
The Court had two questions to answer: were Amazon’s advertisements and offers for sale use of the trade mark in the UK? And did its sales to UK and EU consumers constitute use of the sign in the UK and EU?
At first instance, Mr Justice Green held that there was no infringement. amazon.com was primarily a US site, and it was more expensive and more hassle for UK‑based consumers to buy from it.
The Judge said he was “troubled” by the evidence of Mr Haddad, the Claimants’ Managing Director. He also discussed the Claimants’ motives, noting: “[The Claimants do] not want UK/EU consumers to be able to see the sort of prices that BHPC goods are being traded at in the US.
Yet this is the way of the modern world and consumers do shop around on the internet.”
Differing opinion
In an emphatic judgment, Arnold J came to a very different conclusion. On the offer for sale, paragraph 67 is very clear:
“If one asks whether that offer was targeted at the UK, in my view it is manifest that the answer is yes. The purchaser is located in the UK, the shipping address is in the UK, the billing address is in the UK, the currency of payment is GBP and Amazon will make all the necessary arrangements for the goods to be shipped to and imported into the UK and delivered to the consumer in the UK.
"I do not understand how it can seriously be argued that this offer for sale was not targeted at the UK, notwithstanding the valiant attempt of counsel for Amazon to do just that.”
Although amazon.com is primarily targeted at US consumers, it is not restricted to them. There has to be a specific assessment in relation to the use complained of; even if general adverts on a website do not target the UK, a specific offer for sale to a particular consumer may.
There is no requirement for subjective intent on the part of a defendant; subjective intent may be useful in understanding whether objectively there has been use in the relevant jurisdiction.
There is a lot of case law around advertisements for sale, and websites that “target” the UK have been found to infringe. Arnold J said that this label (“target”) should not distract from the statutory test, which is: is there “use” of the sign in the relevant jurisdiction?
The first instance Judge had said that Mr Haddad’s evidence was “very revealing”. However, Arnold J said that it was not relevant to the question of infringement. In addition to the “offers”, the sales were also infringements.
The first instance Judge appeared to have been influenced by contract law considerations, such as where title and risk passed. These are not relevant. Arnold J said that the CJEU’s decision in C‑98/13 Blomqvist is clear:
“Sale of goods under a sign by a foreign website to a consumer in the UK or the EU constitutes use of the sign in the course of trade in the relevant territory, and … this [is] so even if there is no antecedent offer for sale or advertisement targeting consumers in that territory.”
Four different sales models were considered in the judgment:
1. Goods were sold through Amazon’s Global Store, which meant that amazon.com listings appeared on amazon.co.uk and amazon.de.
2. Goods were sold by Amazon through amazon.com.
3. Goods were sold on amazon.com by third parties but amazon.com fulfilled the orders.
4. Third‑party merchants sold through amazon.com but managed storage, shipping, delivery and other logistics.
Amazon had admitted before trial that the adverts, though not the sales, on amazon.co.uk and amazon.de had been infringements.
All the sales models were found by the Court of Appeal to infringe. Amazon did not argue that, if the other uses infringed, the sales through third‑party merchants would still not infringe.
Arnold J did not decide whether Amazon was jointly liable with the carriers for importation. Neither did he decide whether Amazon Inc was jointly liable for any infringement committed by the other Defendants.
He did subsequently order an inquiry as to damages. Although it was unclear whether Lifestyle Equities would recover a substantial sum (there had only been US$4,500 of sales through the infringing channels to the UK), it was entitled to an inquiry.
In that consequential judgment, Lifestyle Equities was also granted the standard injunction.
Implications
In a passage from the first instance decision, the Judge said that the US goods “are not ‘fake’ or ‘counterfeit’ goods in any normal sense of the word as they have been manufactured and put on sale in the US with the consent of the US rights holder”.
The case turns of course on whether the trade marks were infringed. Trade mark law is territorial, and trade marks are badges that indicate trade origin.
The US goods had not been put on the UK or EU market with the consent of the UK and EU rights holder, so use of the trade marks on the US goods in the UK or EU was infringing.
This judgment from Arnold J is written with his usual scholarly method and will be the first reference for trade mark lawyers dealing with potential infringements on foreign websites. (Daniel Alexander QC, who appeared for Amazon, may or may not take satisfaction in having his own summary of the law on targeting from Abanka v Abanca cited against him.)
On the face of it, one might think that this case was about an unusual brand, because most brands don’t have different ownership in different territories; but this case has a much wider application than that.
If a trade mark owner does not consent to specific goods having been put on the market in the EU, then its trade mark rights in respect of those specific goods have not been exhausted.
Trade mark owners that want to prevent cross‑border sales should check their distribution agreements – to determine whether there is consent – and their procedures for identifying parallel imports.
With the right structure in place, this case makes it easier to stop sales in the EU through unwanted channels outside of the EU.
Amazon sought permission to appeal to the Supreme Court; this was refused by the Court of Appeal, but it may still seek permission from the Supreme Court.
Giles Parsons is a Partner at Browne Jacobson LLP
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