By Foo Yun Chee
BRUSSELS (Reuters) - Amazon (NASDAQ:AMZN) is not liable for unknowingly stocking goods for third-party sellers that infringe trademarks, Europe's top court said on Thursday, handing online retailers a victory in their battle against luxury goods companies.
The case, brought by U.S. cosmetics company Coty's German unit, illustrates the tension between brand names seeking to preserve their brand exclusivity and sprawling online platforms such as Amazon and eBay (NASDAQ:EBAY) fighting against curbs on their business.
Luxury goods makers have questioned the scope of online platforms' responsibility for products sold, or content transmitted, on their sites.
Amazon found itself in a German court after Coty said it violated its trademark rights by stocking its Davidoff perfume for third-party sellers and should be held responsible for such practices. The online retail giant's "Fulfilled by Amazon" scheme allows it to store and deliver goods for such sellers, a key part of its business model.
The German court sought guidance from Europe's top tribunal, the Luxembourg-based Court of Justice of the European Union (CJEU), which backed Amazon.
"The mere storage by Amazon, in the context of its online marketplace (Amazon Marketplace), of goods which infringe trademark rights does not constitute an infringement by Amazon of those trademark rights," judges said.
'POWERFUL REMEDIES'
The online retailer welcomed the decision. "Amazon continues to invest heavily in fighting bad actors on our store and is committed to driving counterfeits to zero," it said.
Coty said it was important that luxury brands be allowed to control online sales of their products.
"Not every virtual marketplace follows the same criteria and though online is an important growth channel, it is important that the framework of selective distribution is maintained here as well," it added.
The ruling does not give a free pass to online retailers, said Joel Smith, head of intellectual property at law firm Herbert Smith Freehills.
"Most European courts are now also willing to grant broad injunctions to force platforms to take down infringing items and search their sites," he said.
"Powerful remedies still exist to tackle the sale of counterfeit, look-a-like and infringing products online across the major sales platforms, despite this decision."
Coty gained the CJEU backing in 2017 to stop retailers selling their products on online platforms to protect their image, marking a landmark victory for brand names. Europe has more luxury brands than other continents.
