Global e-commerce, use of trademarks and counterfeit risk management

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A judgment of 4 May 2022 from the United Kingdom Court of Appeal, Lifestyle Equities CV & Anor v Amazon UK Services Ltd & Ors, returns to the issue of territorial “targeting” by websites exposed to the risk of trademark infringement. The issue, at least in Australia, has received less attention from the courts than might have been expected, given the widespread online sales by platforms and other traders.

Australia’s most frequently cited authority, Ward Group Pty Ltd v Brodie & Stone PLC (neighborhood group), dates from 2005 and is only a first instance decision. A full Federal Court considered the issue in 2015, Christian against Société Des Produits Nestlé SA (Christian against Nestle) with relatively little additional analysis. In Lifestyle vs Amazon, the UK Court of Appeal has adopted a modern approach that provides international businesses with enhanced guidance to avoid the risk of infringement in territories/markets not intended to be targeted.

Early development of the “targeting” principle

Decided almost 20 years ago, neighborhood group involved a UK trader selling hair care products online, the website accessible in Australia and an Australian supplier of the products who owned the mark in Australia but not in the UK.

After a small number of Australian deliveries by the UK trader in response to trap purchases by the Australian supplier, the Federal Court dismissed the infringement claim finding: “the use of a mark on the Internet, downloaded on a website outside of Australia, without more, is not a use by the website owner of the Mark in each jurisdiction where the Mark is uploaded. However, … if there is evidence that the use was specifically intended to be made in, or directed or targeted at, a particular jurisdiction, it is likely that there will be use in that jurisdiction when the mark is uploaded.

In Christian against Nestlé, proof of Australian contact details and shipping information was found to be sufficient to amount to targeting Australian customers.

Post update

Previous British authority, not incompatible with neighborhood group, is a bit newer. Lifestyle vs. Amazon updates the position taking into account the realities of online international trade.

Lifestyle were the owners of the UK brand BEVERLY HILLS POLO CLUB, independently owned in the US which markets identical products, featured on Amazon’s US platform, amazon.com – which is also accessible in the UK. United.

In finding against Lifestyle that Amazon had not infringed (except for minor admitted cases), the trial judge found no targeting, weighing the relevant factors as follows:

  • ‘targeting’ implies the notion of ‘deliberately targeting consumers in another country’ and Amazon directs its website primarily at US customers;
  • customers, such as those in the UK, would be aware of the disadvantages of buying from an overseas website, including prohibitive shipping and import costs and longer delivery times;
  • the volume of traffic from UK visitors to amazon.com was much lower than the volume of traffic from the United States; and
  • UK customers would know that amazon.com was primarily an American platform.

The Court of Appeal reversed the trial judge’s decision, weighing the factors differently:

  • It was a question of objective judgment as to whether a website targeted customers in a particular geographic market and the website operator’s subjective intent in relation to its target audience was of relevance. limited.
  • The customer journey needed to be considered at every stage – on the search results page customers were told that certain products would be shipped to the UK, on ​​the product details page customers were again told that the selected product would be shipped to the UK, on ​​the order review page an estimate for shipping to the UK was provided and the currency was listed in GBP.
  • Customers would not be aware of the differences in shipping and import charges between products listed on amazon.com and those on the UK website.
  • Even though Amazon primarily caters to US customers, it is clearly not limited to them.

The Court emphasized that each advertisement or product listing must be evaluated separately in its context, as opposed to the website as a whole. The Court declined to consider whether there was infringement by importation, since the purchases were made by individual consumer customers on terms that addressed transfer of title and risk.

All advertisements and product listings have been deemed to constitute trademark infringement through advertising, offering for sale and sale.

Takeaways for online sellers

As recognized by the Court in the case Lifestyle vs. Amazon decision, the Internet is global, and with no geo-restrictions, users can access websites hosted anywhere in the world. This contrasts with the territorial nature of trademark rights.

neighborhood group adopted the principle of targeting but, judged against Lifestyle vs Amazon, did not address the questions required for a full analysis. Moreover, in holding relevant that Australian customers would be reluctant to bear the higher transaction costs associated with using a foreign website, the Court adopted an approach which today could lead to an error of the type of that committed by the main judge in the case Lifestyle vs. Amazon.

Whether or not it is appropriate now to reconsider neighborhood group, Lifestyle vs. Amazon provides guidance through a helpful checklist of issues sellers should address to minimize the risk of unintentional trademark infringement in foreign jurisdictions.

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