US online retail giant Amazon is not liable for unwittingly stocking trademark infringing goods for third-party sellers, but should be diligent in checking whether products are legal, an adviser to Europe's top court said on Thursday. The adviser was giving his opinion on a case that pits Amazon against US cosmetics company Coty. The dispute is one of the many battles between luxury goods companies seeking to preserve their exclusivity and branding and online platforms such as Amazon and eBay fighting against online sales curbs.
It also raises the question of the scope of online platforms' responsibility for products sold, or content transmitted, on their sites.
The opinion from Manuel Campos Sanchez-Bordona, advocate general at the Court of Justice of the European Union (CJEU), came in a case involving Coty's German subsidiary, which took Amazon to a German court for stocking Coty's Davidoff perfume for third party sellers.
Coty said such practices violate its trade mark rights and that Amazon should be liable for stocking trade mark infringing goods. The German court subsequently sought guidance from the CJEU.
Companies which are not aware of trade mark infringements cannot be held responsible for storing such products for third party sellers, Campos Sanchez-Bordona said.
However, if they are actively involved in distributing the goods and if they operate a scheme like Amazon's, then they should show diligence in checking the legality of goods sold on their platforms, he said.
Under a scheme called "Fulfilled by Amazon", the US online retail giant stores and delivers goods for third-party sellers, one of the key features of its business model.
Companies cannot simply absolve themselves of responsibility and should be aware that without this control, they can serve as a channel for the sale of illegal, counterfeit, stolen or unethical products, Campos Sanchez-Bordona said.
Amazon said it took steps to combat illegal products on its platform.
"Amazon continues to invest heavily in fighting bad actors on our store and is committed to driving counterfeits to zero. Courts have ruled in our favour in the first two instances of this proceeding, and we are now awaiting preliminary legal clarification from the CJEU," the company said.
The Luxembourg-based court, which follows such non-binding recommendations in the majority of cases, would normally give a ruling in the next two to four months.
Coty did not immediately respond to a request for comment.
The case is C-567/18 Coty Germany.