E-COMMERCE: AMAZON HELD LIABLE FOR DAMAGES CAUSED BY DEFECTIVE PRODUCT SOLD ON ITS ONLINE MARKETPLACE

09/09/2020

With the historical decision Cal. Ct. App., 4th District, No. D075738 – Bolger vs Amazon.com LLC (Fully available at the following link: https://law.justia.com/cases/california/court-of-appeal/2020/d075738.html) on August 13, 2020, the Fourth Section of the District Court of Appeals of the State of California stated for the first time that the e-commerce company is liable for defects and damages caused by products sold on its marketplace.

 

THE CASE
The case originates from the purchase on the Amazon online marketplace, made by Ms. Angela Bolger, of a spare battery for a laptop. The item at issue was ordered from the seller Lenoge Technology (HK) Ltd and accepted by Amazon itself, which handled, processed and finalized the delivery to the buyer. A few months after the purchase, the battery turned out to be defective, resulting in an unexpected explosion that caused serious injury to the woman’s body. The latter sued Amazon and the third Lenoge seller – who remained in absentia – in order to claim restitution of the amount paid for the purchase of the product and a substantial compensation for the damage suffered. In the first instance, the U.S. Judges upheld Amazon’s defense, pointing out that the company is a simple “online marketplace” but does not manufacture, distribute or market the product at issue directly. As a result, the Judges concluded, nothing can be imputed to them in relation to the defectiveness of the product. The judgment of first instance was followed by the appeal, in which the initial decision was completely overturned on the basis of a motivation – at the moment unique in the global legal scenario – which identifies a clear responsibility also towards the e-commerce marketplace.

THE LOGICAL-LEGAL REASONING OF THE COURT
Despite what was stated in the first instance, in the judgment of the U.S. Court of Appeals Amazon is identified as a real intermediary figure between the third seller on the one hand (Lenoge Technology) and the final buyer on the other (Ms. Bolger). In fact, the importance of Amazon within the product distribution chain is highlighted, beyond the mere terminological qualification that can be attributed to it as a simple “intermediary”, “facilitator” or real “distributor”. The most important elements that define the logical-legal reasoning developed in the second instance procedure concern the fact that Amazon has authorized the seller to offer its products for sale within the e-commerce marketplace, thus providing the digital space necessary for the offer to the consumers. Moreover the product at issue has remained stored in one of the c.d. “fulfilment center” by Amazon and subsequently sent from this last one to the buyer. In fact, according to what asserted by the U.S. Court of Appeal, since the beginning the buyer has never had a direct connection with the third seller, interacting simply and only with a single subject, that is the e-commerce marketplace. In addition, a further element highlighted by the Court concerns the payment made for the purchase of the product: specifically, it is pointed out that the transaction itself did not involve the third party seller, who remained totally unaware of what was purchased until Amazon itself decided to forward an official communication. Based on these multiple elements, the Court of Appeal comes to affirm that Amazon is “an integral part of the entire production and distribution complex that should sustain the course of the injuries resulting from defective products”[1]. In fact, in the eyes of the consumer, Amazon is the real seller of the product, the real player of the sales process and, therefore, since it is a fundamental contribution, full liability cannot be excluded in case of defective product sold on its e-commerce marketplace.

POTENTIAL IMPLICATIONS
The decision at issue is a real “unicum” and could pave the way for similar decisions on the subject of the liability of the online seller towards the consumer for defective products sold on its marketplace. In this regard, it should be duly highlighted the fact that this decision has been pronounced in the United States, where it is particularly frequent and consolidated the use of jurisprudence to address deficiencies from the interpretation point of view and to try to classify from the regulatory point of view the new figures and commercial methods increasingly used in everyday life.
However, in trying (as far as possible) to transpose the Californian Court’s ruling at European level, nowadays it would seem unlikely to accept such an innovative interpretation. It is currently strongly consolidated, in both doctrine and jurisprudence, the legal figure of the so-called “provider”, a category within which can be traced the so-called marketplace giants such as, among others, Facebook, Ebay and Amazon itself. These service providers, pursuant to art. 15 of Directive 2000/31 EC (so-called “Directive on electronic commerce”), transposed into our legal system by Legislative Decree no. 70 of 2003, are not required to fulfill a “general obligation to monitor the information which they transmit or store, nor a general obligation actively to seek facts or circumstances indicating illegal activities”, being required to “inform without delay the competent public authority of alleged illegal activities or information provided by the recipients of their services or to communicate information that allows the identification of recipients of their services”. It is clear, however, that the current regulation on this point, if carefully examined, does not include the case dealt with by the Californian Judges , which refers to the seller’s liability for defective products and not to the performance of illegal activities, as stated in the aforementioned regulation. This undoubtedly suggests the innovative approach of the Californian Court of Appeals, which could lead to the identification of a new legal figure even in Europe, completely different from the simple notion of “provider” and able to fully regulate the relationship that increasingly often now arises between the simple customer-buyer on the one hand and the giant marketplaces on the other, real active players in product sales procedures. In any case, while waiting to know if there could be, actually, a real regulatory evolution in this sense, it is unrealistic that such an evolution could be accepted overseas and introduced at a regulatory level without the essential intervention of the European legislator.

[1] On this matter, see the original text of the decision, which states that “Amazon is an integral part of the overall producing and marketing enterprise that should bear the cost of injuries resulting from defective products.” (Vandermark, 61 Cal.2d at p. 262).

Paolo Rovera


USE OF THE TRADEMARK IN COMMERCE: THE CJEU RULES ON THE SHARING OF CONTENT INFRINGING TRADEMARK RIGHTS CARRIED OUT BY WEBSITE CONTENT DIRECTORY OPERATORS.

15/07/2020

With decision of July 2, 2020 in case C-684/19, the Court of Justice of the European Union clarified the scope of the expression of trademark use in commerce through the internet contained in Article 5, paragraph 1, Directive 2008/95/EC – from 2019 replaced by Article 10, EU Directive 2015/2436. The Court held that the online publication of an advertisement containing others’ trademark performed by content directory website operators does not constitute use of the sign identical to others’ trademark made from the original advertiser, if the website operators have shared the advertisement independently in their own name and without any association with the original party which made the request for publication.

 

The case
The question referred to the Court for a preliminary ruling arose in a dispute between the German lawyers mk advokaten GbR and MBK Rechtsanwälte GbR concerning the restriction imposed on mk advokaten from using the group of letters “mbk” in commerce. The question raised by the referring court concerned the interpretation of Article 5, par. 1 of Directive 2008/95/EC, on which grounds the right of the holder of a registered trademark to prohibit third parties from using in commerce a sign identical or similar to its own trademark for goods or services which are identical or similar to those for which it is registered.

The main proceedings
In 2016, MBK Rechtsanwälte, owner of the trademark constituted by the name of the firm and registered for legal services, filed an infringement action against mk advokaten, also operating at that time under the name “mbk rechtsanwälte”. The General Court of the Land of Düsseldorf ruled in this regard by prohibiting mk advokaten – upon imposition of a fine – from using in commerce the group of letters “mbk” for legal services.
Despite this measure, the redirection of the entry “mbk Rechtsanwälte” to several company referencing websites that displayed an advertisement for the legal services of mk advokaten persisted. MBK Rechtsanwälte claiming that it was proven that the prohibition imposed had not been complied with, requested the Court to impose a fine on mk advokaten. In its defence, mk advokaten claimed that it had punctually complied with the Court’s order by removing the advertisement published on its behalf in the Das Örtliche online directory. Since the law firm had never requested to appear on other websites, according to it there was no further obligation to fulfil.
The Regional Court of the Land, finding that the advertisement placed online on the websites at issue benefited mk advokaten and was based on the one that mk advokaten had arranged to be placed in the Das Örtliche directory, imposed a fine on mk advokaten since the latter had not performed the required surveillance activity on possible publication of the deleted advertisement carried out by third-party site operators and failed to intervene for the removal of all occurrences of the concerned advertisement on the internet.

The question referred for a preliminary ruling
The law firm mk advokaten brought an appeal against that decision before the Higher Regional Court of Düsseldorf’s Land. The Court considering the interpretation of the term “use” pursuant to Art. 5, par. 1 of Directive 2008/95 to be essential to the resolution of the dispute before it, decided to stay the proceedings and to refer to the Court of Justice to determine whether use of the trademark in accordance with Article 5 of the Directive could be established if the advertisement infringing others’ trademark had not been published at the interested party’s request but was reproduced by the website’s operator from another entry that the interested party had placed in the past and which no longer existed.

The Court’s decision
The Court was essentially required to determine, in the case of the sharing of an advertisement prejudicial to another person’s trademark, which subject is liable for the use of the sign identical or similar to that mark.
The Court presented two alternative scenarios and provided two different solutions.
In fact, where a person operating in commerce orders, from the operator of a referencing website, the publication of an advertisement containing a sign which is identical or similar to another subject’s trademark, that person must be considered to be using that sign within the meaning of Article 5, par. 1 of Directive 2008/95. By contrast, that person cannot be held liable for the independent actions of other economic operators, such as those of referencing website operators acting on their own initiative and in their own name and with whom the original advertiser has no agreements.
The term “using” in Art. 5, par. 1 of Directive 2009/95 therefore implies active conduct and direct or indirect control of the act constituting the use: that is not the case if that act is carried out by an independent operator without the consent of the advertiser.
Such an assumption precludes the provision from being interpreted as meaning that a person may, irrespective of its conduct, be considered to be a user of a sign that is identical with or similar to another person’s trademark on the sole ground that such use is capable of providing a financial benefit to the former.

Implications
In the present case, it will be for the referring court to ascertain whether there is either a direct or indirect relationship between mk advokaten and the operators of the websites in question and to determine whether those operators had placed the advertisement online by order and on behalf of the law firm.
If no such connection exists, it should be concluded that MBK Rechtsanwälte is not entitled to bring an action against mk advokaten on the basis of the exclusive right pursuant to the Art. 5, par. 1 of Directive 2008/95 for the publication of the advertisement on websites other than the Das Örtliche directory operate by website operators on their own initiative and in their own name.
However, it remains open to MBK Rechtsanwälte to claim from mk advokaten the restitution for financial benefits on the basis of national law and to bring an action against the operators of the websites in question on the basis of Article 5, par. 1 subject of the Court’s interpretative work, the purpose of which is precisely to provide the proprietor of the trademark with a legal instrument enabling him to prohibit – and consequently to discontinue – any use of his trademark by third parties without his consent.

Alessia Asaro


ONLINE COPYRIGHT INFRINGEMENTS. THE RIGHTHOLDER MAY ONLY ASK THE HOSTING PROVIDER FOR THE POSTAL ADDRESS. A STEP BACK IN COMBATING ONLINE PIRACY?

15/07/2020

With the recent decision of July 9, 2020, in the Constantin Film v. YouTube case, C-264/19, the EU Court of Justice ruled that YouTube and Google are required to provide only the postal address, and not also the e-mail address and IP address pertaining to a user who infringes intellectual property rights.

 

For further reference, see also the news of April 21, 2020 concerning the preliminary question and the Opinion of the Advocate General (available https://www.lexology.com/library/detail.aspx?g=5f7486e7-e73e-4cdc-81af-0a0e65de8cbe)

With the said decision, the arguments raised by Advocate General Henrik Saugmandsgaard Øe in his Opinion of April 2, 2020 were upheld and the Court therefore stated that Article 8, par. 2, lett. a of Directive 2004/48/EC (Enforcement Directive) must be interpreted to the effect that the concept of ‘address’ contained therein does not refer, in the case of a user who has uploaded files infringing an intellectual property right, to his e-mail address, his telephone number and the IP address used to upload such files nor the IP address used at his last access to the user account, but only to his postal address.

This interpretation, which can be described as excessively formalistic, is based on the following arguments of the Court:

• the Enforcement Directive does not define the concept of address and therefore the determination of its meaning and scope must be carried out in accordance with its usual meaning in current language which, according to the Court, would concern only the postal address, that is to say, the place of domicile or residence of a particular person;
• this term in Community legislation does not therefore refer to the e-mail address, telephone number or IP address;
• examination of other acts of Union law referring to the e-mail address or IP address would show that none of them uses the term ‘address’, without further specification, to designate the telephone number, IP address or e-mail address;
• the interpretation thus given is also consistent with the aim pursued by Article 8 of the Directive, having regard to the general objective of that Directive.

As explained, the interpretation given by the Advocate General first and then by the Court is, in the writer’s opinion, excessively restrictive.
Indeed, it is questionable whether the common meaning of “address” is solely that of physical address and not also that of electronic address. Moreover, in the present case, the infringements occurred in an online environment where it is also reasonable to assume that the place where a person can be reached can also be determined by the email address and the IP address. It should also be considered that, in most cases, the data held by the providers are not reliable, especially the postal address data (in fact, false data are often provided which are not adequately verified). It follows that only by knowing – at least – the IP address the rights holder would have a better chance of identifying the perpetrators of the offence.

In any event, the judgment in question makes it clear that Member States may in any event grant holders of intellectual property rights the right to receive more extensive information, provided, however, that a fair balance is struck between the different fundamental rights involved and that the other general principles of Union law, such as the principle of proportionality, are respected.

There are indeed many precedents of the Italian Courts (especially the Courts of Milan and Rome) that have ordered disclosure orders against hosting providers far more extensive, which included data such as name, surname, date of birth, place of birth and address of residence, tax code, or name and registered office and identification number for tax purposes or for registration in the commercial register, or similar, in the case of a legal person (see, for example, the decisions of the Court of Rome, Business Division, of 13 March 2019, and the Court of Milan, specialized section on Business, of 23 May 2019). Article 156bis of the Italian copyright law, in fact, has a broader scope than Article 8 of the Enforcement Directive, expressly providing for the possibility to require intermediaries to provide “the elements for the identification of the entities involved in the production and distribution of products or services that constitute an infringement of the rights under this law”.

It should also be considered that the decision of the Court of Justice concerns the identification data of users of user generated services, i.e. generally natural people who do not derive a profit from their sharing activities. It is a fact that in this sector, the European Union is moving towards greater accountability of the intermediary: Article 17 of Directive 2019/790/EC, the so-called “Digital Single Market”, not yet implemented in Italy, states that the provider must conclude licenses with rights holders and implement recognition technologies, to this end also “covering” the activities of service users.
It is therefore trusted that the decision herein commented does not change the consolidated case-law, at least of the Italian Courts, regarding the disclosure of the data of entities responsible for offences, especially where they are not individual users, but real criminal associations with clear profit intentions.

Margherita Stucchi


PLANT VARIETIES: THE GROWING ROLE OF THE CPVO (COMMUNITY PLANT VARIETY OFFICE) BOARD OF APPEAL IN THE LIGHT OF THE RECENT CASE “SIBERIA”

08/07/2020

In the recent case before the Sixth Chamber of the General Court (see Judgment of the General Court, VI Chamber, 25th June 2020, T-737/18 – Siberia Oriental BV vs. Community Plant Variety Office), the latter reiterated two important principles governing the administrative procedure for assessing the registration of a plant variety right.

 

The case
The Netherlands company Siberia Oriental BV appealed the decision of the CPVO Board of Appeal of 15th October 2018 concerning the request for modification of the expiry date of the Community plant variety right of the variety Siberia, of the species Lilium L.
The Community plant variety right was granted by the CPVO on 2nd August 1996 and the expiry date was set on 1st February 2018. In August 2017, the applicant requested the CPVO to change the expiry date of the plant variety right, replacing the date initially fixed with 30 April 2020. The applicant claimed that, first, the duration of the plant variety right should have been calculated by the CPVO on the basis of Article 19 of Regulation (EU) No 2100/94 and that, secondly, the CPVO should have reduced the duration of the plant variety right in accordance with Article 116 paragraph 4 of that Regulation, in view of the period between the first sale of the plant variety in question and the date of entry into force of the mentioned Regulation.

The decision of the UCVV Board of Appeal
The Board of Appeal declared the application inadmissible on the ground, first, that the two-month period laid down in Article 69 of EU Regulation No 2100/94 for lodging an appeal against the CPVO’s decision had already expired. Second, the Board of Appeal affirmed that the application could not be based on Article 67 in combination with Article 87 of Regulation (EU) No 2100/94, since those provisions concern the initial registration of the expiry date of the Community plant variety right and not its modification. Third, the Board of Appeal stated that Article 53 paragraphs 4 and 5 of EU Regulation No. 874/2009 of the European Commission – concerning the procedure for the correction of the CPVO’s decisions in case of linguistic errors, errors of transcription or patent mistakes – could not be applied in the present case.

The appeal before the EU General Court
Siberia Oriental BV appealed the decision of the CPVV Board of Appeal before the EU General Court.
The applicant submitted two pleas: first, the alleged infringement of procedural requirements provided by EU Regulation No 2100/94. In particular, the applicant claimed that the decision of the CPVO was inadequately reasoned. Second, the applicant alleges that the Board of Appeal infringed EU Regulation No 2100/94 and any law relating to its application, including the TEU and the TFEU. In particular, the applicant submits that the Board of Appeal erroneously found: (1) that the application could not be based on Article 67 in combination with Article 87 of EU Regulation No 2100/94; (2) that the application could not be based on Article 53(4) of the Implementing Regulation No 874/2009.
In conclusion, the applicant requested the General Court to revise the CPVO’s decision by amending itself the date of expiry of the plant variety right in question.

The decision of the General Court
The General Court, required to cancel the decision of the CPVO, addressed the issue of the role it must play in relation to the decisions of an administrative body, namely the CPVO Board of Appeal. First, the General Court stated that the CPVO is required, in accordance with Article 73 paragraph 6 of EU Regulation No 2100/94, to take all necessary measures to comply with the judgment of the EU Court, having regard to the operative part of the judgment and its reasoning, without the EU Court being able to order the administrative body to carry out a particular activity. Therefore, the General Court declared the applicant’s appeal inadmissible in so far as it required the Court to change the date of expiry of the Community plant variety right. Second, the General Court set out the criteria on the basis of which a decision of the CPVO can be regarded as sufficiently reasoned within the meaning of Article 75 of EU Regulation No 2100/94 and Article 296 TFEU. As European case-law has repeatedly pointed out, the obligation to provide sufficient reasoning meets two objectives: first, to enable the persons concerned to know the reasons for the measure adopted by the administrative body and, second, to enable the EU Court to verify the lawfulness of the administrative decision.
More specifically, the General Court states that the CPVO can fulfill the obligation to provide sufficient reasoning to its decision “without responding expressly and exhaustively to all the arguments submitted by an applicant, as long as the CPVO explains the facts and legal considerations which are of essential importance to the economy of the decision (…) The reasoning does not necessarily have to specify all the relevant factual and legal elements, in so far as, in order to ascertain whether the reasoning of an act satisfies the requirements of Article 296 TFEU, reference must be made not only to the content of that act but also to its context and to all the legal rules governing the subject-matter concerned”.
With regard to the present case, the General Court found that the Board of Appeal of the CPVO had provided a sufficient reasoning for its decision, stating that the refusal to exercise the power to correct the expiry date of the plant variety right in question could not be appealed pursuant to Article 67 of EU Regulation No 2100/94 adding that such a refusal did not constitute a decision related to data registration or cancellation within the meaning of Article 87 of that Regulation.

Conclusions
The recent decision of the General Court increases the role that the Board of Appeal will play in the future. By imposing on the latter the obligation to give precise reasoning for its decision, the European Court has required the Board of Appeal to act increasingly like a Court of Justice rather than a simple office granting or rejecting applications for registration of plant variety rights.

Luigi Goglia, Camilla Macrì


A CLEAR NO TO NOSECCO! THE HIGH COURT OF JUSTICE OF ENGLAND AND WALES REJECTS THE APPEAL IN A NEW CHAPTER IN THE BUBBLE WAR. THE PROTECTED DESIGNATION OF ORIGIN “PROSECCO” IS AN OBSTACLE TO THE REGISTRATION OF THE TRADEMARK “NOSECCO”.

02/07/2020

By decision of 24 June, the High Court of Justice of England and Wales confirmed the previous rejection of the application for the trademark Nosecco of the Intellectual Property Office of the United Kingdom, considering the interference with the protected designation of origin “Prosecco”, under EU Regulation No 1308/2013, and also considering the risk that the sign could mislead the English public.

 

The contested trademark application
The well-known French company Les Grand Chais de France, producer of a non-alcoholic sparkling wine, had filed an application in January 2018 for the following international trademark for non-alcoholic wines:

The opposition procedure
The Italian Consortium for the Protection of the Controlled Designation of Origin Prosecco has successfully filed an opposition against the above trademark application before the Intellectual Property Office of the United Kingdom: the office pointed out that EU Regulation no. 1308/2013 shields protected designations of origin explicitly from “any misuse, imitation or evocation” and this also when the actual origin of the product is indicated (as happened in this case). The UK office also stressed that the term “evocation” does not require any risk of confusion: for having an evocation it would be sufficient to have a link to the protected term designation of origin to convey a new message to the consumer. Moreover, the trademark would be deceptive for the consumer who could well expect that the product thus indicated would, in some way, result from the elaboration of an authentic Prosecco.

The appeal
The decision was appealed by the French company. The combination of the initial negation ‘No’ with the adjective ‘secco’ (= “dry” in Italian language) would have the meaning of a witty indication for a beverage which is not dry and therefore sweet. The starting point of the argument was that knowledge of the Italian term ‘secco’ could be taken for granted, even by an English-speaking public. If anything, the imaginative creation “No secco” would be considered as a legitimate parody of the term Prosecco. The play on words could therefore also be interpreted as a “no” to “prosecco”, an interpretation that would distance the consumer from the protected term. To describe this argument the appellant had used the suggestive term “teach away”, and thus the expression known in the patent field to highlight the irreconcilable conceptual distance and different direction between two ideas. The mentioning that there would be “many reasons why people choose non-alcoholic beverages, including reasons of religion, health, low calorie requirements, legitimate participation in motorized traffic”, the French appellant had also implicitly suggested the possible relevance of fundamental rights to the present case. Moreover, according to the appellant, the decision of rejection was unjustifiably based on a “presumed consumer perception” since it was not considered necessary to have concrete evidence of the latter.

The decision of the High Court of Justice of England and Wales
The High Court of Justice of England and Wales rejected the appeal, confirming the previous decision: what matters is not the intention of the creator of the sign but, as correctly observed by the Office, the alleged public perception. The first association of the public, in the case of the sign “Nosecco”, would be the well-known “Prosecco”, while the possible second thought would derive from the denial, namely that it is not a Prosecco and that it is not a dry-tasting drink. There would therefore be no room for the application of a “teach away” doctrine in the field of distinctive signs. It was also reaffirmed that the application of the criterion of “presumed consumer perception”, even without resorting to ex officio technical advice, must be considered to be confirmed by settled case-law of the Court of Justice of the European Union.

Note
From a systematic – conceptual point of view, the decision of the High Court of Justice of England and Wales is not surprising: the text of EU Regulation 1308/2013, which expressly prohibits any “evocation”, has often been applied with severity even in the previous case law of the Court of Justice concerning the conflicts between the signs Cognac / Konjakkia; Gorgonzola / Cambozola or Calvados / Verlados. The application of the criterion of “presumed public perception”, to be determined directly by the Judge, can also be based on established case law. Nevertheless, in order to correctly determine the perception of the public, it will be necessary to observe very carefully changing customs. The present dispute can be framed in a broader context in which it can often be observed how the use of signs for non-traditional food and drink clashes with historical-traditional signs. The ever-increasing demand for new types of food, capable of satisfying increasingly different and diversified demands, sometimes supported by aspects such as religion and health, and on the other hand the possibility of enjoying food from increasingly diverse origins, will inevitably change the type of perception that the consumer will have in relation to the signs used in these areas.

Tankred Thiem