CJEU: the storage of goods by a natural person acting as an economic operator constitutes a use in the course of trade
In a judgment of April 30, 2020 (CJEU, April 30, 2020, A v. B., aff. C ‑ 772/18), the Court of Justice of the European Union (CJEU) ruled on the application, to natural persons, of the prohibition provided for in Article 5 of the Directive of October 22, 2008, approximating the laws of the Member States relating to trademarks (eur-lex.europa.eu). The so-called “A” company owns an international “INA” trademark registered for ball bearings with specifications for the heavy industry. In 2011, the Finnish authorities discovered that B, a natural person, had stored a batch of 150 ball bearings from China on which the “INA” trademark was affixed and that, subsequently, B had sent it to C who, finally exported the goods to Russia. As part of the transaction between B and C, B received a carton of cigarettes and a bottle of Cognac. The story does not specify if these two products, so often counterfeited, were also counterfeits. In any case, the Finnish authorities sued B before the criminal courts. The court of first instance ordered him to compensate A. However, the court of appeal set aside the judgment considering that “B had not used in the course of trade a sign similar to the registered trademark at issue in the main proceedings” (paragraph 13). A appealed to the Finnish Supreme Court (the Korkein Oikeus) which, finally, decided to stay the proceedings and referred the CJEU the following ruling:
whether Article 5(1) of Directive 2008/95, read in conjunction with Article 5(3)(b) and (c) of that directive, must be interpreted as meaning that a person who does not engage in trade as an occupation, who takes delivery of, releases for free circulation in a Member State and retains goods that are manifestly not intended for private use, where those goods were sent to that person’s address from a third country and where a trade mark, without the consent of the proprietor of that trade mark, is affixed to those goods, must be regarded as using that trade mark in the course of trade, within the meaning of Article 5(1) of that directive.
As a preliminary point, the court recalled the principle according to which “the exclusive rights conferred by a trade mark may, as a rule, be relied on by the proprietor of that trade mark only as against economic operators and, consequently, only in the context of a trading business” (paragraph 23). So what is an “economic operator”? Can a natural person be qualified as such? Article 5.1) of the directive refers to “any third party.” In other words, ubi lex non distinguit, nec nos distinguere debemus, so that an economic operator can either take the form of a legal person or a natural person. This is what the court recalls: “if the transactions carried out, by reason of their volume, their frequency or other characteristics, go beyond the scope of a private activity, whoever carries out those transactions will be acting in the course of trade” (paragraph 23) or, in other words, he/she becomes an economic operator. In the present case, the court considered that the products in question, “having regard to their nature and their volume, are manifestly not intended for private use, the relevant transactions must be considered to fall within the scope of a trading business” (paragraph 25). In addition, the European court also considered that B had placed himself in the position of an importer (point 26) and recalled that “ownership of the goods on which the trade mark is affixed is of no relevance” (Point 27), as well as export to a third country (point 28) and the importance of remuneration (point 29). The CJEU then confirmed several principles of the L’Oréal v. eBay case (CJUE, July 12, 2011, L’Oréal v. eBay, C ‑ 324/09, points 54, 55 and 91). In the end, the court ruled as follows:
Article 5(1) of Directive 2008/95/EC of the European Parliament and of the Council of October 22 2008 to approximate the laws of the Member States relating to trade marks, read in conjunction with Article 5(3)(b) and (c) of that directive, must be interpreted as meaning that a person who does not engage in trade as an occupation, who takes delivery of, releases for free circulation in a Member State and retains goods that are manifestly not intended for private use, where those goods were sent to his or her address from a third country and where a trade mark, without the consent of the proprietor of that trade mark, is affixed to those goods, must be regarded as using that trade mark in the course of trade, within the meaning of Article 5(1) of that directive.
This decision comes a few weeks after the Coty v. Amazon one, of April 2, 2020, in which it had decided that:
Article 9(2)(b) of Council Regulation (EC) No 207/2009 of February 26 2009 on the [European Union] trade mark and Article 9(3)(b) of Regulation (EU) 2017/1001 of the European Parliament and of the Council of June 14 2017 on the European Union trade mark must be interpreted as meaning that a person who, on behalf of a third party, stores goods which infringe trade mark rights, without being aware of that infringement, must be regarded as not stocking those goods in order to offer them or put them on the market for the purposes of those provisions, if that person does not itself pursue those aims.” (CJUE, April 2, 2020, Coty v. Amazon, Aff. C ‑ 567/18 : iptwins.com, 2020 -04-08).
In the present case, the decision specifies that B had been prosecuted before the Finnish criminal courts (paragraph 10). However, evidence of the intentional criteria was missing. In other words, it had not been proven that B knew that the ball bearings were counterfeit. Proof of criminal intent in criminal proceedings is essential. However, in several European jurisdictions, it is not in the civil lawsuits.
Moreover, the directive does not require the trademark owner to prove that the importer or the holder of the products is aware of the infringement of the rights of third parties. In the context of a civil lawsuit, the intention or, in a certain way, the knowledge of such an infringement, should be excluded from the proceedings. The main virtue of such a view is to compel the economic operator or the one who acts as such to give himself the means to ensure, as incontestably as possible, that the goods in question do not infringe the rights of third parties. Globalization has produced many intermediaries, all of whom must be held accountable for counterfeiting and, more broadly, infringing intellectual property rights. Both Amazon and B do have the means to verify that they are not storing counterfeit goods.