Amazon hit by ECJ ruling on online sale of counterfeit goods

Amazon may be responsible for the sale of counterfeit Louboutin shoes on its store, the EU’s top court has said, in a judgment that observers have said will embolden brands frustrated with the volume of knock-off goods sold on the ecommerce giant’s store.

In cases brought in Luxembourg and Belgium in 2019, Louboutin argued that third parties were selling inauthentic versions of the brand’s distinctive red-soled shoes, a protected trademark, to unsuspecting Amazon shoppers.

Asked by those lower courts for its interpretation of the law, the European Court of Justice made a preliminary ruling on Thursday that agreed with Louboutin’s concerns that Amazon’s website did not make it clear enough when customers may be purchasing goods from a third party, rather than directly from the ecommerce giant itself.

The case will now be handed back down to the lower courts for a final judgment. The outcome is likely to have repercussions for how Amazon displays and sells products from third parties on its store in the face of major brands’ longstanding concerns about counterfeiting.

“I think other brands will have a very close look at this case and say ‘hey, maybe we can we can go down the same route’,” said intellectual property lawyer Fabian Klein from Pinsent Masons. “The direction of the ECJ is pretty clear. Life has got tougher for Amazon.”

Amazon’s role in handling and delivering the counterfeit products was of particular significance, the ECJ said, as it blurred the line for consumers in knowing which company they had bought the products from.

Amazon said: “We will study the Court’s decision.”

In chasing its goal as the “Everything Store”, much of Amazon’s product selection growth has been fuelled by opening up its marketplace to third parties who own and list their inventory on Amazon’s online stores globally. These sellers were responsible for 58 per cent of all units sold on Amazon, the company said in October.

“Thus far, Amazon acted like a department store that allowed unknown third parties to display counterfeit goods on its own shelves, which not only led to great confusion amongst consumer on the origin of the goods, but also greatly bolstered the distribution of counterfeit goods,” said Thierry Van Innis, a lawyer for Louboutin.

“After this judgment, Amazon will have little choice but to adjust its business model and make a very clear distinction between goods offered by itself and goods offered by third parties,” he added.

The company has faced similar complaints in the US, where several state-level judges have deemed Amazon responsible for dangerous products sold by third parties.

Amazon has argued that it is a middleman and should not be held liable. In response to brands’ complaints, in 2020 the company launched a counterfeit crimes unit, made up of “former federal prosecutors, experienced investigators and data analysts” to take legal action against counterfeiters.