Global E-commerce, trade mark use and managing infringement risk

A 4 May 2022 judgment of the UK Court of Appeal, Lifestyle Equities CV & Anor v Amazon UK Services Ltd & Ors[1], revisits the issue of territorial ‘targeting’ by websites with exposure to trade mark infringement risk. The issue, at least in Australia, has received less attention in the courts than might have been expected, given widespread online selling by platforms and other traders.

The Australian authority most often referred to, Ward Group Pty Ltd v Brodie & Stone PLC[2] (Ward Group), dates from 2005 and is a first instance decision only. A Full Federal Court looked at the issue in 2015, in Christian v Societe Des Produits Nestle SA[3] (Christian v Nestle) with relatively little additional analysis. In Lifestyle v Amazon, the UK Court of Appeal adopted a modern approach that provides international businesses with improved guidance on avoiding infringement risk in territories/markets not intended to be targeted.[4]

Early development of the ‘targeting’ principle

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

After a small number of Australian deliveries by the UK trader in response to what were trap purchases by the Australian supplier, the Federal Court rejected the infringement claim finding: “the use of a trade mark on the internet, uploaded on a website outside of Australia, without more, is not a use by the website proprietor of the mark in each jurisdiction where the mark is downloaded. However, … if there is evidence that the use was specifically intended to be made in, or directed or targeted at, a particular jurisdiction then there is likely to be a use in that jurisdiction when the mark is downloaded.”[5]

In Christian v Nestle, evidence of Australian contact details and shipping information was found to be sufficient to amount to targeting of Australian customers.[6]

Bringing the position up to date

Previous UK authority, not inconsistent with Ward Group, is somewhat more recent.[7] Lifestyle v Amazon brings the position up to date, taking account of the realities of international online trade.  

Lifestyle were the owners of the UK trade mark BEVERLY HILLS POLO CLUB, owned in the US by an unrelated party which markets identical goods, profiled on Amazon’s US platform, amazon.com – which is also accessible in the UK.

In finding against Lifestyle that Amazon had not infringed (other than for minor instances admitted), the trial judge found no targeting, assessing the relevant factors as follows:

• ‘targeting’ imports the notion of taking ‘deliberate aim at the consumers in another country’[8] and Amazon primarily directs its website to US customers[9];
  
  
• customers, such as those in the UK, would be aware of the disadvantages of shopping from a foreign website, including prohibitively high shipping and import costs and longer delivery times[10];
  
  
• the volume of traffic from UK visitors to amazon.com was much less than the volume of traffic from the US[11]; and
  
  
• UK customers would be aware that amazon.com was primarily a US platform.

The Court of Appeal reversed the trial judge, assessing the factors differently:

• It was a matter for objective assessment as to whether a website targeted customers in a particular geographic market and the subjective intention of the website operator with respect to its target audience was of limited relevance[12].
  
  
• The customer journey needed to be considered at each step – on the search results page, customers were advised that certain products would ship to the UK, on the product details page, customers were again advised that the selected product would ship to the UK, on the order review page, a shipping estimate to the UK was provided and currency was shown in GBP[13].
  
  
• Customers would not be aware of differences in shipping and import costs between goods listed on amazon.com and those on the UK website[14].
  
  
• Even if Amazon is primarily directed at US customers, it is plainly not restricted to them.[15]

The Court emphasised that each advertisement or product listing should be separately assessed in its context, as opposed to the website as a whole.[16] The Court refrained from addressing whether there was infringement by importation, given that purchases were made by individual consumer customers on terms and conditions that addressed passing of title and risk.

All advertisements and product listings were found to amount to trade mark infringement by way of advertising, offering for sale and selling.

Takeaway for online sellers

As was acknowledged by the Court in the Lifestyle v Amazon decision, the internet is global, and in the absence of geo-restriction users can access websites hosted anywhere in the world. This sits in contrast with the territorial nature of trade mark rights.

Ward Group adopted the targeting principle but, judged against Lifestyle v Amazon, did not address the matters required for a complete analysis. Also, in finding it relevant that Australian customers would be disinclined to meet the higher transaction costs associated with use of a foreign website, the Court adopted an approach that today could lead into error of the kind made by the primary judge in Lifestyle v Amazon. 

Whether or not it is appropriate now to re-consider Ward Group, Lifestyle v Amazon provides guidance by way of a useful checklist of matters for sellers to address in minimising the risk of unintended trade mark infringement in overseas jurisdictions.