UK Supreme Court Rules Against Amazon

Yesterday, Wednesday 6 March, the U.K. Supreme Court released its judgment in the case Lifestyle Equities v Amazon. 

The case concerns the territorial reach of trade marks when used on the internet. As the judgment records (paragraph 1):

“[T]here would be no infringement of the rights of the proprietor of a UK trade mark if goods bearing the mark were advertised and sold to a UK-resident buyer on a visit to a shop in New York, and then brought back to the UK in the buyer’s personal luggage. The seller would not be using the mark in the UK, and the buyer would not be importing the goods in the course of trade.”

The issue in this case is if Amazon (and other such retailers) replicate such a transaction via the internet, with title in the goods transferring to the purchaser when delivered to the carrier in the U.S., is this an infringement of a U.K. trade mark?

Amazon marketed and sold in the U.S. via its U.S. website Lifestyle’s branded goods (most notably under its brand and registered trade mark BEVERLY HILLS POLO CLUB). Lifestyle contended that those goods were targeted at, and sold to, customers in the U.K. — a contention which Amazon denied. Amazon did accept, however, that if and in so far as any sales were preceded by an offer or advertisement targeted at consumers in the U.K., then there would be infringement, reflecting existing U.K./EU law. 

At first instance in the High Court, the judge held against Lifestyle, relying in particular on:

1. the U.S. website advised incoming consumers from the U.K. about the availability of the U.K. website;
2. that this would for U.K. consumers produce lower delivery times and prices than the U.S. website;
3. that there were statistically very few sales of the U.S. branded goods to the U.K.; and 
4. that Lifestyle’s purpose in bringing the claim was not so much to prevent sales to the U.K. but to prevent U.K. consumers who strayed onto the U.S. website learning of the low prices of the U.S. branded goods, thereby downgrading the value of the marks.

On appeal to the Court of Appeal, this decision was overturned. As recorded in the Supreme Court’s decision:

“[T]he (High Court) judge’s analysis of the targeting issue had been vitiated by a number of errors, and that upon a re-analysis of that issue, it was plain on the face of the relevant electronic pages that by its USA website Amazon targeted the US branded goods at consumers in the UK.”

Amazon argued before the Supreme Court that this went too far and catches acts by a foreign trader in a foreign country where there is no targeting.

The judgment at paragraphs 61 to 67 sets out a U.K. consumer’s journey through Amazon’s U.S. website and the various points at which such a consumer is invited instead to visit the U.K. website and the benefits of completing a transaction via the U.K. website (e.g., faster delivery times, no import taxes, etc.). It is beyond the scope of this article to go through all those steps, but in summary and as recorded in the Supreme Court’s decision (paragraph 70):

“In our view, balancing the relevant facts about Amazon’s marketing and offer for sale of the US branded goods on its USA website does show with reasonable clarity that it was targeting the UK as a territory, i.e. targeting consumers accessing its USA website from the UK. This is because the factors favouring that conclusion greatly outweigh the factors which might be said to point in the opposite direction. In outline, viewed from the perspective of the average UK consumer, they are from start to finish in their encounter with the USA website being told that they will be shown goods (including the US branded goods) available for delivery to them in the UK, and that those goods will indeed be delivered there if they choose to make an online purchase of them from the USA website.”

A number of factors influenced this decision, but perhaps most significantly is the content of a pop-up box which informs a U.K. consumer that “we’re showing you items that ship to United Kingdom,” and subsequent product pages reinforce the message of which goods are available to ship to the U.K. In other words, there was no attempt to hide from the U.K. consumer such products and the U.K. consumer was made aware that they were available for purchase at all times.

Accordingly, the Supreme Court agreed with the Court of Appeal’s decision that Amazon had targeted U.K. customers and thus that it had infringed Lifestyle’s trade marks. To avoid future allegations of trade mark infringement Amazon (and other online retailers who operate a similar model) will have to change their practices to ensure that its non-U.K. websites do not target U.K. consumers with branded goods protected by U.K. registered trade marks. 

Finally, and as an aside, this case was commenced before 31 December 2020, the date that the U.K. left the European Union. Technically, therefore, the case had to be decided under EU trade mark law. This does not, however, render the decision one of mere historic interest, as U.K. trade mark law remains rooted in EU legal principles, and one cannot anticipate a different decision had the case commended after that date. Equally, as EU and U.K. trade mark law has yet to differ, one might expect a court in the EU to come to the same conclusion on this issue.