
Miele puts
retailers through
the wringer.
Miele puts
retailers through
the wringer.
of
Miele is taking action against sellers on Amazon Marketplace for infringing on its rights to photographs and alleged trademark infringements. Miele’s actions raise questions.
Miele Issues Cease and Desist Letters to Online Retailers
Miele, a long-established company based in Gütersloh, is one of the best-known manufacturers of household appliances, such as washing machines, dishwashers, and vacuum cleaners, including related accessories. The company positions itself in the premium segment and distributes its products within Europe through a selective distribution system, meaning it supplies only those retailers who meet specific quality requirements and accept the contractual terms. Miele also owns numerous trademarks.
For some time now, Miele has been taking action against sellers of Miele products who are not part of its selective distribution system, for various reasons.
Cease and Desist Letter Against an Amazon Seller
Anyone who sells branded products on Amazon knows that every product has a product page with an ASIN. Sellers offering the same product are added to that page, provided it already exists. The title, description, and photos are the same for all sellers listed under the same ASIN. If the product is offered under a trademark registered in the Amazon Brand Registry, only the trademark owner and sellers affiliated with the trademark can generally create product detail pages or suggest changes through the standard listing processes. Other sellers who did not create the product listing cannot do so in this case.
Miele has now taken action against a seller on Amazon whom we represent, who piggybacked on an existing ASIN for vacuum cleaner bags. It is not known whether Miele has registered its “Miele” trademark in the Amazon Brand Registry. However, it would be surprising if it hadn’t, since this would be the easiest way to prevent the use of the trademark for unauthorized products.
In the cease and desist letter, Miele accused the saleswoman of two things at once.
- First, the listing on Amazon includes product photos provided by the manufacturer, and therefore the use of these photos constitutes an infringement on M iele ‘s copyrights .
- Second, she may be selling goods that were not intended for the European market at all and are therefore causing an infringement on Miele’s trademark rights .
The cease and desist letter demands the submission of a declaration of discontinuance subject to a penalty, the provision of information, payment of damages, and reimbursement of attorneys’ fees in the four-digit range.
In principle, it is entirely legitimate for a rights holder to take action against infringers by issuing a cease and desist letter . However, this case involves certain unique circumstances that cast doubt on Miele’s actions.
Allegation of copyright infringement
Product photos are protected by copyright, even if they show nothing more than a vacuum cleaner bag on a table. Copyright law protects photographs regardless of whether they are artistically sophisticated. So far, so clear.
However, the question of whether the seller on Amazon is even liable for the use of the images is an interesting one. This question certainly arises if the seller did not upload the images and may not be able to replace or remove them.
To this day, the courts have ruled differently on this issue. In the past, the Munich Higher Regional Court has ruled that the retailer is not liable because simply providing a product number does not constitute an act of use relevant under copyright law. In a similar case, the Cologne Regional Court ruled exactly the opposite and treated the retailer as the infringer. The Cologne Higher Regional Court upheld this ruling in its conclusion, though it provided a different rationale.
What the Cologne Higher Regional Court Ruled
According to the Higher Regional Court of Cologne (Judgment of February 24, 2023 – Case No. 6 U 137/22 ) A retailer would not make the images publicly available on its own, because they are not within its control and because the platform alone decides whether they remain accessible. However, the merchant would commit an infringement of an unnamed public communication law because, by listing its product under the existing product number, it is the merchant that establishes the link between the third-party photos and its own merchandise in the first place. Furthermore, the court held that the argument that deletion is practically impossible would not hold up, because the merchant has the ability to exert influence through its contractual relationship with the platform and must, if necessary, enforce this through the courts.
Miele apparently isn’t taking action against Amazon
As far as can be seen, the images that Miele has objected to are still available on the product page on Amazon and continue to be displayed to anyone who lists an offer there. It therefore appears that Miele is not taking action against Amazon regarding the allegedly unlawful images, but only against the sellers listing products there.
In principle, a rights holder may choose against whom to take action, and the threshold for finding an abuse of rights is high. The abuse-of-rights provision under competition law does not apply in copyright law.
In practice, however, this decision leads to a result that requires explanation. Rights holders have their own procedures available on Amazon to report and have disputed content removed. A single request for removal would take the images off the product page and thereby end the alleged infringement for all sellers on that page at the same time. Instead, the individual seller is held liable, even though they generally neither uploaded the images nor can remove them.
If Miele, as the copyright holder, were really concerned about the images, they would probably have been taken down by now. They haven’t been. Apparently, there’s something else at stake.
Miele as the creator
Throughout the cease and desist letter, Miele is consistently identified as the author of the photos, thereby relying on the legal presumption of authorship. Under German copyright law, however, the author can only be a person, never a company. For companies, at most, a weaker presumption applies, which favors the holder of exclusive rights of use.
This weaker presumption, however, has an important limitation. It applies only to preliminary injunctions and claims for injunctive relief. It is of no help in cases involving requests for information or claims for damages. Anyone claiming both would have to specifically demonstrate the chain of rights from the photographer to the company. The copyright notice printed in the legal notice says nothing about this, as it merely identifies the party claiming the rights.
Cease and Desist Letter Based on Suspicion
Even more questionable in the cease and desist letter is the section on trademark law. The manufacturer does not accuse the seller of selling counterfeit goods. On the contrary, based on a test purchase, Miele confirms that the product is genuine.
The allegation is different. Because the same products are also offered outside the European Economic Area and because the retailer is not part of the authorized distribution network, Miele must assume that these are unauthorized reimports into the EU. If that is the case, the trademark rights would not be exhausted, and the sale would be prohibited.
The key phrase is in the wording itself. The manufacturer does not know where the goods come from. He merely suspects it. And yet he immediately demands a cease-and-desist declaration subject to a penalty, disclosure of information, damages, and attorney’s fees—along with a warning that, otherwise, he will recommend filing a lawsuit.
Formally, this is mitigated by the fact that the allegation of infringement is consistently phrased in the subjunctive and that the cease-and-desist declaration is demanded subject to proof of exhaustion. This does little to alter the effect, as the deadlines, demand for payment, and threat of legal action are absolute.
Authorization Request or Cease and Desist Letter
If the rights holder does not know whether there is actually an infringement of their rights, a request for authorization is the best course of action. The authorization request asks why the retailer believes it is entitled to use the trademark. It serves to facilitate an exchange of views and to establish the facts. In principle, it does not trigger any obligation to reimburse costs and does not give rise to liability if the suspicion proves to be unfounded.
By contrast, a cease and desist letter in the form of an intellectual property warning requires a serious and definitive demand for injunctive relief. According to case law, the threshold would not yet be crossed if the letter merely indicated the possibility of considering legal action. However, anyone who issues an immediate injunction, demands a declaration subject to a penalty, and demands payment is issuing a warning.
The letter we have before us refers to itself as a cease and desist letter, issues a prohibition effective immediately, and sets three parallel deadlines of two, three, and four weeks. It is therefore not a request, but a warning. In our view, the included reservation does not alter this, as it merely states that further action will be waived if counterevidence is successfully provided.
Unjustified Notice of Infringement of Intellectual Property Rights
According to the established case law of the Federal Court of Justice (BGH), an unjustified cease and desist letter regarding intellectual property rights constitutes an unlawful and culpable infringement of the right to conduct and operate a business, and thus gives rise to liability for damages on the part of the party issuing the letter.
This raises the question of whether a retailer who can later prove exhaustion would, in turn, have claims against Miele as the trademark owner.
Who should actually know where the goods come from
A selective distribution system works only if the manufacturer knows the flow of goods. It supplies exclusively to selected dealers, who may resell only to each other and to end customers, and admission to the system requires contractual obligations. Anyone who establishes and defends such a system typically knows very precisely to whom they have delivered which goods and when.
Then there’s the technical aspect. Packaging for brand-name products typically bears batch, lot, or serial numbers that allow them to be traced back to the production run and shipment. Manufacturers generally maintain internal databases for this purpose. And in this particular case, Miele even had the actual product in its possession, as the test purchase is documented in the letter with photos of the delivered package. As far as could be seen, no information on the packaging had been removed or obscured.
Anyone who has the goods in front of them, can read the numbers, and has their own database knows whether or not the goods were placed on the market in the EU. It is not known whether Miele can determine this or not. However, it would be surprising if the operator of a selective distribution system had no way of tracing, based on the product, to whom it was first delivered.
Nevertheless, in the cease and desist letter, Miele points out that the burden of proof regarding trademark exhaustion rests with the seller.
The Burden of Proof
In the view of the ECJ, the rules on the free movement of goods would require a change to the general rule of evidence if that rule could enable the trademark owner to isolate national markets and thereby maintain price differences between Member States.
A case before the ECJ reads like a blueprint. The manufacturer sold its products exclusively through a selective distribution network. Each device bore a serial number. The manufacturer maintained its own database indicating the target market for each unit. Externally, there was no labeling from which the intended market could be determined. The database was accessible only to the manufacturer, and no information was provided in response to inquiries from dealers.
In such a situation, the Court would consider it incompatible with the free movement of goods to place the burden of proof regarding exhaustion solely on the defendant distributor. In support of this, it would point out that the distributor would face considerable difficulties in providing such proof, because its suppliers would, for understandable reasons, be reluctant to disclose their source of supply within the distribution network. And even if the distributor were to succeed in providing such proof, the trademark owner could subsequently prevent any further purchases from precisely that member of the distribution network that had committed an infringement of its contractual obligations. The burden of proof must therefore be reversed, so that the trademark owner would have to prove that the specific items were first placed on the market outside the European Union or the European Economic Area.
In our view, the assertion that the burden of proof rests exclusively with the retailer who received the cease-and-desist notice—and that the trademark owner is under no obligation to present any evidence—is untenable when stated in such absolute terms.
The Dilemma Facing the Operator of a Selective System
What does it actually mean when a manufacturer says it doesn’t know where the goods come from?
Either the selective distribution system is managed as strictly as the letter describes. In that case, the manufacturer knows its authorized dealers, knows the delivery routes, and can determine for itself—based on the numbers on the packaging—where that specific unit was delivered. In this case, the assertion that one must assume a reimport is not a fact, but rather a decision not to investigate or—even worse—to allege a legal violation against one’s better judgment.
Or maybe the system just isn’t that comprehensive.
You can’t have it both ways. You can’t use the system’s integrity as an argument to claim that the outsider couldn’t have obtained the goods legally, and at the same time claim that you know nothing about the whereabouts of your own goods.
Why This All Looks Like Sales Policy
This approach suggests that Miele is less concerned with trademark and copyright infringement than with protecting its distribution system.
Neither copyright law nor trademark law protects such distribution systems. Once a product has been placed on the market within the EU or the EEA with the manufacturer’s consent, anyone may resell it, even those who are not part of the authorized network. A breach of the distribution system remains a contractual issue between the system operator and the authorized dealer and is of no concern to outsiders.
EU trademark law provides for an exception only if there are legitimate reasons against further distribution. No such reasons existed in this case.
How the specific case turned out
In this specific case, our client was able to prove exhaustion of trademark rights. In response to our arguments and objections, Miele declared the claims asserted in the cease and desist letter to be settled. However, should our client insist on reimbursement of costs resulting from the unjustified warning regarding intellectual property rights, Miele reserves the right to continue pursuing the claims for copyright infringement.
Conclusion
Miele’s cease and desist letters are not unfounded per se, but they are also not as clear-cut as their wording is intended to suggest.
The legal issues raised regarding copyright and the burden of proof are controversial. The fact that, instead of sending a request for authorization regarding trademark rights, the sender proceeds directly with a kind of conditional cease and desist letter suggests an attempt to exert maximum pressure on the recipient to give in quickly.
If exhaustion can be proven, this would generally constitute an unjustified warning regarding intellectual property rights, giving rise to corresponding counterclaims. In our view, any attempt to evade this liability by relying on the condition stated in the cease and desist letter is likely to fail.
Anyone who receives such a letter should neither sign a cease-and-desist letter nor ignore it. Both courses of action can be costly. Those affected should instead consult a lawyer they trust to determine whether and to what extent Miele’s claims are justified.
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