L’Oreal victory is far from cosmetic

The European Court of Justice (ECJ) recently ruled on whether eBay can be held liable for trademark infringements committed by people using its site to sell goods, and whether eBay is at fault in allowing the infringing goods to be sold. The decision could result in any similar online service being held liable for the actions of its users, so could have far-reaching consequences, says Chris Pulham, IP Partner at Rosenblatt.

The case was brought by L’Oreal after a number of eBay users had listed L’Oreal items for sale, including items not meant for sale inside the European Economic Area (EEA), tester products and goods without their original packaging.

For the items that were not meant for sale inside the EEA, the ECJ decided that even though no physical importing had taken place at the point of the offer to sell the product, the offer itself was enough to breach the Trade Marks Act 1994. The location of the offer was the relevant fact, not the location of the goods at the time of the offer. As the goods in question had not previously been offered for sale in the EEA, eBay should have prevented their sale and advertising to consumers in the EEA.

When discussing the sample and tester products, the ECJ decided that eBay had infringed L’Oreal’s trademark by facilitating the sale of products in the EEA that L’Oreal had not intended for sale in that market. Then the ECJ moved on to the question of whether the sale of L’Oreal products without their original packaging had infringed a trademark. The ECJ ruled that if the sale resulted in the removal of information such as the identity of the manufacturer, or led to the brand image being damaged, then it would be a breach of the directive on the enforcement of intellectual property rights. Obviously these matters would have to be decided case by case.

The ECJ also considered Article 14 of the E-commerce Directive, which says a website such as eBay, which hosts offers, would not be liable for the information stored by users if it does not have actual knowledge of illegal activity or information, and it is not aware of facts or circumstances from which the illegal activity is apparent, or if it acts expeditiously to remove or disable access to the information, once it becomes aware it is illegal. However, the ECJ decided that a hosting website cannot use this defence if it, as a diligent economic operator, should have identified the unlawful activity, and removed the information. This part of the ruling demonstrates the high threshold such websites must reach if they are not to fall foul of this area of European law.

The ECJ also ruled that member states should protect intellectual property by granting injunctions to prevent continued trademark infringements. So sites such as eBay are obliged to provide a service to allow brand owners to identify its users if an infringement is found. This ruling will place a heavy burden on sites like eBay, to monitor and control the activity of their users, or face the consequences. This will no doubt result in increased costs for eBay, which are surely likely to be passed onto its many users.

On the other hand, brand owners such as L’Oreal, whose products will often pass through eBay and similar sites, will be delighted at the ruling, which increases the likelihood of success in cases of trademark infringement against hosting websites.

Contact Chris Pulham, IP Partner
on 020 7955 1425 or
chrisp@rosenblatt-law.co.uk

top   back to issue main page