L'Oréal wins eBay court case

13 July 2011

LUXEMBOURG: L'Oréal has won a case against eBay in the European Court of Justice which could help companies protect brand integrity on the web.

According to the ruling, firms running internet marketplaces like eBay cannot be exempted from liability about the sale of counterfeits if they have knowledge or control over the products made available on their sites in Europe.

Similarly, these portals could be held responsible should they fail to move sufficiently quickly upon discovering or being informed such offerings are for sale via their pages.

The court also decided that trademark regulations enacted by the European Union must be regarded as applicable where items are sold from outside this area, but are demonstrably aimed at shoppers inside the EU.

Following the ECJ's decision, national courts within the European Union can instruct platforms such as eBay to take steps that would halt or prevent any future contravention of intellectual property legislation.

However, it also suggested website operators might not be viewed as liable for abuses if they just give users the tools to display images corresponding to trademarks.

In 2007, L'Oréal had pressed eBay on issues including the sales of samples, items supposed to be distributed for free and lines only sold outside of Europe, but failed to receive the hoped-for reassurances.

"European trademark law has been straining under the pressure of dealing with the internet age," said Kirsten Gilbert, a partner at law firm Marks & Clerk.

"Brand owners like L'Oréal will be jubilant at today's ruling. Trademark owners are no longer alone in their fight for online brand protection.

"Instead, as is the case on the High Street, companies which facilitate sales can be held accountable for the goods which pass through their hands."

Stefan Krawczyk, senior director and counsel government relations for eBay Europe, stated the decision offered greater clarity.

"As a marketplace, eBay provides a level playing field for all online sellers and will continue building constructive partnerships to expand the range of brands being sold on eBay," he said.

The case was heard in the UK high court in 2009 and referred to the ECJ. A French court had previously ordered both parties enter mediation the same year, and a Belgian court rejected L'Oréal's argument in 2008.

"A lot of cases will still have to be assessed by the national courts. We've moved on – we fulfill most of these conditions now anyways," said Krawczyk.

One area where auction services could face legal claims from manufacturers is if their paid-for search terms end up promoting listings which fall foul of copyright law.

Dominic Batchelor, a partner at law firm Ashurst, said: "eBay will be concerned by this decision, which means it may be forced to prevent intellectual property infringements by its users.

"The practical and cost implications could be extensive, and any additional costs will presumably be passed on to eBay's users. What eBay wants is a checklist, 'If we are following this, we're OK. What we don't have here is that sort of certainty."

Data sourced from BBC, Bloomberg, Wall Street Journal; additional content by Warc staff