ECJ: L’Oreal vs eBay – selling branded goods on online marketplace

In July the ECJ gave a noteworthy trademark ruling in a case between the French cosmetics giant L’Oreal and eBay, the online market. Normally we do cover only patent and technology but as it is quiet on the patent front (Europe is on holiday, so basically July and August are very slow here) some news on the trademark front. The gist of the decision on whether sales of trademarked goods on the eBay marketplace can constitute a trademark infringement reads as follows:

When an individual sells a product bearing a trade mark through an online marketplace and the transaction does not take place in the context of a commercial activity, the proprietor of the trade mark cannot rely on his exclusive right as expressed in Article 5 of Directive 89/104 and Article 9 of Regulation No 40/94. If, however, owing to their volume, their frequency or other characteristics, the sales made on such a marketplace go beyond the realms of a private activity, the seller will be acting ‘in the course of trade’ within the meaning of those provisions. Websites such as eBay may be liable for trademark infringements if they play an “active role” in promoting fake goods, the European Court of Justice has said.

The court’s ruling came in response to a case brought by French cosmetics giant L’Oreal against eBay in the UK. L’Oreal claims eBay is liable for sales on its website of counterfeit goods and “parallel imports” – L’Oreal products not intended for sale in the EU. eBay said the court gave “some clarity” while others saw it as a “blow”. L’Oreal said it was “satisfied” with the ruling. “This decision is in line with the position L’Oreal has taken for several years and is applicable in courts throughout the European Union,” a company spokesman said. In May 2009, the High Court in the UK ruled that eBay was not jointly liable for the sale of any counterfeit L’Oreal products through its website, but said that the online marketplace could do more to stop trademark infringement. The High Court asked the European Court of Justice (ECJ) to clarify the obligations of internet marketplaces under EU law.

In a statement, the ECJ said that it was for national courts to order online shopping sites to take measures to prevent trademark infringements. But it also said that companies such as eBay were deemed to play an “active role” for instance by “optimizing the presentation of the online offers for sale or promoting those offers”.

“When the operator has played an ‘active role’ of that kind, it cannot rely on the exemption from liability which EU law confers, under certain conditions, on online service providers such as operators of internet marketplaces,” the court said.

Stefan Krawczyk, senior director at eBay Europe, said: “The judgment provides some clarity on certain issues, and ensures that all brands can be traded online in Europe. “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.” Kirsten Gilbert, partner at Marks & Clerk Solicitors, which specializes in intellectual property, said the verdict was a blow to eBay. “Brands have been concerned for years now that the internet has facilitated the trade of counterfeit goods,” she said. “Items which would otherwise be available only from back-street traders have become instantly available to consumers in the privacy of their own homes. “L’Oreal and other brand owners will be hoping that online marketplaces like eBay now sit up and pay attention to the sales of counterfeit items which go through their sites.”

 

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