December 20, 2010
In the case introduced by L’Oreal against auction site eBay and referred by the High Court of Justice (England and Wales) to the European Court of Justice (ECJ) the Advocate General, Niilo Jaaskinen, published on 9 December 2010 its opinion that the site could not be considered liable for trademark infringement committed by its users in case it was not expressly notified regarding such infringements.
However, in case electronic marketplaces, such as eBay, do not take measures to stop a trademark infringement when notified of it, they will no longer be except from liability: “Regarding the same user and the same trade mark an operator of an electronic marketplace has actual knowledge in a case where the same activity continues in the form of subsequent listings and can also be required to disable access to the information the user uploads in the future. In other words, exemption from liability does not apply in cases where the electronic marketplace operator has been notified of infringing use of a trade mark, and the same user continues or repeats the same infringement,” says the Advocate General.
In 2007, L’Oréal notified eBay of its concerns about the sale of its goods on eBay’s European websites and, dissatisfied with the site’s answer, brought a legal action against eBay in Belgium, Britain, France, Germany and Spain. L’Oreal claimed eBay was equally liable, together with its users, for potential brand infringements which included eBay users selling L’Oréal perfumes and cosmetics samples meant for free distribution, removing package boxes from perfumes and cosmetics before selling them via eBay or selling their products intended for markets outside of Europe. eBay argued the were just hosting the auctions and therefore not directly liable, according to the EU E-commerce directive.
In an earlier case this year dealing with the conflict between trademark infringement and contextual adevertising brought by a group of luxury goods companies in March 2010, the ECJ ruled that Google could continue selling advertisements linked to searches for brand names. Similarly, the Advocate General now believes eBay can continue to purchase keywords-based advertising in order to direct users of Internet search engines to its site (including L’Oréal trademarks) stating that “the use of the disputed trademarks as keywords by eBay does not necessarily result in misleading the consumers as to the origin of the goods offered.” Yet, he also expressed himself in favour of L’Oréal, stating the company can prohibit the selling of goods with the outer packaging removed if this is damaging for the company’s reputation or the function or quality of its products. Also, trade mark protection can be invoked where goods for sale on eBay haven’t been put on the market within the EU.
It seems both eBay and L’Oreal have received Jaaskinen’s opinion positively: “Despite the complexity of the issues and the preliminary nature of the advocate general’s opinion, we are encouraged that the ECJ’s final judgment will reinforce European consumers’ freedom to buy and sell authentic goods online,” stated Steve Milton, Director of Corporate Communications at eBay International.
L’Oréal believes that the opinion is a balanced one and “is overall consistent with the stance that L’Oréal has held for several years,” and that it also supports “effective combating of internet-based counterfeit product sales.”
The Advocate general’s opinion is not binding for the ECJ but, in most of the cases the Court follows his recommendations. Usually, the ECJ rules between three and six months after the advocate general’s opinion.
Also, in the US, the Supreme Court refused to hear an appeal in a similar case, thus supporting the ruling made by the Appeal Court on 1 April 2010 in the case brought by jeweller Tiffany against eBay in 2004 and consequently making the ruling definitive. The Court of Appeal’s decision was that eBay did not infringe trademarks when allowing counterfeit sales in its auction sales. The court considered that eBay had fulfilled its duty by removing certain items when so asked by Tiffany, and that its obligations went no further than that. However, the Court of Appeal asked the lower court in the case to rule on whether eBay adverts for Tiffany goods were infringing false advertising regulations.
Opinion of Advocate Genral Jaaskinen in L’Oreal vs eBay case C 324/09 (9.12.2010)
ECJ could increase online sellers’ liability for trade mark infringements (9.12.2010)
US ruling relieving eBay of trade mark liability over fakes will stand (1.12.2010)