L’Oreal v eBay Court of Justice decision

Back in 2009 eBay won a court case against L’Oreal over the sale of counterfeit goods on its website. The High Court in the UK ruled that the online marketplace, eBay, was not responsible for fake goods being sold on its website, but that it should do more to help prevent any trademark infringement.  

The case was referred to the Court of Justice by Mr. Justice Arnold for a preliminary reference. Now the European Court has ruled that eBay may be responsible for trademark breaches on its websites.

Specifically eBay would be liable if it ‘played an active role’ that would ‘give it knowledge of or control over the data relating to the offers for sale’.

The court said ‘When the operator has played an ‘active role’… 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’.

Currently eBay only blocks ongoing auctions if suspicious activity is reported, but now eBay and other companies like it will have to be more vigilant.

L’Oreal originally complained about trademark infringements of their brand in 2007, when they sent a letter articulating their concerns about sales of counterfeit products on eBay’s websites. They asked eBay to address the issue. When eBay did not do enough to satisfy L’Oreal, the cosmetic manufacturer sued.

L’Oreal argued that eBay should be liable due to its active engagement with the sale of goods. eBay used L’Oreal’s name as a sponsored link to lead users to cosmetics that infringed L’Oreal’s trademarks.

The case has been described as ‘one of the most exciting and potentially important trade mark law disputes to be heard in England and Wales in recent times’.

This new ruling by the European court will have an impact on both brand owners, and those selling goods online. L’Oreal said in a statement that it is ‘a step towards effectively combating the sale of counterfeiting brands and products via the Internet’.

The decision means it will no longer be purely the responsibility of trademark owners to protect their own brands online,  as online market operators will also have a role to play.

It should be noted that now it is up to the referring court to apply the EU court’s ruling to the facts of the case. As Jeremy Phillips puts it: ‘It is likely that the decision will then be appealed whatever that court does’.