Legal Updates

Intellectual Property – Trademarks – IP Law - Injunctions – eBay – L’Oreal - Trademark Infringement

On 12 July 2011, the Court of Justice of the European Union (CJEU) ruled on the L’Oreal v. eBay case which had been referred to it by the English High Court. In brief, the CJEU ruled that eBay could be liable for vendors selling fake goods through its site.

Background

This case was originally referred to the ECJ by the High Court in 2009, after Arnold J had found in favour of eBay. More particularly, it was held that eBay was not liable as joint tortfeasors for the sale of infringing goods on its website.

Arnold J could not make a decision on the allegations that eBay’s use of sponsored links amounted to trade mark infringement. He therefore referred the question to the ECJ.

Issues referred to ECJ (now CJEU)

Use of key words (eBay had bought keywords to attract customers to its site)

• Parallel import and un-boxing issues and exhaustion of rights
• The existence of an E-commerce Directive defence for eBay and operators of similar websites
• The scope of national courts for issuing injunctions against website operators such as eBay.

L’Oreal objected to eBay’s use of their trade marks as key words, trade in counterfeit goods, trade in unpackaged goods as well as parallel imports of products not intended for the EEA or EU.

Opinion

In December 2010, the opinion of the Advocate General (AG) was released. The AG suggested that in the first instance, eBay was not liable for the trade mark infringements of the users of its website, however, if it had been notified of the infringing use and the use continued, then eBay would be liable.

More particularly:-

Keywords:

• By reserving L’Oreal’s trade marks as keywords, eBay was using these trade marks in relation to the goods, but the use of such keywords does not necessarily result in misleading the consumers as to the origin of the goods offered – in such cases, the function of the trade marks is not likely to be jeopardised.

Parallel Imports and Un-boxing:

• The removal of outer packaging could constitute damage to the function of the trade mark
• Indicating origin and the quality of the goods and to the reputation of the trade mark and so could be actionable by the proprietor.

E-Commerce Directive Defence:

• Article 14 of the E-commerce Directive (‘hosting’ safe harbour) provides an exemption from liability to Internet Service Providers (ISPs) in relation to information provided and stored by recipients of the service.
• Under the Google cases, it is a requirement for the ISP to behave neutrally so as to benefit from this exemption.
• The AG made clear that by merely assisting its clients in the preparation of their listings, eBay would not be adversely affecting its neutrality.
• eBay still remains liable for the content of its own advertising activities.

Injunction:

• L’Oreal had argued that, even if eBay is not itself liable for trade mark infringement, an injunction should be issued to prevent further use of its market place for infringing purposes.
• Under Article 11 of the Directive on enforcement of intellectual property rights (2004/48), injunctions may be available against marketplace operators (eBay) in order to prevent continued or repeated infringements by the same user in relation to the same trade mark.

CJEU Decision on 12 July, 2011

According to the CJEU: 

• EU trade mark rules apply to offers for sale and advertisements relating to good bearing trade marks located in third States when it is clear that the offers for sale and advertisements are targeted at consumers in the EU.
• National courts should take a case-by-case approach and assess the relevant factors.
• The operator of an online market place (eBay) does not ‘use’ trade marks if it provides a service consisting merely of enabling its customers to display on its website, in the course of their commercial activities, signs corresponding to trade marks.
• Where an online market operator has played an ‘active role’ by optimising or promoting infringing items for sale, it cannot rely on the exemption from liability which the E-Commerce Directive provides. 
• EU Member States were obliged to ensure that their courts took measures that help to stop trade mark infringements by users of online marketplaces, as well as preventing further infringements. Any injunctive relief must be effective, proportionate, and dissuasive and must not create barriers to legitimate trade.

Commentary:

Rosanna Cooper has commented on this case and has stated that:

"The practical and cost implications could be extensive, and any additional costs will presumably be passed on to eBay's users."

“The problem for eBay is that there is still uncertainty over what they have to do." The CJEU 's ruling left it up to individual countries to enforce the measures against such sites.”

“This ruling has opened the door for brands to sue online marketplaces if counterfeit goods are sold on their sites.”

If you require advice on exhaustion of rights or trade mark infringement, trademarks, please contact us at [email protected]

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© RT COOPERS, 2011. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.