The Advocate General has delivered his opinion on questions
referred to the ECJ by the High Court in L'Oreal v
eBay. The questions concerned: (1) the liability of
marketplace website operators (such as eBay) for the offer/sale of
cosmetic samples, unboxed branded products, and non-EEA-sourced
branded product on their websites; (2) the use of third party trade
marks in sponsored links and offers for sale; (3) the applicability
of the exemptions in the E-Commerce Directive to marketplace
website operators; and (4) the scope of national courts for issuing
injunctions against website operators such as eBay.
If the ECJ follows the Advocate General's opinion,
which is common, the outcome would be welcomed by the
operators of online marketplace websites as it recommends that such
operators should not generally be liable for trade mark
infringements committed by users of their websites. The
Advocate General also recommended that such operators should be
able to offer guidance etc, without exposing the operator to
potential liability for infringing content that they are
unknowingly hosting.
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Introduction
In November 2009 we reported in an earlier
Law Now, that Justice Arnold had referred a number of
questions to the ECJ for preliminary reference in the L'Oreal v
eBay High Court trademark infringement case. L'Oreal alleged
that eBay was infringing its trade marks by using them to direct
consumers to infringing goods on its marketplace website, and also
that eBay should be liable for its involvement in the trade mark
infringements being committed by individual sellers on the
website.
In May 2009 Justice Arnold had held that eBay was not jointly
liable for IP infringements committed by individual sellers on the
eBay website, see our earlier
LawNow. In relation to further aspects of the claim, he
concluded that ECJ guidance was required. A summary of the Advocate
General's response to the various questions referred is set out
below.
(1) "Putting on the Market"
The Advocate General did not consider that samples and testers
would have been "put on the market " in the EEA, within
the meaning of the CTM Regulation, when they are supplied without
charge to authorised distributors, and therefore that further sale
could constitute trade mark infringement. The Advocate General
cited the ECJ's decision in Coty Prestige Lancaster Group v
Simex Trading in support of this conclusion.
In relation to unboxed branded products, the Advocate General
concluded that a rights holder may legitimately be able to oppose
further commercialisation if one of the following conditions was
satisfied:
- The unboxing results in the product no longer complying with the labelling requirements under the Cosmetics Directive, as this would be likely to cause serious damage to the reputation of the trade mark;
- The removal of the outer packaging can be considered as a change to, or impairment of, the condition of the goods, this being particularly relevant in relation to luxury goods; or
- Further commercialisation of the goods damages, or is likely to damage, the image of the goods and, consequently, the reputation of the trade mark. The Advocate General emphasised that this was not an inevitable consequence of the removal of packaging, and must be assessed on the merits of each case.
The Advocate General stated that "the effect of further
commercialisation can be presumed as actually or potentially
damaging the image of the goods and hence the reputation of the
trade mark in all cases where the offers for sale or the sales
transactions concerning cosmetic products stripped of their
original packages take place in the course of trade as defined by
the case-law of the Court" and that the burden of showing
the opposite lies with the seller.
Further, the Advocate General considered that in order to prevent
the advertising of goods on the website which included those which
had not been put on the market within the EEA by, or with the
consent of, the trade mark proprietor, the proprietor need only
show that the advertisement was targeted at consumers in a
territory in which the trade mark rights subsisted. It would not be
necessary for the trade mark proprietor to show that the
advertisement or offer for sale necessarily entailed putting the
goods on the market that territory.
(2) Use of advertising keywords
The Advocate General considered that if an online marketplace
operator purchased a third-party mark as a keyword, the display of
that keyword in a sponsored link to direct consumers to its
marketplace website would constitute "use" of the keyword
within the meaning of the CTM Regulation and could, therefore,
constitute infringement. The Advocate General cited the Google
Adwords case in his opinion, and contrasted the position of eBay
with that of Google: eBay was using the signs in the sponsored
links to advertise eBay's online marketplace services, rather
than to advertise competing goods, as in Google. However, the
Advocate General considered that if an online marketplace operator
was to use a third-party trade mark in his own advertising to
describe goods that were available in his marketplace, this would
indeed constitute "use" in relation to the goods; the
operator would provide a source of the goods that was an
alternative to the trade mark proprietor's official
distribution network.
The Advocate General further opined that a sponsored link that
would lead a user directly to advertisements/offers for sale of
goods, some of which are infringing, could constitute use of the
sign by the operator "in relation to" the infringing
goods. However, this would not be considered to have an adverse
effect on the functions of the trade mark where the
"reasonable, average consumer" understands, on the basis
of the information provided in the sponsored link, that the website
stores in its system third-party advertisements or offers for
sale.
(3) E-Commerce Directive Exemption
Article 14(1) of the E-Commerce Directive exempts information
society service providers from liability for unlawful acts hosted
by them in certain, limited circumstances. The Advocate General did
not consider that a marketplace website operator would be able to
benefit from the "storage of information provided by a
recipient of the service" exemption by displaying a sign
identical to a trade mark in a sponsored link. However, they would
be able to benefit from the exemption when the sign featured in
advertisements/offers for sale on the website uploaded by
individual without any moderation or inspection by the online
marketplace operator. Importantly, the Advocate General concluded
that it would be "surreal" if eBay's provision of
guidance to users in relation to hosted data would deprive it of
the exemption in the E-Commerce Directive.
However, the Advocate General did consider that if the operator
knew that particular infringing goods had been advertised/sold and
that similar infringements by the same/different users were likely
to continue then, in general, this could constitute "actual
knowledge"/"awareness" of the infringement and
therefore the operator may not be able to benefit from the
exemptions under the E-Commerce Directive. In particular, knowledge
would be deemed where there are repeat infringements by the same
advertiser in relation to the same mark.
(4) Right to an injunction against an intermediary
The Council Directive on the enforcement of intellectual
property rights (the Enforcement Directive) requires member states
to ensure, amongst other things, that rights-holders can apply for
injunctions against intermediaries whose services are used by a
third party to infringe IP rights. The Advocate General concluded
that an injunction against an intermediary, such as marketplace
website operator on whose website infringing goods are
offered/sold, could be issued under the Enforcement Directive to
require the intermediary to prevent repeated instances of the
same/similar infringements, in addition to the continuation of a
specific act of infringement, provided that this was possible under
the relevant national law. He suggested that it would often be
appropriate to limit any such injunction to a specific user and
specific trade mark, and this could be achieved, for example, by
the operator closing the user's account.
Comment
Marketplace website operators will be encouraged by the overall
tenor of the Advocate General opinion, and the recommendation
within it that sponsored links that take a consumer to a web page
offering infringing goods should not expose the operator to primary
liability for trade mark infringement. This is, however, provided
that the "reasonable, average consumer" understands the
nature of the website and is aware of the intermediary nature of
operators such as eBay.
The opinion recognises the practical difficulties faced by
marketplace website operators in preventing trade mark
infringements by individual sellers on their websites. Website
operators will welcome the recommendation that operators should be
entitled to assume that their website is being used in a lawful way
by individual sellers, unless the operator is actually informed
otherwise, and that intervention such as providing guidance in
relation to listings on their website should not deprive them of
the exemption under the E-Commerce Directive. Following this
opinion, the ECJ's decision will be eagerly awaited by eBay and
other marketplace website operators.
This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to www.law-now.com/law-now/mondaq
Law-Now information is for general purposes and guidance only. The information and opinions expressed in all Law-Now articles are not necessarily comprehensive and do not purport to give professional or legal advice. All Law-Now information relates to circumstances prevailing at the date of its original publication and may not have been updated to reflect subsequent developments.
The original publication date for this article was 17/12/2010.
