Every now and then we bring you news of how certain legal cases might affect the retail landscape. The recent High Court case brought by L'Oreal against eBay is one such instance.
Questions were referred from the High Court to the European Court of Justice ('ECJ') and the Advocate General's opinion is a good guide as to how the ECJ might answer the questions.
The case
The issues arose when luxury brand-owner, L'Oreal, brought proceedings against online auction site, eBay, in response to counterfeit and unauthorised (although genuine) products bearing the L'Oreal name being sold via its website.
The questions posed by the High Court related to interpretation of the Trade Mark Directive and the E-Commerce Directive and also covered issues relating to re-packaged products and sampler products. The question with the greatest potential ramifications for retailers is to what extent eBay is liable for trade mark use on its website?
The opinion
This issue has arisen before and the decisions across Europe vary with most tending to favour eBay's position. Essentially, in referring a number of questions to the ECJ, the High Court concluded that, whilst individual traders on eBay's website can be liable for parallel imports (or grey imports) and trade mark infringements on genuine or counterfeit products, eBay is not to be considered jointly liable. The remaining question in this context was whether links containing the trade mark on the website or produced as a result of eBay's purchase of keywords on search engines gave rise to infringement.
The Advocate General concluded that use of a trade mark for such links did bring the use within the ambit of the relevant Directive. However, eBay's liability for such use would only be in relation to the direct (search engine) link which directed users to the products or advertisements offered on the online marketplace and not where it appeared on the online marketplace itself (placed there by traders). In relation to the former, the Advocate General did not think the use necessarily adversely affected the function of the trade mark if it was clear that the goods or advertisements were those of third parties and consequently eBay could escape liability.
Importantly, the Advocate General also confirmed that eBay will not be able to avoid liability in relation to repeat later infringements by a trader if it has been given earlier notice of previous infringements. In such circumstances, eBay may be liable.
What does it all mean for retailers?
In summary, if the ECJ follows the Advocate General's opinion (as it usually does), eBay will ordinarily not be liable for the infringing activities of its traders. Retailers will therefore have to continue to be vigilant and take action against individual traders on a case by case basis, rather than being able to take action against the online marketplace (eBay in this case) where the counterfeit products are sold. However, retailers should ensure that eBay is, at least, notified in such circumstances so as to impose maximum obligation on eBay to prevent continuation or repetition of the infringement.
The contents of this brochure are intended as guidelines for clients and other readers. It is not a substitute for considered advice on specific issues. Consequently, we cannot accept any responsibility for this information or for any errors or omissions.
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