Last week saw a preliminary ruling by the European Court of Justice (ECJ) in the long running legal battle between L’Oréal and eBay in the UK in relation to the sale of various L’Oréal products by individuals who were not authorised distributors of L'Oreal via eBay stores.
L’Oréal distributes its products through a closed network of authorised distributors and issued a High Court claim arguing that eBay was involved in trade mark infringements committed by its sellers (who were unauthorised distributors of L’Oréal products). L’Oréal also took issue with eBay’s use of keyword searches (which were identical to its trade marks) and with sponsored links to adverts for counterfeit items. So back in 2009, the High Court asked the ECJ to clarify the position on the liability of companies operating internet marketplaces for trade mark infringements committed by users.
On 12 July we finally got to hear the ECJ's judgment. The main points to note are as follows:
- EU trade mark rules (and protection) will apply to branded products located outside of the European Economic Area (EEA) if the offers for sale and/or advertisements of those branded products are targeted at consumers within the EEA.
- A trade mark owner can prevent branded products that have been removed from their packaging being resold where (i) "essential information", such as the identity of the manufacturer, is lost as a result; and (ii) the removal of the packaging has damaged the image of the product and the reputation of the mark.
- Online marketplace operators can be prevented from using keyword searches identical to a trade mark to advertise products bearing that trade mark if it is difficult for reasonably well-informed and observant internet users to ascertain from the advertising that the products do not originate from the trade mark owner or any of its authorised distributors.
- The operators of online marketplaces do not 'use' trade marks if they provide a service which consists of simply enabling sellers to display branded products on their websites, but they cannot argue that they are simply storing information on their websites (and therefore avoid any liability for trade mark infringement) where they provide assistance to optimise the presentation of or promote the items being sold (such as eBay's "Featured Item" tool). They will also be liable if they should have realised that the “offers for sale in question were unlawful and … failed to act expeditiously” in removing or disabling access to the advert in question.
- National courts should be able to grant injunctions against online marketplace operators in order to end infringements of the intellectual property rights and to prevent further infringements of "that kind". However, the injunctions must not create barriers to legitimate trade and should only be proportionate and dissuasive.
Private sellers will not be be affected by this ruling as the ECJ has said that this only applies to sellers acting “in the course of trade”. However this is clearly not good news for eBay (or any other online marketplaces), which is going to have to be much more proactive in the operation of its take down procedure and careful of how it advertises products in future.
One - nil to the trade mark owners then?