UK: L'Oreal v eBay: Online Marketplaces And Trade Mark Infringement By Their Users

Last Updated: 20 July 2011
Article by Tom Scourfield

Online marketplaces, such as eBay, enable users to advertise for sale a vast range of products. Some of those products (such as counterfeits and certain parallel imports) inevitably infringe the trade marks of brand holders. To what extent is the operator of the online marketplace required to provide assistance or bear responsibility for dealing with such infringement, including, ultimately, being liable for the infringement? A long awaited judgment from the Court of Justice of the European Union provides an answer.

To view the article in full, please see below:


Full Article

Online marketplaces, such as eBay, enable users to advertise for sale a vast range of products. Some of those products (such as counterfeits and certain parallel imports) inevitably infringe the trade marks of brand holders. To what extent is the operator of the online marketplace required to provide assistance or bear responsibility for dealing with such infringement, including, ultimately, being liable for the infringement? A long awaited judgment from the Court of Justice of the European Union provides an answer.

Background: a referral to the Court of Justice of the European Union

In May 2009 the High Court gave its judgment in the case of L'Oréal v eBay [2009] EWHC 1094 (Ch). Our Law Now article on the decision can be viewed  here. By way of summary, L'Oreal alleged that eBay:

  • (1) should be jointly liable for its involvement in the trade mark infringements being committed by individual sellers through the eBay marketplace; 
  • (2) was infringing L'Oreal's trade marks by using them (via referencing services such as Google's AdWords and in its user's adverts on the ebay.co.uk website) to direct consumers to infringing goods on the marketplace; and,
  • (3) that eBay's efforts to prevent the sale of counterfeit goods and parallel imports are inadequate.

In his judgment, Arnold J. (High Court) rejected the first allegation, but in relation to the others he requested – despite being minded not to support all of L'Oreal's allegations – guidance on interpreting the relevant law from the Court of Justice of the European Union.

Following an Opinion given by Advocate General Jääskinen (reported in our Law Now article of November 2010, which can be viewed  here), the Court of Justice has now handed down its judgment. A summary of the guidance this provides to the High Court (and to those potentially affected by the implications of the judgment) is set out below.

Private sellers: not infringing

The Court of Justice started its judgment by reminding trade mark proprietors that they may only rely on their rights (including, as against those who sell trade-marked goods online) in the context of commercial activity. So, for example, a trade mark proprietor could not pursue an individual re-selling a few unwanted birthday presents over eBay. Only if the sales go beyond the realms of private activity (perhaps, owing to their volume, frequency or other characteristics) will the seller be caught by trade mark law.

Parallel importing – when does it breach EU trade mark law?

In regards to parallel imports, the Court confirmed that EU trade mark laws apply to offers for sale relating to trade-marked goods located in third states (i.e. non-EU/EEA states) as soon as it is clear that those offers for sale are targeted at consumers in the EU. So, for example, an advertisement placed on eBay containing L'Oreal trade marks and advertising genuine L'Oreal products that the seller (who holds those goods in China) is willing to have delivered to the UK would infringe the relevant L'Oreal trade marks because the seller has no permission from L'Oreal to do so and those same products have not yet been placed on the market in the EU/EEA by L'Oreal.

The Court noted that it is for national courts to assess, in each case, whether an offer for sale is targeted at consumers in the EU. We would expect that national courts will continue to take a common sense view to this, taking into account all relevant factors, including shipping destinations, language and billing currency.

In addition, the Court confirmed that merely supplying sample products does not amount to the proprietor of the trade mark having put those goods on the market within the meaning of the Community Trade Mark Regulation. Thus, trade mark proprietors do not need to worry that putting out samples will give parallel importers a legitimate reason to resell such goods without the proprietor's consent.

Unboxed/unpackaged products: a warning to re-sellers

Thirdly, the Court agreed with the Advocate General's Opinion that, where a re-seller of branded products removes the boxing/packaging prior to re-sale, that may harm the image of the product and thus the reputation of the trade mark that the boxing/packaging and product bears. It may also mean that essential information required as a matter of law (such as the identity of the manufacturer under the Cosmetics Directive) is no longer on the product. In such situations, the proprietor of the trade mark is entitled to seek prevention of the sale of those unboxed/unpackaged products.

Third party trade marks used as keywords – lawful?

Applying its Google France rationale (see our Law Now on that case  here), the Court re-confirmed that, where an online marketplace operator advertises (through an internet referencing service, e.g. Google's AdWords) the sale (by its users) of trade mark bearing goods on its marketplace, using a keyword which is identical to that trade mark, then that operator may be liable for infringing the proprietor's trade mark unless the advertising enables a reasonably well-informed and reasonably observant internet user to ascertain – without difficulty – whether the goods concerned originate from the proprietor of the trade mark or, on the contrary, a third party.

The practical impact of this is that marketplace operators making use of trade mark protected keywords on internet referencing services will need to ensure that their online advertisements make it clear, in some way, that the goods being re-sold on the marketplace are being sold by persons other than the actual brand owners.

Operators liable for their users' offers for sale?

Ordinarily speaking, in providing an online marketplace, operators may expect to benefit from an exemption from liability (including, for trade mark infringement committed by their users) contained in the E-Commerce Directive (Directive 2000/31). Essentially, the E-Commerce Directive exempts an "information society service" provider (such as an online marketplace operator) from liability for information/data stored by it on behalf of the recipient of its services. In making its reference, the High Court sought clarification from the Court of Justice as to whether this exemption applies to online marketplaces where sellers upload offers for sale (i.e. product descriptions) that infringe brand holders' trade marks.

The Court confirmed that if a seller uploads an offer for sale that contains signs similar or identical to a registered trade mark, such that it would amount to trade mark infringement, the marketplace operator may escape liability through the E-Commerce exemption, except where:

  1. it has provided the seller with some sort of "active" assistance, such as optimising the presentation of the offer for sale or promoting the offer for the seller; or
  2. the operator was aware of factors or circumstances on the basis of which it should have realised that the offer for sale in question was unlawful, and upon becoming aware, it failed to act expeditiously to remove or prevent access to the offer for sale.

This is probably the most concerning part of the judgment for marketplace operators. It poses questions such as, what is "active" assistance? Does providing users with templates or formatting tools fall within the ambit of "active" assistance? What level of awareness would the operator need to have for it to have realised that the offer for sale was unlawful?

These questions will be answered as national courts apply the judgment to the disputes that come before them, as the High Court will now have to do in this dispute. Marketplace operators may take some comfort from the statement by the Court that the measures to be taken "... cannot consist in active monitoring of all the data of each of its customers in order to prevent any future infringement of intellectual property rights...". This seems to echo the comments made by Arnold J. at first instance. Just because the operator could do more does not reasonably mean that they should.

Injunctions – what should an operator do to prevent infringement by its users?

Finally, the Court ruled that, in issuing an injunction against a marketplace operator that has committed trade mark infringement (for example, because it has provided active assistance to the seller in producing an infringing offer for sale), national courts must ensure that the injunction does not create barriers to legitimate trade. This means that the injunction can not have, as its object or effect, a general and permanent prohibition on the sale of goods bearing the relevant trade mark on that marketplace. Rather, any injunction must be effective, proportionate and dissuasive.

An effective, proportionate and dissuasive injunction would mean, perhaps, one that requires the operator to prevent specific sellers (whose infringing activities are known) from continuing their activities on the website both now and in the future – for example, by deleting an infringing seller's account.

In addition, the Court stated that national courts could order operators to take measures to make it easier to identify sellers (presumably, so that trade mark proprietors can go after them directly if they sell infringing products). Such measures may themselves have implications for data protection and contractual issues between operators and their users.

A fair judgment?

To some extent, the judgment of the Court of Justice is as anticipated. L'Oreal, and others like it, wish (quite legitimately) to prevent online sellers of counterfeit goods or parallel importers from circumventing established principles of trade mark law through the use of the internet. Without an application of the law that provides protection for European businesses, those businesses and the European economy could be adversely affected.

Nevertheless, because the Court's judgment places more of an onus on online marketplaces (who provide a legitimate and economically useful service), it is foreseeable that they will be concerned that this judgment could be used to attempt to force them to put in place sophisticated and potentially costly mechanisms to prevent intellectual property infringement by their users. Indeed, the users themselves (if they become aware of this decision) may be concerned that online marketplace operators will pass on such costs to users.

However, the extent to which online marketplace providers will be burdened by this judgment will not become completely clear until national courts (including the High Court in this dispute) begin applying the Court's judgment in disputes that come before them.

Essentially, there are a number of ways of dealing with the issue of online infringement and the relationships between online marketplace operators and brand holders. In many ways, constructive dialogue aimed at finding a consensual solution is just as important. To that end, a memorandum of understanding ("MoU") was signed last year by notable players such as Amazon, Nokia, eBay, Lacoste, Nike, Richemont and Unilever, under which they agreed a number of principles regarding notice and take-down procedures, as well as commitments to take commercially reasonable pro-active and preventative measures to fight counterfeiting and improve co-operation and information exchange.  The alternative is of course litigation such as this. The future is likely to continue to involve both carrot and stick in brand infringement.

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 15/07/2011.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.