The recent eBay decisions in France (Paris Commercial Court, June 30, 2008) and the United States (U.S. District Court Southern District of New York, July 14, 2008) have given some the impression that French trademark law does more to protect luxury brand owners against online counterfeits than American trademark law. This is understandable; after all, in both cases, at issue was the legality of eBay's auction platform in light of the fact that many of the goods being sold were counterfeit goods (fake Tiffany in the US case and faux LVMH and Christian Dior in the French one) and in Paris eBay was ordered to pay approximately €40 Million in damages whereas in New York it got off scot-free.
Lost however in the glare of the media spotlight is one crucial difference between the two decisions: while the American court's analysis was for the most part based on trademark law, the French court did not even consider trademark law issues. In fact, as LVMH and Christian Dior elected to bring suit against eBay before the Paris Commercial Court, trademark law issues could not, from a jurisdictional point of view, even be addressed (as trademark law falls within the exclusive jurisdiction of the High Courts or Tribunaux de Grande Instance).
In other words, while Tiffany felt sufficiently comfortable arguing its case on trademark law grounds in the US, LVMH and Christian Dior were so sure that such grounds were futile, that they (cleverly) argued the case on other grounds before a court that was barred from even considering trademark law issues!
The key to understanding the differing legal strategies lies in the French statute called the Law for Confidence in the Digital Economy (or LCEN in French). Under this law, a mere hoster of content posted by others cannot be held liable for such content where it does not have knowledge (actual or constructive) of its infringing nature or where, once duly put on notice, it takes the necessary steps to remove such content or to block access thereto. Critically, this special regime applies to any kind of civil liability (whether for intellectual property infringement or other tortious conduct).
Accordingly, a French plaintiff seeking to make out a case based on trademark infringement against a defendant who is engaged in hosting content posted by others (such as eBay's posting of the would-be sellers' ads) has, to say the least, its work cut out in meeting an onerous burden of proof. In light of this, such a plaintiff has a very strong incentive to focus not on the content posted by third parties, but rather on the running of the platform itself. This shift in focus away from the third-party content and toward the way in which the defendant runs the platform per se in turn suggests legal grounds based not on trademark law but rather on the tort of negligence (Section 1382 of the French Civil Code). This is precisely what LVMH and Christian Dior realized and they argued their case against eBay in France based on this insight.
In contrast, while US statute law dealing with ISP liability (section 230 of the Communications Decency Act) provides for a special regime of immunity for claims based on tort law (e.g. defamation) it expressly leaves intellectual property law claims untouched. As the Digital Millennium Copyright Act is limited to copyright claims, the result is that trademark infringement claims against ISPs (including web hosters) remain subject to general trademark law. Accordingly, a US plaintiff seeking to make out a trademark case against such a party need only meet the standard burden of proof applicable to any trademark infringement claim; there is thus no incentive to avoid focusing on the content posted by third parties and, hence, no compelling reason to avoid a cause of action based on trademark infringement.
The result of the different statutory regimes applicable to online activities such as those of eBay in the two countries is that while in the US eBay faced a full frontal attack based on trademark infringement, in France it had only to defend itself against a negligence claim under general tort law. The irony is that it while eBay withstood the trademark action in the US, it failed to convince the French court that it had satisfied its general duty of care in running the online auction service.
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