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L’Oreal eBay ruling: a warning shot to unauthorised sales

By Andrew McDougall , 05-Aug-2011
Last updated the 05-Aug-2011 at 13:07 GMT

The European Court of Justice’s ruling last month in the case between L’Oreal and eBay concerning the sale of unauthorised goods online, is one that should be welcomed by brand owners as they strive for brand protection.

The EUCJ ruling means that online marketplace operators can not turn a blind eye to the unauthorised sale of counterfeit products on their sites as they may now be held liable.

It is well established that actively selling branded products without a trade mark owner's consent will amount to a trade mark infringement.

With the new ruling it now means that a website owner who facilitates or fails to stop the unauthorised sale of branded products via its website may also be guilty of infringing a trade mark owner's rights.

Decision time

The English High Court must now decide, based on the guidance provided by the CJEU, whether eBay has infringed L'Oréal's trade marks.

The consensus is that online marketplace operators like eBay should do more to reduce the number of sales in its online marketplace that infringe intellectual property rights.

Even though the case has spanned many years and there is no clear victor following the ruling, it is brand owners who should see the ruling as a useful step forward to prevent the sale of counterfeit goods online.

It now means that operators of an online marketplace will have to pay more attention to the extent to which they may be considered to have taken an active part in their customer’s business.

It will also raise the question of whether the measures it takes to address potential trade mark infringements are sufficient.

The long and winding road…

The case originated in 2007 when L’Oreal brought a claim against eBay in the UK, France in Belgium and France.

The French cosmetics company argued that unauthorised goods were being sold on the marketplace without consent, citing eBay as jointly liable for trade mark infringements.

The English High Court referred the case to the EUCJ in 2009 after it questioned if eBay could be held responsible for the sale of counterfeit goods.

In 2008, the internet auction house was ordered to pay luxury goods firm LVMH €40m for failing to prevent the sale of counterfeit goods and genuine perfumes without authorisation.

At the time, LVMH welcomed the verdict saying that it was an important step in the protection of brands and designs against ‘parasitic practices’.

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