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eBay - are they liable for trademark infringment of thier users?

Written by Michael Coyle on 27 May 2009

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The High Court recently considered whether eBay (Europe) is liable for trade mark infringement committed by users?

And do eBay themselves commit infringements by using trade marks in relation to infringing goods? This is a crucial question when considering responses from providers when questioned as to their liability when accused of infringments.

The questions were brought by L'Oreal (They have brought similar cases in France.) These questions do demand an answer as legislation is unclear and the Court of Justice of the European Communities has either not pronounced on the issues of interpretation or has not yet provided a clear answer.

e-bay was desrcibed in court as

"an online marketplace. They operate 21 websites in eight languages which display listings of goods for sale posted by users and which enable buyers to purchase such goods from the sellers. eBay Inc was founded in 1995 under the name AuctionWeb. It changed its name in 1997. It was listed on the NASDAQ stock exchange in 1998. eBay have been very successful. In 2008 eBay Inc's revenue was $8.54 billion and its income was $1.78 billion.

eBay have grown and changed even over the period between the earliest events giving rise to this litigation and now. eBay now have over 300 million registered users, of which about 84 million are active. More than 125 million active listings appear on eBay's websites at any given time. On average about 7.3 million new listings are posted each day, although this can rise to 12 million new listings a day.

L'Oreal's claim

L'Oreal contend that so far as the auction style listings are concerned, eBay do in fact conduct an auction. eBay dispute this. It is not necessary to decide who is right about this, however, since L'Oreal do not contend that eBay act as agent for the sellers of the goods or that they ever have possession of the goods. At least to that extent, L'Oreal accept that eBay's activities differ from those of traditional auctioneers.

So far as sponsored links are concerned, it is common ground that eBay Europe have purchased keywords consisting of the Link Marks which trigger sponsored links on third party search engines including Google, MSN and Yahoo. The effect of this is that a search on, say, Google using one of the Link Marks will cause a sponsored link to the Site to be displayed.

There were six key issues

i) Were the goods sold by the Fourth to Tenth Defendants infringing goods? This issue divides into four sub-issues concerning (a) counterfeits, (b) non-EEA goods, (c) tester and dramming products and (d) unboxed products.

ii)) Are eBay Europe jointly liable for any infringements committed by the Fourth to Tenth Defendants?

iii) Are eBay Europe liable as primary infringers for use of the Link Marks in relation to infringing goods?

iv) Do eBay Europe have a defence under Article 14 of the E-Commence Directive?

v) Do L'Oreal have a remedy under Article 11 of the Enforcement Directive?

vi) Are the Distance Selling Regulations relevant to any of the foregoing issues, and if so how

The court found the following

i) )The Fourth to Tenth Defendants infringed the Trade Marks. In the case of the Fourth to Eighth Defendants the goods they sold were put on the market outside the EEA and L'Oreal did not consent to those goods being put on the market within the EEA. In the case of the Ninth and Tenth Defendants the goods they sold were counterfeits.

ii) Whether the sale by sellers on the Site of testers and dramming products and of unboxed products amounts to an infringement of the Trade Marks depends upon questions of interpretation of the Trade Marks Directive as to which the law is unclear. Although these questions are academic so far as the acts committed by the Fourth to Tenth Defendants are concerned, they are potentially relevant to the question of what relief, if any, L'Oreal are entitled to. Accordingly, guidance from the ECJ is required on these points.

iii) eBay Europe are not jointly liable for the infringements committed by the Fourth to Tenth Defendants.

iv) Whether eBay Europe have infringed the Link Marks by use in sponsored links and on the Site in relation to infringing goods again depends upon a number of questions of interpretation of the Trade Marks Directive upon which guidance from the ECJ is required.

v) Whether eBay Europe have a defence under Article 14 of the E-Commerce Directive is another matter upon which guidance from the ECJ is needed.

vi) As a matter of domestic law the court has power to grant an injunction against eBay Europe by virtue of the infringements committed by the Fourth to Tenth Defendants, but the scope of the relief which Article 11 requires national courts to grant in such circumstances is another matter upon which guidance from the ECJ is required.

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