eBay Not Responsible for L'Oreal Counterfeit Sales

Online auction house eBay has secured an important result in its battle to avoid liability for counterfeit goods sold via its trading website, following a recent ruling by the High Court.

Cosmetics giant L’Oréal failed in its claim to make eBay jointly liable for fake L’Oréal products sold on the eBay site. The beauty company has also lost similar cases in France and Belgium, but won in Germany.

During the hearing, several examples of eBay sellers offering fake L’Oréal products were given. Although the court ruled that eBay could not be held liable in these cases, it was also stated that eBay could do more to prevent such fraud. The judge suggested ten measures that could be adopted, including the publication of sellers’ real names and addresses.

Much of the argument during the case concerned European Directives aimed at harmonising rules relating to trade marks. The judge ruled, however, that Community law on the subject did not extend to ‘accessory liability’ and, as such, was not applicable to this case.

It was therefore left to an interpretation of domestic laws to resolve the dispute. In order to be held liable, stated the judge, a third party such as eBay must have conspired with the seller in the trade mark infringement or have been otherwise consciously involved with the unlawful transaction. On the basis of the facts presented to the court in this case, such involvement did not occur.

Ruling in eBay’s favour, the judge stated that he would refer a number of legal questions to the European Court of Justice for further clarification.

The issue of the degree to which owners of online trading sites can be held liable for infringement of trade marks and other intellectual property rights by their customers is very complex and is not going to go away. It is vital that site owners take every precaution to prevent costly actions brought by well-resourced and litigious multinational companies. Appropriate precautions should start with a proper examination of user terms and conditions.