On 12 July 2011, the Court of Justice of the European Union (the "ECJ") gave judgment in a case involving the liability of an operator of an Internet marketplace on account of trade mark infringements committed by its users (Case C-324/09, L'Oréal and others v. eBay and others). The opinion of Advocate General Jääskinen was discussed in Van Bael & Bellis on Belgian Business Law, Volume 2010, No. 12, p. 10.
The case at hand pitted L'Oréal, a producer of cosmetic products, against eBay and a number of individuals selling goods on eBay before the UK High Court. L'Oréal claimed that goods were offered for sale on eBay that infringed its trade marks. In addition, L'Oréal maintained that eBay had directed consumers within the EU towards the infringing goods through the purchase of AdWords from Google comprising L'Oréal's trade marks. Moreover, L'Oréal alleged that eBay's efforts to prevent the sale of counterfeit goods on the eBay website were insufficient. The UK High Court decided to refer a number of questions to the ECJ for a preliminary ruling.
Jurisdiction
The ECJ noted that EU trade mark rules apply to offers for sale and advertisements of goods located outside the EU in so far as they are directed to EU consumers. Under EU trade mark exhaustion rules, such goods cannot be put on the market in the EU, unless the seller can prove that the trade mark owner gave its consent.
Trade mark violations
In addition, the ECJ held that the trade mark owner can prevent the sale of products, such as perfume testers and dramming bottles that are clearly marked as "not for sale". The ECJ maintained that the trade marks of such products had not been exhausted. In addition, the ECJ clarified that for products where the trade mark has been exhausted by the initial marketing in the EEA, the trade mark owner may still be able to object to the sale on eBay if the packaging was removed. For instance, this may be the case if the removal of the packaging damaged the image of the product or does away with information required to identify the manufacturer or promoter of the product.
However and somewhat surprisingly, the ECJ specified that the mere fact that the removed packaging contains information required under Cosmetics Directive 76/768 does not permit the trade mark owner to prevent the sale of this product on the basis of trade mark law, even if the removal of this information could give rise to a criminal offence.
Trade mark violations - AdWords
Moreover, eBay had registered L'Oréal's trade marks as AdWords with Google to advertise the products sold on its website. The ECJ held that such a use amounts to trade mark use within the meaning of Trade mark Directive 89/104 (now Directive 2008/95) and Trade mark Regulation 40/94 (now Regulation 207/2009). Accordingly, the ECJ confirmed the Google France case, stating that the use of AdWords can be countered by the trade mark owner if the normal Internet user "cannot, or only with difficulty, ascertain whether the goods referred to by the advertisement originate from the proprietor of the trade mark or from an undertaking economically linked to it, or on the contrary, originate from a third party" (See, Van Bael & Bellis on Belgian Business Law, Volume 2010, No. 3, p. 6).
Trade mark violations - Limits
In contrast, if the operator of the Internet marketplace merely permits its users to display their offer on its website, the ECJ noted that the operator cannot be held to "use" the trade marks mentioned in the users' offer. Accordingly, it cannot be held liable to infringe the exclusive rights of the trade mark owner.
E-commerce Directive
The ECJ went on to state that eBay may still be held liable under national law, unless it can rely on an exemption from liability provided by Directive 2000/31 on electronic commerce. The ECJ explained that such an exemption is subject to the following conditions being met: (i) the operator does not play an active role, i.e., it does not know or control the data provided by its customers; (ii) a diligent economic operator would not have realised that the online offers for sale were unlawful; and (iii) the operator must not have failed to act promptly to remove offers of counterfeiting goods from its website or to disable access to such offers.
Relief
Finally, the ECJ was brought to decide on the scope of the injunctions that national courts may impose on eBay to terminate infringements. The ECJ held that national courts must ensure that operators take measures that contribute not only to bringing to an end current infringements, but also prevent future infringements. On the other hand, the ECJ considered that it is not possible to impose a general monitoring obligation, or a general prohibition to sell goods bearing a specific trade mark. The ECJ furthermore explained that national courts may grant injunctions against operators of an online marketplace, for instance to suspend a perpetrator or to facilitate identification of users that sell counterfeit goods. Such injunctions must be effective, proportionate, dissuasive and must not create barriers to legitimate trade.
The L'Oréal - eBay judgment should be welcomed as a cautious endorsement of intellectual property rights in cyberspace. It also offers a set of concrete guidelines for national courts to apply.
