Brand owners will welcome the recent ECJ decision that websites such as eBay can be held directly liable for infringing activity taking place on their online marketplace.
L’Oréal brought proceedings against eBay for selling (or allowing the sale of) counterfeit or parallel goods on its online marketplace. In the previous edition of Brandhawk in July 2010, we reported on the High Court’s decision in favour of eBay. However, whilst the English High Court found for eBay in respect of part of the claim, the High Court stated that it required assistance from the ECJ in respect of a number of aspects of the claim.
In May 2010, Mr Justice Arnold therefore referred the following issues to the ECJ:
Liability for; the sale of products intended for sale outside of the EEA, cosmetic samples/testers that were not intended for sale and unpackaged/unbranded products;
- eBay’s liability for trademark infringement in circumstances where it had assisted users in promoting the infringing goods;
- The extent of the exemption of liability offered to service providers by Article 14 of the E-Commerce Directive (2000/31);
- The availability of injunctive relief against sites such as eBay.
ECJ’s Decision - 12 July 2011
Each of the above issues referred to the ECJ are addressed in turn below.
In relation to the sale of goods not intended for the EEA market the ECJ held that, providing the website in question was targeted at consumers within the particular territory (in this case within the EEA), then trademark owners may enforce its rights against a commercial seller in the usual manner. The ECJ also held that a trademark owner can oppose the sale of samples/testers (which are clearly marked as “Not for Sale” or “Demonstration Only”) because the provision of these items to authorised distributors does not mean that the items have been “put on the market”. Finally, the ECJ held that a trademark owner is able to oppose the resale of trademarked/branded goods without their packaging in circumstances where the removal of the packaging could damage the image of the product or the reputation of the trademark.
In this case, eBay had assisted some users in the promotion of the infringing items by buying keywords from search engines (which were identical to the trademark) and using sponsored links (purchased by eBay users) to direct potential buyers to the infringing goods. The ECJ ruled that a trademark owner may prevent sites such as eBay from advertising in this manner any goods for sale (bearing the relevant trademark) where the advertising in question did not enable “reasonably well informed and observant internet users” to easily ascertain whether the advertised goods were genuine or counterfeit.
Article 14 of the E-Commerce Directive offers exemption from liability to websites which are simply “intermediary providers”. The ECJ held that an online marketplace provider would potentially be able to take advantage on this exemption on the basis that it was an “intermediary provider”, if it had simply hosted information provided by a seller and consequently had no knowledge of any unlawful act. However, in the present case, eBay could not rely on the exemption because it had played an active role by optimising the presentation of the offers for sale and assisting the seller in promoting the goods. Accordingly the ECJ held that, by playing this active role, eBay was not an “intermediary provider” and had acquired “knowledge of, or control over, the data”. The ECJ further stated that, even if a provider does not play an active role (like eBay had), they still cannot rely on the exemption if (a) they were aware of facts/circumstances which would have led a diligent economic operator to realise that the activity was unlawful; and (b) they failed to act quickly to remove the offending material.
The ECJ held that Article 11 of the Enforcement Directive (2004/48/EC) requires member states to ensure that trademark owners can obtain injunctions from national courts ordering online market place providers to take steps to end infringing activity (even if there is no domestic law which incorporates Article 11). The ECJ stated that the injunctions must be “effective, proportionate and dissuasive” and can seek to prevent specific future infringements in relation to certain trademarks. In practice, this might potentially include injunctions ordering the provider to suspend the infringing account or an order requiring the provider to reveal the identity of commercial sellers. However the ECJ warned that the injunction must not be a barrier to trade and so wholesale prohibitions on selling infringing goods bearing a particular mark are probably not permissible.
Comment
This decision is a victory for brand owners, who should now feel more confident in taking action and seeking injunctions against online marketplace websites which sell infringing goods. Online marketplace providers will not be permitted to rely upon the exemption in the E-Commerce Directive in circumstances where they have taken an active role in promoting the goods, or they have (or should have had) knowledge that the sales are unlawful. Accordingly sites such as eBay may now seek to limit their involvement in sales, in an attempt to avoid liability. It is also hoped that sites such as eBay will now take swifter action to remove infringing goods that have been put up for sale on their sites and will take positive steps to cooperate with brand owners.
For more information on this or any other similar trademark law issue, please contact Liane Bylett or Clive Lee by emailing Liane or Clive or by calling them on 08450 990045, or speak to your usual contact in the Commercial Disputes Team.
This document is provided for information purposes only and does not constitute legal advice. Professional legal advice should be obtained before taking or refraining from taking any action as a result of the contents of this document.
