The European Court of Justice ("ECJ") yesterday ruled that, in certain circumstances, online market operators such as eBay may be held liable for trade mark infringement by users of their sites, and that they should take preventative action against sellers of counterfeit goods.

The ECJ's long-awaited ruling regarding the application of EU trade mark law to online commerce websites was the latest instalment of the ongoing stoush between L'Oréal and eBay.  Among the 10 questions raised before the Court, the ECJ held that:

  1. Online market operators such as eBay do not "use" a trade mark simply by enabling customers to display on the site signs or advertisements corresponding to registered trade marks.
  2. However, online market operators may be liable for trade mark infringement in circumstances where they have played an "active role" in any trade mark infringement by users of the site.  These market operators will not be able to take advantage of the safe harbour provisions in the EU E-Commerce Directive.
  3. Even where they have not played an active role, online market operators may not be exempt for liability if they are aware of the unlawful acts.  Awareness includes knowledge obtained by the operator of its own volition or through notification by third parties of such activities.
  4. A trade mark owner can stop an online market operator from using their trade mark in a paid keyword advertisement where the advertisement does not enable users to clearly ascertain whether the goods being advertised come from the trade mark owner or a third party.
  5. Injunctive relief should be available to IP owners to prevent persistent ongoing infringement.  However, such relief should not impose on the online market operator a general monitoring obligation, for this would be too onerous.  In addition, the injunctive relief should not create barriers to legitimate trade, and therefore must not create a "general and permanent prohibition" on the sale of goods bearing particular marks.  

The case began in 2007 when L'Oréal took issue over certain items for sale on eBay, which were either counterfeit, not intended for sale, or intended for sale outside the EU.  As well as the products being made available for sale on eBay, L'Oréal complained about eBay's use of paid keywords which directed eBay users to allegedly infringing items for sale on eBay.  L'Oréal also argued that eBay did not take appropriate measures to prevent counterfeit goods being sold through its online marketplace. In 2009, the UK High Court referred to the ECJ a number of questions regarding the extent to which eBay (and other online marketplaces) are obliged to prevent trade mark infringement by users of their sites (see our earlier post here), which culminated in the ECJ's ruling yesterday.