Despite heavy criticism from some quarters, the German Federal Supreme Court has reaffirmed its decision from an earlier case that an online intermediary can be obliged under German law to monitor content posted on its platform by users for violation of third party rights.

In a case brought by Rolex, the watch manufacturer, against eBay, the online auctioneer, the German Federal Supreme Court - the Bundesgerichtshof (BGH) - recently had to decide under what circumstances an online intermediary operating a platform for "user generated content" could be liable where users upload content that infringes a third party’s rights. Rolex’s complaint concerned auctions of fake Rolex watches posted by users of eBay’s website.

This was not the Court's first decision on such a matter. In 2004, the BGH decided – in a case Rolex brought against eBay's competitor, Ricardo – that although the European E-commerce Directive and the German Teleservices Act exclude any general obligation to pro-actively search for unlawful user content, a duty to monitor could still exist for an online intermediary under German law.

The 2004 decision of the BGH has been heavily criticised in some quarters. However the BGH confirmed its guidelines in its decision on 19 April 2007 in the eBay case. The BGH found that the protection against liability afforded to online intermediaries under the Telemedia Act (formerly the Teleservices Act) did not apply to injunctive claims. Ricardo and eBay were not held liable by the BGH for infringing Rolex trademarks or participating in such infringement by hosting and displaying auctions with offers for fake Rolex watches on their websites. Instead, the Court warned the companies that they could be liable as a “disquietor” if they did not take steps to prevent counterfeit Rolex watches being offered for auction on their websites after they had been informed that this type of infringement had taken place in the past.

The concept of liability as a disquietor goes back to general principles of civil law and targets situations in which somebody – the disquietor – intentionally contributes to an infringement by an omission to act. By doing so, he comes under a subsequent "surveillance duty" in order to prevent further infringements occurring in his sphere of influence. As a consequence, an online intermediary can come under an ongoing duty to monitor for a specific type of third party content following an initial notification that such content may infringe third party rights.

This surveillance duty – and any related liability – is, however, limited by a rule of reason that applies in each individual case concerned. With respect to online intermediaries, this rule of reason takes particular account of the "technical feasibility" of appropriate measures. In its new judgment, the BGH expressly stressed that "no unreasonable duties to monitor are to be entailed on [an online intermediary], which would challenge his whole business model". In practice, however, it is highly unclear and difficult to predict what Courts would hold to be "reasonable" and what not. The Düsseldorf Court of Appeals, for example, held that it is not reasonable for the provider of a privately run discussion board to monitor the board for defamatory content, even if such content had been posted several times before. The Munich Court of Appeals, on the other hand, has held eBay liable on the grounds of the disquietor-principle for repeated sales of non-authorised copies of a Latin schoolbook. The Brandenburg Court of Appeals required eBay to take appropriate measures against the repeated abuse of an individual's personal data by unknown third persons who had opened accounts with eBay under the plaintiff's name.

Critics of the BGH's decision argue that it stands in stark contrast to the intention set forth in Sections 15 and 14 of the E-commerce Directive (no general obligation to monitor content; liability privilege for hosting), and the corresponding provisions in Section 7 subsection 2 and Section 10 of the German Telemedia Act. Some had hoped that the issue would be clarified when the new Telemedia Act replaced the old Tele Services Act. The Telemedia Act, however, does not resolve the discrepancy - the lawmaker chose instead to await further developments at the European level (see also our IT & E-commerce Law Bulletin - March 2007). As regards eBay's situation in the mentioned case, the BGH has now remitted it to the Düsseldorf Court of Appeals to clarify whether eBay could have recognised the infringements Rolex complained about.