L'Oréal v eBay: trade mark owners relieved

EBay, and other Internet businesses, have a much greater duty to trade mark owners than previously thought. Negligent failure to act, not just a positive act, can make them liable, according to the Court of Justice in Case C‑324/09, L'Oréal v eBay. The Court went on to say that national courts must be able not only to stop infringements but also to prevent future ones of the same kind.

The case was brought by L'Oréal, which distributes its products through a closed distribution network as is common in the fine fragrances sector. Sellers using eBay's electronic marketplace committed what L'Oréal said were trade mark infringements, and it sued eBay as well as some sellers. Another claim was that eBay had committed further infringements by purchasing keywords from paid Internet referral services (Google's AdWords being the main one) which corresponded to L'Oréal trade marks and which directed traffic to the infringers. L'Oréal argued that eBay's efforts to stop infringements were inadequate.

L'Oréal's claim was brought in the High Court of England and Wales. Arnold J referred a multiplicity of questions to Luxembourg. Advocate General Jääskinen gave his opinion last December, and now the Court has now given answers.

It starts by saying that there has to be a commercial activity - distinguished from a private activity by reference to the volume and frequency of sales - before there can be a trade mark infringement. Well, it has to be use in the course of trade, the directive is clear about that.

If the goods are offered for sale from outside the EU, infringements will be committed once it is clear that offers for sale and advertisements are directed at consumers in the EU. national courts have to assess on a case-by-case basis whether there are any relevant factors from which suggest that offers and advertisements on an online marketplace are directed to consumers in the EU. Where the seller is prepared to send the goods to will be one indication.

The operator of the marketplace does not itself use the marks: this reflects the logic of the AdWords judgment. Of course, it might do more than just enable its customers to display signs on the website in the course of their commercial activities, and leave itself open to action that way, but just providing the marketplace is not enough.

The operator of the marketplace might find itself in the liability zone if it plays an active role so that it has knowledge of or control over the date relating to the offers for sale. This might happen if it provides assistance which entails, for example, optimising the presentation of the online offers or promoting them. Then it will lose the exemption from liability given by EU law (specifically, the e-commerce directive) to online service providers.
Even where the operator has not played such an active role, it cannot rely on the exemption if it was aware of facts or circumstances on the basis of which a diligent economic operator should have realised that the online offers for sale were unlawful, and it fails to act promptly to remove the offending material from its website or disable access to it.

If the operator does not bring infringements committed by users of its service to an end, what orders can the courts make? The Court of Justice says that the operator can be ordered to take measures making it easier to identify the sellers, its customers, Personal data must be protected, but where the perpetrator is operating in the course of trade and not as a private individual (as they must be to commit an infringement) they have to be identifiable. That is a strange reading of the data protection directive, though the point that traders have to identify themselves on the Internet is an important safeguard in the e-commerce directive. So national courts must have the power to order the operator to take measures which contribute to preventing further infringements as well as dealing with infringements that have already been committed.

In the Google AdWords case, the Court did not hold Google responsible for what users of the service did - drawing an important line between the keyword and where it leads. The keyword might correspond to a trade mark, but the important question is whether the resulting sponsored link uses the trade mark or not. That's why Google is not liable, but why marketplace operators who help sellers or who know what the sellers are up to might be liable if the sellers are handling infringing goods.