L'Oréal v eBay: the ECJ's Judgment

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25 July 2011

Providers of online marketplaces may lose the protection of the hosting defence by offering assistance to their users.

In giving judgment, the European Court of Justice answered a number of questions referred to it by the High Court in London, which arose out of a trade mark infringement action brought by the cosmetics giant L'Oréal, in respect of the unauthorised sale of both genuine and counterfeit products over eBay's online marketplace.

The ECJ broadly followed the opinion of Advocate General Jääskinen delivered in December 2010, indicating that operators could incur liability for infringement where they fail to promptly remove listings when they are aware of circumstances which suggest that those listings are unlawful.  However, in a departure from the Advocate General's opinion, the ECJ held that where the operator of an online marketplace provides assistance intended to optimise or promote offers for sale by users, it will be playing an active role.  As such, it will no longer fall within the scope of the hosting defence under Article 14 of the E- Commerce Directive (which provides for an immunity from claims for damages).

The ECJ's views on the availability of injunctions to prevent online trade mark infringement also go further than the Advocate General. The ECJ indicated that not only should national courts be able to grant injunctions against ISPs to bring existing infringements to an end, but also to prevent further infringements of that kind in the future, for example by suspending accounts or identifying infringing users.

The decision is good news for brand owners, but operators of online marketplaces will need to ensure that they have effective notice and take-down procedures, and may wish to consider limiting the level of direct and indirect assistance they give to users in promoting or optimising listings.

The case will now be referred back to the High Court for a decision on the facts.

For further information, please contact Helen Scott-Lawler at helen.scott-lawler@burges-salmon.com, Jeremy Dickerson at jeremy.dickerson@burges-salmon.com, or your usual Burges Salmon contact.

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