Behind the times

In media law the complaint is that current libel regulations are out of touch with the internet age. The same problem has struck the retail sector, with big brands complaining that online auction websites are flouting trademark rights by helping their users trade in counterfeit goods.

eBay, the king of auction sites, has been subjected to countless claims across Europe from major brands that are fed up with what they see as a laissez-faire attitude towards the trade of counterfeit goods.

This was the subject of a major European Court legal battle and the result, which was published yesterday (see story), will have implications for online sellers and buyers everywhere.

The claim was launched by L’Oreal in London’s High Court two years ago, with Bristows partner Paul Walsh instructing 11 South Square’s Henry Carr QC for the claimant. On the opposing side was Olswang for eBay, with One Essex Court’s Geoffrey Hobbs QC acting as counsel.

What was needed was an answer to the legal question: Is eBay Europe liable for trademark infringements committed by their users?

When Mr Justice Arnold handed down his 482-paragraphed judgment in May 2009 he highlighted that further clarity was needed from the European Court to ensure that all European jurisdictions took a similar approach to the problem.

After all, the previous July (2008) the  French Tribunal de Commerce demanded that eBay pay out almost €20m (£15.91m) to Louis Vuitton Malletier and €16.4m (£13.04m) to Christian Dior Couture, as well as around €3m (£2.39m) to a variety of perfume brands, after users of the auction site were found to be trading in counterfeit goods (7 July 2008).

However, in May 2009, the Paris Court of Appeal refused to award compensation to L’Oreal when it alleged that eBay had failed to put in place sufficient measures to prevent counterfeit goods from being sold through its website.

As Arnold J highlighted in his judgment: “This is one of a number of cases around Europe both between the same parties and between other parties raising the same or similar issues.”

He added: “The sooner the courts of Europe are able to arrive at common answers to these issues, the better.”

At the European level both sides expanded their legal teams. Walsh continued to instruct Carr, but he also drafted in European law specialist David Anderson QC from Brick Court.

eBay, meanwhile, switched from Olswang to Field Fisher Waterhouse, instructing Brussels-based of counsel Thierry Van Innis, who was assisted by senior associate Hakim Haouideg.

Following nearly two years of submissions and deliberations, the European Court held that sites such as eBay could be held liable for trademark infringement committed by users of their site.

The court also said that rights holders should be able to obtain injunctions requiring service providers like eBay to prevent users selling infringing goods on those sites, as well as to cease such infringements as are already occurring. 

Such injunctions must be effective but need to be proportionate and so would not extend to bans on the sale of particular goods or an obligation to monitor all goods offered for sale on eBay’s site.

According to Ashurst partner Dominic Batchelor: “eBay will be concerned by this decision, which means it could be forced to prevent intellectual property infringements by its users.”

Furthermore, the court said, eBay could be liable for trademark infringement where it promotes infringing goods by paying for sponsored links to them on referencing websites, such as Google AdWords. 

A statement released by the online auction site said the ruling gave “some clarity on certain issues, and ensures that all brands can be traded online in Europe.”

However, each European jurisdiction will now have to decipher the ruling and apply it in its own courts.

That could mean the matter has gone full circle, and while Europe has provided some clarity it has also given intellectual property lawyers a whole new raft of issues to wrangle over.