If counterfeit goods have been sold via an online auction house who should take responsibility for cracking down on the couterfeiters – the manufacturer whose goods have been cloned or the online auction house which provides the sales outlet?
It is a debate that has dogged eBay for some time.
Last July the company eBay was left reeling after the French Tribunal de Commerce demanded that the company pay out almost e20m (£15.91m) to Louis Vuitton Malletier and e16.4m (£13.04m) to Christian Dior Couture, as well as around e3m (£2.39m) to perfume brands, after users of the auction site were found to be trading in counterfeit goods (7 July 2008).
It was a decision that left some lawyers baffled. As Alexandra Neri, head of IP for Herbert Smith in France, told The Lawyer: “From a legal point of view the judgment doesn’t make any sense. Before this decision eBay obtained 18 others that said the company wasn’t liable for counterfeits.
“You can’t adopt a decision that says, ‘you’re earning money so you’re liable’.”
Some even went so far as to say that the French court was taking a protectionist stance in ruling in favour of a French firm against an American company, although that seems like more than a little far fetched.
The latest twist in the saga has swung in favour of eBay after Lovells fought its case against L’Oreal, also through the French courts.
The cosmetics company was confident of a win after the previous legal losses suffered by eBay in France. It claimed $4.8m (3.1m) in compensation from eBay, alleging that the company had failed to put in place sufficient measures to prevent counterfeit goods from being sold through its website.
But judge Elisabeth Belfort, who presided over the case, disagreed. She ruled that the auction site’s existing measures to prevent sales of fakes were sufficient “to fulfill its obligations in good faith”.
Lovells partner Thomas Rouhette, who represented eBay on the L’Oreal case, said: “This ruling is a clear victory for eBay since the Paris Court affirmed eBay’s status as a hosting provider in respect of the listings posted on the website and dismissed L’Oreal claims based on tort liability. This French judgment is fully consistent with the opinions given by courts in other jurisdictions, in the EU and in the US, in favour of eBay”.
Although the French court has no jurisdiction outside the country, the decision further reinforces a US ruling that trademark law cannot be used to force eBay to shoulder the burden of examining individual auction listings for possible counterfeits.
This was the decision made after luxury jewellers Tiffany & Co brought a case against eBay last July that attempted to force the online auction house to pay out for allegedly failing to adequately police its website for counterfeit goods.
US district judge Richard Sullivan couldn’t be clearer when he ruled: “The law is clear: it’s the trademark owner’s burden to police its mark.”
eBay has a team of 2,000 people, including former prosecutors, and spends $10m a year fighting fakes and other crimes. But, according to the International Counterfeiting Coalition, if the counterfeit market were legal it would be the world’s biggest business. It makes sense, then, that Judge Belfort urged both L’Oreal and eBay to work together to stamp out fraud.
L’Oréal, represented by Bird & Bird partner Isabelle Leroux, said it was “satisfied” with the outcome, adding that it was “glad to accept the court’s decision to judicial mediation, to agree necessary and long-lasting measures to curb counterfeiting”.
Which seems to be a sensible outcome.