L’Oréal v eBay Part III: what the world says ...

Here in Part III, in alphabetical order, are some early responses to this morning's Court of Justice ruling in Case C‑324/09 L’Oréal SA, Lancôme parfums et beauté & Cie, Laboratoire Garnier & Cie, L’Oréal (UK) Limited v eBay International AG, eBay Europe SARL and eBay (UK) Limited (see Part I for background, Part II for the ruling and an easy summary).

Ashursts IP partner Dominic Batchelor: "eBay will be concerned by this decision, which means it could be forced to prevent intellectual property infringements by its users. The practical and cost implications could be extensive, and any additional costs will presumably be passed on to eBay's users".

“Brand owners like L’Oréal will be jubilant at today’s ruling. Trade mark owners are no longer alone in their fight for online brand protection. Instead, as is the case on the High Street, companies which facilitate sales can be held accountable for the goods which pass through their hands", says Kirsten Gilbert (Marks & Clerk), adding "Brands have been concerned for years now that the internet has facilitated the trade of counterfeit goods. Items which would otherwise be available only from back-street traders have become instantly available to consumers in the privacy of their own homes. L’Oréal and other brand owners will be hoping that online marketplaces like eBay now sit up and pay attention to the sales of counterfeit items which go through their sites. ... Brand owners will now be working with a legal system which protects one of their key assets – their brand identity.”

Stefan Krawczyk, eBay’s European government-relations director: “The judgment provides some clarity on certain issues, and ensures that all brands can be traded online in Europe. A lot of cases will still have to be assessed by the national courts. We’ve moved on -- we fulfill most of these conditions now anyways”.

At the time this item was posted, L’Oréal had yet to issue a public statement, confirming only that the company was studying the ruling. Given the fact that L’Oréal must not only decide what it thinks about the judgment but must also determine what it should say about its own corporate policy in the wake of the ruling, any delay in issuing a statement is probably prudent.

Managing Internet IP's James Nurton said this morning's press release from the court "makes grim reading for the online marketplace".

Adam Smith (World Trademark Review blog): "the court clarified that an online marketplace is not exempted from liability when it has played an “active role” in the sale, which includes “optimising the presentation of the offers for sale in question or promoting them”. This would appear to challenge eBay’s current business practices, and its arguments that it is not responsible for third parties selling counterfeit goods, especially because it takes active steps to stop them with its Verifed Rights Owner programme".

While these responses, which the perhaps inevitable exception of that of eBay, reflect the opinion that this ruling is bad news for online market operators, this Kat is not expecting an avalanche of litigation against eBay. The fact that the company cannot automatically escape liability under the E-Commerce Directive does not mean that it is automatically liable. Apart from the fact that the success of each prospective trade mark infringement action will still turn on its facts, the cost of litigation is itself a deterrent where the infringement is small and injunctive relief -- which is pretty well automatic in the case of Community trade mark infringement even when infringement has ceased -- is not a per se remedy in the case of infringement of national marks.  Merpel adds, while the injured trade mark owner can derive some justifiable satisfaction from having brought a successful action, the biggest benefit to the consumer, and therefore to the protection of the goodwill in each brand, is for eBay and the brand owners to cooperate more fully and effectively in producing the best-possible system for notice and take-down.

L’Oréal v eBay Part II: what the Court says

KATNOTE: IF YOU NEED TO CHECK THE FACTS THAT TRIGGERED THIS PIECE OF LITIGATION, THE QUESTIONS REFERRED FOR A PRELIMINARY RULING BY THE COURT OF JUSTICE OF THE EUROPEAN UNION AND THE ADVOCATE GENERAL'S OPINION, READ L’Oréal  v eBay I: background to this morning's ruling BEFORE YOU READ THIS POST

The ruling in  Case C‑324/09 L’Oréal SA, Lancôme parfums et beauté & Cie, Laboratoire Garnier & Cie, L’Oréal (UK) Limited v eBay International AG, eBay Europe SARL and eBay (UK) Limited has now been posted on the Curia website. 

The active part of the Court's ruling reads thus:

"1. Where goods located in a third State, which bear a trade mark registered in a Member State of the European Union or a Community trade mark and have not previously been put on the market in the European Economic Area or, in the case of a Community trade mark, in the European Union, (i) are sold by an economic operator on an online marketplace without the consent of the trade mark proprietor to a consumer located in the territory covered by the trade mark or (ii) are offered for sale or advertised on such a marketplace targeted at consumers located in that territory, the trade mark proprietor may prevent that sale, offer for sale or advertising by virtue of the rules set out in Article 5 of First Council Directive 89/104 ..., as amended ..., or in Article 9 of Council Regulation ... 40/94 ... on the Community trade mark. [there's no surprise here ...] It is the task of the national courts to assess on a case-by-case basis whether relevant factors exist, on the basis of which it may be concluded that an offer for sale or an advertisement displayed on an online marketplace accessible from the territory covered by the trade mark is targeted at consumers in that territory [... or here].

2. Where the proprietor of a trade mark supplies to its authorised distributors items bearing that mark, intended for demonstration to consumers in authorised retail outlets, and bottles bearing the mark from which small quantities can be taken for supply to consumers as free samples, those goods, in the absence of any evidence to the contrary, are not put on the market within the meaning of Directive 89/104 and Regulation No 40/94 [= Case C-127/09 Coty Prestige Lancaster v Simex, here].

3. Article 5 of Directive 89/104 and Article 9 of Regulation No 40/94 must be interpreted as meaning that the proprietor of a trade mark may, by virtue of the exclusive right conferred by the mark, oppose the resale of goods such as those at issue in the main proceedings, on the ground that the person reselling the goods has removed their packaging, where the consequence of that removal is that essential information, such as information relating to the identity of the manufacturer or the person responsible for marketing the cosmetic product, is missing [in which case repackaging in different information-bearing boxes would still be fine ...]. Where the removal of the packaging has not resulted in the absence of that information, the trade mark proprietor may nevertheless oppose the resale of an unboxed perfume or cosmetic product bearing his trade mark, if he establishes that the removal of the packaging has damaged the image of the product and, hence, the reputation of the trade mark [... though the repackager may need to use a reputation-neutral package].

4. On a proper construction of Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94, the proprietor of a trade mark is entitled to prevent an online marketplace operator from advertising – on the basis of a keyword which is identical to his trade mark and which has been selected in an internet referencing service by that operator – goods bearing that trade mark which are offered for sale on the marketplace, where the advertising does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods concerned originate from the proprietor of the trade mark or from an undertaking economically linked to that proprietor or, on the contrary, originate from a third party [this looks like an application of the Court's Case C-238/06 Google France formula].

5. The operator of an online marketplace does not ‘use’ – for the purposes of Article 5 of Directive 89/104 or Article 9 of Regulation No 40/94 – signs identical with or similar to trade marks which appear in offers for sale displayed on its site.

6. Article 14(1) of Directive 2000/31 ...on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market (‘Directive on electronic commerce’) must be interpreted as applying to the operator of an online marketplace where that operator has not played an active role allowing it to have knowledge or control of the data stored.

[... but ...] The operator plays such a role when it provides assistance which entails, in particular, optimising the presentation of the offers for sale in question or promoting them.

Where the operator of the online marketplace has not played an active role within the meaning of the preceding paragraph and the service provided falls, as a consequence, within the scope of Article 14(1) of Directive 2000/31, the operator none the less cannot, in a case which may result in an order to pay damages, rely on the exemption from liability provided for in that provision if it was aware of facts or circumstances on the basis of which a diligent economic operator should have realised that the offers for sale in question were unlawful and, in the event of it being so aware, failed to act expeditiously in accordance with Article 14(1)(b) of Directive 2000/31. [no surprise here]

7. The third sentence of Article 11 of Directive 2004/48 ... on the enforcement of intellectual property rights must be interpreted as requiring the Member States to ensure that the national courts with jurisdiction in relation to the protection of intellectual property rights are able to order the operator of an online marketplace to take measures which contribute, not only to bringing to an end infringements of those rights by users of that marketplace, but also to preventing further infringements of that kind. Those injunctions must be effective, proportionate, and dissuasive and must not create barriers to legitimate trade" [Good news for trade mark owners, and a headache for courts when they have to determine what is not only effective -- that's the easy bit -- but proportionate and dissuasive].

If this is all too much to take in, here's this morning's press release from the court,

"National courts must be able to order those companies to take measures intended not only to bring to an end infringements of intellectual property rights but also to prevent further infringements of that kind

eBay operates a global electronic marketplace on the internet, where individuals and businesses can buy and sell a broad variety of goods and services.

L’Oréal is the owner of a wide range of well-known trade marks. Its products (especially cosmetics and perfumes) are distributed through a closed distribution network, in which authorised distributors are restrained from supplying products to other distributors.

L’Oréal complains that eBay is involved in trade mark infringements committed by users of its website. Moreover, it claims that, by purchasing from paid internet referencing services (such as Google’s AdWords) keywords corresponding to the names of L’Oréal trade marks, eBay directs its users towards goods that infringe trade mark law, which are offered for sale on its website.

Furthermore, L’Oréal is of the view that eBay’s efforts to prevent the sale of counterfeit goods on its website are inadequate. L’Oréal has identified various forms of infringement, including, inter alia, the sale and offer for sale, to consumers in the EU, of goods bearing L’Oréal’s trade marks intended, by L’Oréal, for sale in third States (parallel importation).

The High Court (United Kingdom), before which the dispute is pending, has asked the Court of Justice a number of questions concerning the obligations to which a company operating an internet marketplace may be subject in order to prevent trade mark infringements by its users.

The Court states, as a preliminary point, that the proprietor of the trade mark may rely on his exclusive right as against an individual who sells trade-marked goods online only when those sales take place in the context of a commercial activity. That is the case, in particular, if the sales, owing to their volume and frequency, go beyond the realms of a private activity.

The Court rules first of all on commercial activities directed towards the EU by means of online marketplaces such as eBay. It states that the EU trade mark rules apply to offers for sale and advertisements relating to trade-marked goods located in third States as soon as it is clear that those offers for sale and advertisements are targeted at consumers in the EU.

It is for the national courts to assess, on a case-by-case basis, whether there are any relevant factors on the basis of which it may be concluded that an offer for sale or an advertisement, displayed on an online marketplace, is targeted at EU consumers. For example, the national courts will be able to take into account the geographic areas to which the seller is willing to dispatch the product.

Next, the Court holds that the operator of an internet marketplace does not itself ‘use’ trade marks within the meaning of the EU legislation if it provides a service consisting merely in enabling its customers to display on its website, in the course of their commercial activities, signs corresponding to trade marks.

The Court also specifically mentions certain matters concerning the liability of the operator of an online marketplace. Whilst making clear that it is for the national courts to carry out the assessment concerned, the Court considers that the operator plays an active role of such a kind as to give it knowledge of, or control over, the data relating to the offers for sale, when it provides assistance which entails, in particular, optimising the presentation of the online offers for sale or promoting those offers.

When the operator has played an ‘active role’ of that kind, it cannot rely on the exemption from liability which EU law confers, under certain conditions, on online service providers such as operators of internet marketplaces.

Moreover, even in cases in which the operator has not played an active role of that kind, it cannot rely on that exemption from liability 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, in the event of it being so aware, failed to act promptly to remove the data concerned from its website or to disable access to them.

Finally, the Court rules on the question of injunctions which may be granted against the operator of an online marketplace when it does not decide, on its own initiative, to bring to an end infringements of intellectual property rights and to prevent further such infringements occurring.
Thus, the operator may be ordered to take measures making it easier to identify the sellers who are its customers. In that regard, although it is necessary to respect the protection of personal data, the fact remains that when the perpetrator of the infringement is operating in the course of trade, and not in a private matter, that person must be clearly identifiable.

Consequently, the Court holds that EU law requires the Member States to ensure that the national courts with jurisdiction in relation to the protection of intellectual property rights are able to order the operator to take measures which contribute, not only to bringing to an end infringements of those rights by the users, but also to preventing further infringements of that kind. Those injunctions must be".

The IPKat reminds readers that this is not an end to the litigation. The ruling must now be applied to the referring court and, whatever that court does, an appeal may be confidently expected. Readers' comments may also be expected ...

L’Oréal v eBay Part I: background to this morning's ruling

KATNOTE: IF YOU ARE QUITE FAMILIAR WITH THE FACTS THAT TRIGGERED THIS PIECE OF LITIGATION, THE QUESTIONS REFERRED FOR A PRELIMINARY RULING BY THE COURT OF JUSTICE OF THE EUROPEAN UNION AND THE ADVOCATE GENERAL'S OPINION, YOU CAN SKIP THIS POST AND MOVE STRAIGHT ON TO L’Oréal  v eBay II: what the Court says  

It was only two short years ago that Mr Justice Arnold told us that he was referring a number of questions to the Court of Justice of the European Union for a preliminary reference in one of the most exciting and potentially important trade mark law disputes to be heard in England and Wales in recent times -- the titan struggle between luxury cosmetic kings L’Oréal SA and online auction host eBay which reaches a critical point in today's ruling in  Case C‑324/09 L’Oréal SA, Lancôme parfums et beauté & Cie, Laboratoire Garnier & Cie, L’Oréal (UK) Limited v eBay International AG, eBay Europe SARL and eBay (UK) Limited.


The facts in brief: Paris-based L'Oréal, which had brought similar proceedings in several European countries, objected that online auction site eBay did not do enough to prevent the sale of counterfeit goods such as perfumes and cosmetics. Broadly speaking L'Oréal's position was that eBay should be liable for counterfeit and parallel imported goods sold via its website, and that eBay should do more to prevent the sale of such trade mark infringing goods. 


The facts at length: the detailed facts can be found in a whopping big judgment of some 482 paragraphs, which you can read at your leisure on BAILII here.

To refresh readers' memories, the questions referred for a preliminary ruling were as follows:

‘(1) Where perfume and cosmetic testers (i.e. samples for use in demonstrating products to consumers in retail outlets) and dramming bottles (i.e. containers from which small aliquots can be taken for supply to consumers as free samples) which are not intended for sale to consumers (and are often marked “not for sale” or “not for individual sale”) are supplied without charge to the trade mark proprietor’s authorised distributors, are such goods “put on the market” within the meaning of Article 7(1) of [Directive 89/104] and Article 13(1) of [Regulation No 40/94]?

(2) Where the boxes (or other outer packaging) have been removed from perfumes and cosmetics without the consent of the trade mark proprietor, does this constitute a “legitimate reason” for the trade mark proprietor to oppose further commercialisation of the unboxed products within the meaning of Article 7(2) of [Directive 89/104] and Article 13(2) of [Regulation No 40/94]?

(3) Does it make a difference to the answer to question 2 above if:

(a) as a result of the removal of the boxes (or other outer packaging), the unboxed products do not bear the information required by Article 6(1) of [Directive 76/768], and in particular do not bear a list of ingredients or a “best before date”?

(b) as a result of the absence of such information, the offer for sale or sale of the unboxed products constitutes a criminal offence according to the law of the Member State of the Community in which they are offered for sale or sold by third parties?

(4) Does it make a difference to the answer to question 2 above if the further commercialisation damages, or is likely to damage, the image of the goods and hence the reputation of the trade mark? If so, is that effect to be presumed, or is it required to be proved by the trade mark proprietor?

(5) Where a trader which operates an online marketplace purchases the use of a sign which is identical to a registered trade mark as a keyword from a search engine operator so that the sign is displayed to a user by the search engine in a sponsored link to the website of the operator of the online marketplace, does the display of the sign in the sponsored link constitute “use” of the sign within the meaning of Article 5(1)(a) of [Directive 89/104] and Article 9(1)(a) of [Regulation No 40/94]?

(6) Where clicking on the sponsored link referred to in question 5 above leads the user directly to advertisements or offers for sale of goods identical to those for which the trade mark is registered under the sign placed on the website by other parties, some of which infringe the trade mark and some which do not infringe the trade mark by virtue of the differing statuses of the respective goods, does that constitute use of the sign by the operator of the online marketplace “in relation to” the infringing goods within the meaning of 5(1)(a) of [Directive 89/104] and Article 9(1)(a) of [Regulation No 40/94]?

(7) Where the goods advertised and offered for sale on the website referred to in question 6 above include goods which have not been put on the market within the EEA by or with the consent of the trade mark proprietor, is it sufficient for such use to fall within the scope of Article 5(1)(a) of [Directive 89/104] and Article 9(1)(a) of [Regulation No 40/94] and outside Article 7(1) of [Directive 89/104] and Article 13(1) of [Regulation No 40/94] that the advertisement or offer for sale is targeted at consumers in the territory covered by the trade mark or must the trade mark proprietor show that the advertisement or offer for sale necessarily entails putting the goods in question on the market within the territory covered by the trade mark?

(8) Does it make any difference to the answers to questions 5 to 7 above if the use complained of by the trade mark proprietor consists of the display of the sign on the web site of the operator of the online marketplace itself rather than in a sponsored link?

(9) If it is sufficient for such use to fall within the scope of Article 5(1)(a) of [Directive 89/104] and Article 9(1)(a) of [Regulation No 40/94] and outside Article 7(1) of [Directive 89/104] and Article 13(1) of [Regulation No 40/94] that the advertisement or offer for sale is targeted at consumers in the territory covered by the trade mark:

(a) does such use consist of or include “the storage of information provided by a recipient of the service” within the meaning of Article 14(1) of [Directive 2000/31]?

(b) if the use does not consist exclusively of activities falling within the scope of Article 14(1) of [Directive 2000/31], but includes such activities, is the operator of the online marketplace exempted from liability to the extent that the use consists of such activities and if so may damages or other financial remedies be granted in respect of such use to the extent that it is not exempted from liability?

(c) in circumstances where the operator of the online marketplace has knowledge that goods have been advertised, offered for sale and sold on its website in infringement of registered trade marks, and that infringements of such registered trade marks are likely to continue to occur through the advertisement, offer for sale and sale of the same or similar goods by the same or different users of the website, does this constitute “actual knowledge” or “awareness” within the meaning of Article 14(1) of [Directive 2000/31]?

(10) Where the services of an intermediary such as an operator of a website have been used by a third party to infringe a registered trade mark, does Article 11 of [Directive 2004/48] require Member States to ensure that the trade mark proprietor can obtain an injunction against the intermediary to prevent further infringements of the said trade mark, as opposed to continuation of that specific act of infringement, and if so what is the scope of the injunction that shall be made available?’

Advocate General Jääskinen advised the Court to rule thus:

'(1) Where perfume and cosmetic testers and dramming bottles which are not intended for sale to consumers are supplied without charge to the trade mark proprietor’s authorised distributors, such goods are not put on the market within the meaning of Article 7(1) of ... Council Directive 89/104 ...and Article 13(1) of ... Regulation ...40/94 .... [this fits with the Court's ruling in Case C-127/09 Coty Prestige Lancaster v Simex, noted by the IPKat here]

(2), (3) and (4) The trade mark proprietor is entitled to oppose further commercialisation of the unboxed products within the meaning of Article 7(2) of Directive 89/104 and Article 13(2) of Regulation No 40/94 where the outer packaging have been removed from perfumes and cosmetics without the consent of the trade mark proprietor if, as a result of the removal of the outer packaging, the products do not bear the information required by Article 6(1) of Council Directive 76/768 ... on the approximation of the laws of the Member States relating to cosmetic products, or if the removal of outer packaging can be considered as such as changing or impairing the condition of the goods or if the further commercialisation damages, or is likely to damage, the image of the goods and therefore the reputation of the trade mark. Under the circumstances of the main proceedings that effect is to be presumed unless the offer concerns a single item or few items offered by a seller clearly not acting in the course of trade.

(5) Where a trader operating an electronic marketplace purchases the use of a sign which is identical to a registered trade mark as a keyword from a search engine operator so that the sign is displayed to a user by the search engine in a sponsored link to the website of the operator of the electronic marketplace, the display of the sign in the sponsored link constitutes ‘use’ of the sign within the meaning of Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94.

(6) Where clicking on the sponsored link referred to in point 5 above leads the user directly to advertisements or offers for sale of goods identical to those for which the trade mark is registered under the sign placed on the website by other parties, some of which infringe the trade mark and some which do not infringe the trade mark by virtue of the differing statuses of the respective goods, that fact constitutes use of the sign by the operator of the electronic marketplace ‘in relation to’ the infringing goods within the meaning of Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94, but it does not have an adverse effect on the functions of the trade mark provided that a reasonable average consumer understands on the basis of information included in the sponsored link that the operator of the electronic marketplace stores in his system advertisements or offers for sale of third parties.

(7) Where the goods offered for sale on the electronic marketplace have not yet been put on the market within the EEA by or with the consent of the trade mark proprietor, it is none the less sufficient for the exclusive right conferred by the national or Community trade mark to apply to show that the advertisement is targeted at consumers within the territory covered by the trade mark.

(8) If the use complained of by the trade mark proprietor consists of the display of the sign on the website of the operator of the electronic marketplace itself rather than in a sponsored link on the website of a search engine operator, the sign is not used by the operator of the electronic marketplace ‘in relation to’ the infringing goods within the meaning of Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94.

(9)(a) The use referred to in point 5 does not consist of or include ‘the storage of information provided by a recipient of the service’ by the electronic marketplace operator within the meaning of Article 14(1) of Directive 2000/31 ... on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, whereas the use referred to in point 6 may consist of or include such storage.

(9)(b) Where the use does not consist exclusively of activities falling within the scope of Article 14(1) of Directive 2000/31, but includes such activities, the operator of the electronic marketplace is exempted from liability to the extent that the use consists of such activities, but damages or other financial remedies may be granted pursuant to national law in respect of such use to the extent that it is not exempted from liability.

(9)(c) There is ‘actual knowledge’ of illegal activity or information or ‘awareness’ of facts or circumstances within the meaning of Article 14(1) of Directive 2000/31 where the operator of the electronic marketplace has knowledge that goods have been advertised, offered for sale and sold on its website in infringement of a registered trade mark, and that infringements of that registered trade mark are likely to continue regarding the same or similar goods by the same user of the website.

(10) Where the services of an intermediary such as an operator of a website have been used by a third party to infringe a registered trade mark, Article 11 of Directive 2004/48 ...on the enforcement of intellectual property rights requires Member States to ensure that the trade mark proprietor can obtain an effective, dissuasive and proportionate injunction against the intermediary to prevent continuation or repetition of that infringement by that third party. The conditions and procedures relating to such injunctions are defined in national law'.