Warning to online retailers

By LBV

31 Aug 2011

The case of L'Oréal v eBay dealt with the way in which users of the auction giant were selling L'Oréal products online, without the cosmetic company’s consent. Often these products were counterfeit.

L'Oréal argued eBay and its users were infringing its trademark, and the recent European Court of Justice ruling clarified how liable eBay and other ISPs are in this respect.

L'Oréal said that eBay’s efforts to stop such trademark infringements were not good enough – and that the auction giant was actually helping to sell these products by advertising the pages through Google and its service Adwords.

It was this action which was seen as taking an active role in relation to the offering of trade mark infringing goods that the ECJ judgement took issue with. Such actions demonstrated knowledge or control of the data which they were storing as an ISP and this left them outside the exemption of liability afforded to ISPs under EU law.

The ruling will mean all online sites allowing vendors to sell branded goods could be affected, with owners of big brands able to bring cases against companies like eBay for trade mark infringement.

Many retailers use eBay and other retail sites to sell their products, and both online retail outlets and companies which sell through them need to be aware of this ruling.

Retailers must always be aware that trademarks should not be used on websites without permission, and attention should also be paid to how advertising is being carried out.

The European Court of Justice’s decision means that national courts may now be able to grant injunctions against internet service providers themselves to stop trade mark infringements in the event they have played an active role in the infringement. For instance, by way of purchasing Google Adwords to bring visitors to a website.

Trademark holders have welcomed this news, but operators of the online businesses will need to ensure their procedures are up to scratch to deal with the ramifications – good procedures will need to be in place to take down offending adverts and listings, for instance.

Benjamin Dredge
Napthens solicitor

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