EBay Liable for Leading Users to Fakes, L'Oreal Says
EBay Inc. is actively involved in the process of selling fake L’Oreal SA cosmetics on its auction site, the Paris-based company told the European Union’s highest court.
EBay, the most-visited U.S. e-commerce site, is liable for trademark breaches due to its active involvement in the pre- sale, sale and after-sale processes on its online platform, lawyers for L’Oreal told the European Court of Justice today. EBay uses L’Oreal trademarks as sponsored links to lead users to infringing perfumes and other cosmetics, according to L’Oreal.
“In no way can EBay’s role be described as either passive or neutral,” L’Oreal’s lawyer Henry Carr said to a 13-judge panel of the Luxembourg-based EU court. “EBay is just like a large car-boot sale on the Internet and should face the same sanctions if fake products are sold there.”
A ruling by the EU court may help settle pending trademark disputes between the two companies in France, Belgium and Spain. The EU court ruled earlier this year, in a dispute between Google Inc. and LVMH, that Internet hosts may benefit from an exemption under the EU’s e-commerce law only if their role in processing potentially infringing data is neutral.
Courts in France and Belgium so far have sided with EBay in the lawsuits brought by L’Oreal, Europe’s largest cosmetics company.
Guidance
Today’s case stems from a dispute in the U.K., where the High Court in London last year decided EBay could do more to reduce the sale of copies on its site by installing filters, imposing restrictions on sellers or applying its policies more consistently. Before giving its final decision, the court referred a number of questions to the EU tribunal for guidance.
“Even if EBay itself is not liable for trademark infringement, L’Oreal must have the possibility to require an injunction against EBay because the company has the knowledge that’s tied to the infringement on its site,” said Carr.
EBay’s lawyer Thierry Van Innis today said an injunction was a “disproportionate sanction” that would impede the functioning of e-commerce. He also rejected the idea of installing control mechanisms, such as a filters to help early detection of counterfeits sellers “because these clearly don’t have the capacity to block what’s illegal and ensure that everything offered is legal.”
The case dates back to 2007 when L’Oreal sent a letter expressing its concerns about the “widespread” sale of fake products on EBay’s European websites and asking it to address those concerns. L’Oreal sued, saying EBay hadn’t done enough.
‘Jockeying’ for Position
“L’Oreal seems less comfortable with e-commerce and seems to be jockeying for a position where its rights would be broader than they are in the real world,” said Geert Glas, one of the two lawyers representing EBay at the EU court today.
Trademark-protected words that EBay bought to bring visitors on search engines to its site via so-called sponsored links were another point of contention raised by L’Oreal today.
While L’Oreal argues this practice helps guide people faster to fake products on EBay’s site, EBay and the U.K. government argued that it’s meant to act as an advertisement for EBay.
“The sponsored links in this case act as a hook to draw the user to the EBay site and they don’t act as a hook to draw the user to any particular goods,” Charlotte May, a lawyer for the U.K. government, told the court.
Niilo Jaeaeskinen, an advocate general at the EU court, said he’ll publish a non-binding opinion on December 9. The court’s ruling on average follows about six months later.
The case is C-324/09, L’Oreal SA, Lancome parfums et beaute & Cie SNC, Laboratoire Garnier & Cie, L’Oreal (UK) Limited v eBay International AG, eBay Europe SARL, eBay (UK) Limited.
To contact the reporter on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.net
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