eBay liable for counterfeits sold on its site

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The European Court of Justice has struck a blow to eBay in its fight against L'Oral and other brand owners over liability for counterfeit goods sold on its website. The Court has ruled that eBay and other online marketplaces cannot claim exemption from liability for these infringements, if they are aware of the illegal nature of the sales their sites facilitate.

The recent ruling means that, in the future, brand owners will be able to initiate legal proceedings against online marketplaces if they allow counterfeit goods to be sold through their site.

The long-awaited ruling gives definitive answers to questions referred to the European Court of Justice in August 2009 by the High Court of Justice for England and Wales. Mr Justice Arnold of the High Court referred the questions after finding in favour of eBay in May 2009 in a landmark ruling in the struggle between the luxury cosmetics giant and the online marketplace. Later in the same year, a French court ordered eBay to pay LVMH, the owner of the Louis Vuitton brand, 1.7m Euros for failing to prevent the sale of LVMH products on its website. The new ruling from the European Court of Justice hands the advantage to L'Oral and other big brands.

Kirsten Gilbert, Partner at Marks & Clerk Solicitors, comments: "Brand owners like L'Oral will be jubilant at the 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.

"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'Oral 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."

Kirsten Gilbert continues: "European trade mark law has been straining under the pressure of dealing with the internet age. The information revolution and the rise of online commerce have created a host of scenarios never envisaged when our laws were drafted. [The new] ruling will give national courts guidance on how to approach just one of these scenarios.

"We have seen over the past years different national courts finding in favour of opposing parties in similar cases. Inconsistency in the area of the online counterfeiting trade will be reduced following this ruling. Brand owners will now be working with a legal system which protects one of their key assets their brand identity."