European Court of Justice: eBay not liable for alleged trademark infringments

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According to a non-binding opinion of European Court of Justice Advocate General Niilo Jaaskinen, eBay should not be liable for trademark infringement as claimed by cosmetics giant L’Oreal. However they could be liable if they have been notified of infringement by a trademark holder of a user who continued to repeat the offence.

The opinion states that the trademark protection “is subject to legal limitations, it is exhausted when the trade mark proprietor has realised the economic value inherent in the trade mark in relation to the goods, and it is territorially limited. The limitations and restrictions are necessary to uphold freedom of commerce and competition which requires that distinctive signs and linguistic expressions are available for businesses for labelling goods and services, that the trade mark proprietors cannot prevent legitimate commercial and non-commercial use of the protected signs”.

What this in effect means is that eBay are acting within their rights to purchase keywords on search engines such as Google for L’Oreal and other trademarks to attract buyers to the site as well as upholding the rights for sellers to offer the trademarked goods although there are some limitations.

Perfume and cosmetic testers can be prohibited from sale by the trademark owner. Many testers are supplied with the words “Not for Sale” on the packaging and are intended for the purpose of allowing customers to test the contents so they are not considered to be available for resale on the open market and may in some cases be considered to still be the property of the trademark holder.

Trademark owners may also have the right to restrict the sale of products which have been removed from the original packaging. This may not be the case for “less-expensive cosmetic products”, but for “luxury cosmetics the outer package of the product may sometimes be considered as a part of the condition of the product due to its specific design”.

Finally L’Oreal and other brands have the right to restrict the sale of goods that originate from outside the European Economic Area if they have not already been offered for sale in the same market.

To summarise eBay sellers are free to resell original boxed products and describe them using the trademark to identify the goods so long as the goods have been placed in the European Economic Area market by the manufacturer. eBay can use the trademarks to drive traffic from search engines to the site, but must remove any items identified as infringing a trademark by the trademark owner. To facilitate this eBay operate the VeRO program, eBay have emphasised that it was difficult for them to adjudicate on allegations of infringement made by rights owners so they assume any VeRO claims are well founded unless they appear obviously unfounded.

This is not a final ruling, but in most cases the European Court of Justice follows the opinion of the Advocate General and a final ruling should take place next year. The final decision of the European Court of Justice would then be considered in the UK courts where the original L’Oreal case was filed.

eBay said “Despite the complexity of the issues and the preliminary nature of the Advocate-General’s opinion, we are encouraged that the European Court of Justice’s final judgement will reinforce European consumers’ freedom to buy and sell authentic goods online.”

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