U.K. Court Decides for EBay

EBay has won another battle in their skirmish with L’Oreal as the High Court of the United Kingdom says that eBay has “no legal duty” to protect other companies’ trade marks or stop its sellers from infringing them.  Cosmetics company L’Oréal has failed to show that eBay was jointly liable with the sellers of fakes and illegally imported goods and had “participated in a common design” to infringe its trade marks, the Court said.

L’Oréal has embarked on over 100 lawsuits in Europe over eBay trade in its goods. The company is taking action against sales of its products or counterfeits of them which it believes damage its business and reputation.  In its High Court case L’Oréal submitted evidence which showed that of 287 test purchases that it made on eBay, only 84 products were legitimate and intended for sale within the European Economic Area (EEA).  It said that the agency it employed to conduct the purchasing had not deliberately targeted auctions likely to carry fakes or grey imports, but that still 14 of the products were counterfeits, 49 were never intended for sale and 139 were put on the market outside of the EEA and not intended for import.

L’Oréal took a case against the sellers of the goods bought in the test purchases, and won its argument that those people had infringed its trade mark rights, either by selling fakes or by selling goods put on the market outside of the EEA and not intended for import.  It then sought to prove that eBay bore joint liability for these trade mark infringements because it did not do enough to prevent them.  EBay argued that it has a scheme that helps to police trade mark infringement. The scheme is called VeRO (Verified Rights Owner). L’Oréal does not participate in the scheme and said that it is unacceptable because it puts the onus of preventing infringement solely on the trade mark holder and does not punish rogue sellers enough. 

The judge in the case, Mr Justice Arnold, said that the most appropriate legal precedents for deciding the question of joint liability were those involving the sale of tape recording machines in the 1980s.  Record companies had said that Amstrad was liable for the copyright infringement of people who used the tape recording machines to duplicate commercial recordings.

“What were the consequences in law, first of Amstrad knowing that the majority of those who bought their machines would use them to copy unlawfully pre-recorded cassettes protected by copyright and, secondly, of their intention to supply that market?” said a ruling that the Court referred to, from a 1986 case. “I am satisfied that mere knowledge on the part of the supplier of equipment that it would probably be used to infringe someone’s copyright does not make the supply unlawful; nor does an intention to supply the market for such user.”

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