Tuesday, July 12, 2011

Online Shop Sites Liable for 'Active' Promoting of Fake Goods, Euro High Court Warns

Official insignia of the European Court of JusticeImage via WikipediaeBay and other online shopping sites can't skirt trademark infringement claims if they have an "active role" in hawking counterfeit products, a full panel of the European Court of Justice ("ECJ") in Luxembourg has ruled.

Since 2007, cosmetics and beauty giant L'Oreal has locked horns with eBay, the world's largest online auction site, when the Paris-based company turned to the ECJ by linking lawsuits filed in France, Belgium, Spain and the United Kingdom, according to articles in The Independent and The Guardian. L'Oreal blames eBay for the sale of counterfeit goods on its Website as well as the sale of "parallel imports" (imported L'Oreal products not aimed at the European market). eBay argues that it should not be accountable unless it fails to act after a trademark holder notifies it of an infringement.

In a ruling that resonates in the world of e-commerce, the ECJ said national courts may order eBay and such companies "to take measures intended not only to bring to an end infringements of intellectual property sites, but also to prevent further infringments of that kind,"  The Guardian reports. The ECJ said European Union trademark rules are applicable to sales offers and advertisements involving trademarked goods outside EU countries once "it is clear that those offers are targeted at consumers in the EU."

L'Oreal complained that by paying for keywords from Internet referencing services, such as Google's AdWords, that correspond to the cosmetics company's trademarks, eBay was directing users "toward goods that infringe trademark law, which are offered for sale on its Website."  Although the ECJ said liability may attach if the online shopping site takes an "active role" in promoting sham goods or fails to remove goods upon notice that the sales are unlawful, eBay and its competitors are not liable merely for permiting its customers to display signs corresponding to trademarks.

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