Letters and comment

July 2009

Your readers may be interested to learn that the long awaited decision of the Court of First Instance of Paris on the EBay vs L’Oréal case finally came through on May 13 after several postponements. The case was mentioned in the conclusion of the WIPO Magazine 3/2009 article: “Legal Pioneering at the Online Auction Frontier”. Contrary to the main case discussed in that article and others it mentioned, the Court ruled that the liability of eBay – an Internet host – could only be enforced in cases of evidenced knowledge of the infringing content and failure to remedy thereto.

The L’Oréal suit, launched in 2007, alleged trademark infringement and breach of selected distribution networks by eBay companies. L’Oréal argued that eBay qualified as a website editor with brokerage activities, which under French practice makes eBay fully responsible for the content of its website. The auction site was said to actively intervene in the promotion of cosmetic and perfume products, and to earn money on their sales. L’Oréal claimed 3.5 million euros in damages.

EBay opposed the plaintiff’s position, claiming it was an intermediary, offering solely hosting services and lacking control over users and the contents of their ads. “Power seller” programs, eBay shops or Paypal protection were presented as only aiming at enhancing sellers’ auctions. As a hosting company, eBay is not bound by a general obligation to monitor the content of their website.

The Court agreed with eBay’s arguments and ruled that eBay acted in good faith by establishing strong means to fight counterfeiting. With this difference in positions between Courts of First Instance, a Court of Appeal decision would now be welcome.

But this new decision is in line with the decision of the U.S. District Court (Southern District of New York, July 14, 2008) regarding eBay’s generalized knowledge that some auctions are counterfeiting as insufficient to rule eBay as liable for trademark infringement.  In August 2008, a Belgian Court decision also favored the auction site over L’Oréal, ruling that eBay had no obligation to systematically watch which products were being offered up for sale. A court in the U.K. took the same position on May 22, 2009 (pending a referral to the ECJ). L’Oréal’s only win has been in the German Courts. A decision is yet to come from Spain.

Franck Soutoul and Jean-Philippe Bresson, Inlex IP Expertise


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