ECJ trade mark ruling lets eBay off the hook

The European Court of Justice has moved a step closer to judgement in a case referred from the English High Court, which it is hoped will provide guidance...

The European Court of Justice has moved a step closer to judgement in a case referred from the English High Court, which it is hoped will provide guidance on the extent to which operators of electronic marketplaces are responsible for policing trade mark infringements committed by their sellers, wirtes Alison Hague.

In a test case commenced by L'Oreal against eBay, the English High Court referred several questions to the ECJ to enable it to decide whether eBay had infringed L'Oreal's trade marks by using the marks on its website and in sponsored links, and whether eBay could claim exemption from liability under the E-Commerce Directive. The High Court also sought guidance on whether an injunction should in any event be available against eBay to prevent further infringements.

Advocate general's opinion

In December 2010 the advocate general, who is an independent advisor to the ECJ, delivered an opinion which suggests operators of electronic marketplaces should not automatically be deemed to be responsible for the conduct of individual sellers. Furthermore, the purchase of keywords to generate sponsored links from a search engine should not be objectionable, provided the nature of the electronic marketplace is clear to the average consumer.

In the advocate general's opinion electronic marketplaces should, under the E-commerce Directive, also be able to claim exemption from liability in so far as their activities consist of hosting information for sellers, provided the marketplace operator does not have actual knowledge of illegal activity.

There is good news for eBay in that the advocate general did not agree with a suggestion in another recent judgement that the host might be deprived of this protection unless its role was entirely neutral in relation to the data. The advocate general considered it surreal to suggest that eBay could put itself in a worse position by providing advice to sellers on the content of listings.

Hosts must act on 'knowledge'

However once the host obtains "actual knowledge" of illegal activity or awareness of facts or circumstances from which illegal activity is apparent it must act expeditiously to remove or disable the data. The advocate general considered in the context of an electronic marketplace "actual knowledge" was not limited to past or present use, but could continue where the same activity continues in the form of subsequent listings.

Another EU directive, known as the enforcement directive, requires that injunctions should be available against an intermediary such as eBay, whose services have been used by a third-party to infringe an intellectual property right.

While the scope of an injunction should be proportionate and avoid creating a barrier to legitimate trade, the advocate general suggested that where available under national law, an injunction might be granted against an intermediary to prevent future infringements of the same trade mark by the same third party (a so-called "double requirement of identity"). It was suggested that an intermediary could react to such an injunction by closing the account of the user.

While under EU law information society service providers cannot be placed under a general obligation to monitor the information that they store, if the ECJ follows this opinion then hosts could be placed under a greater obligation to monitor for repeat offences by the same user.


Alison Hague is a partner at Dehns Patent and Trade Mark Attorneys. She manages all aspects of international trade mark portfolios in a wide range of fields.

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