EU ruling holds eBay liable in trademark infringement case

The European Court of Justice has ruled that online marketplaces can be liable for trademark infringement if they sell or promote counterfeit goods, but only if they play an active role in the trade.

The ruling also holds that online marketplaces are liable if they fail to remove or disable access to infringing listings quickly enough.

The case was initially brought in the UK by cosmetics giant L'Oreal against eBay following widespread sale of its branded products, including counterfeit versions, through the online auction site.  Questions about the case where referred by the UK court to the ECJ for judgment.

The company contended that eBay shared liability with its users for trademark infringement for sales of goods not intended for distribution in the UK. L'Oreal operates a closed selective distribution network, in which authorised distributors are restrained from supplying products to other distributors.

The cosmetics group also claimed that eBay was directly liable for trademark infringement via the use of registered trademarks on its website and in sponsored search engine results, such as Google AdWords.  eBay argued it was a host and therefore not liable for the actions of others.

The ECJ ruled on this point that eBay was not infringing a trademark by displaying it on its site, but was taking an active, infringing role by promoting the trademarks via sponsored search engines.

It also concluded that national courts could impose injunctions on online marketplaces which do not take prompt action to block infringing listings or other activity, and enforced measures to stop future transgressions occurring, such as identifying perpetrators and blocking their access.