eBay scores victory over Lancôme

The Brussels Commercial Court has ruled in favour of eBay in a dispute over its liability for the sale of counterfeit goods on its online auction platforms (Case A/07/06032, July 31 2008).
The case opposed eBay International AG, eBay Europe SARL and eBay Belgium SPRL (collectively eBay) against Lancôme Parfums et Beauté & Cie. Lancôme, which is part of the L'Oréal Group, markets perfumes and cosmetics. 
Lancôme filed suit against eBay on the grounds that:
  • a high number of goods infringing its trademark rights (among others) were offered for sale on the Belgian auction website; and
  • eBay had failed to implement appropriate measures to fight such activities.
The injunctive relief sought by Lancôme was directed at the display of 'offers for sale' of (alleged) Lancôme products. In particular, Lancôme required the preventive monitoring of sellers who had sold counterfeit Lancôme goods in the past. In addition, Lancôme sought damages in an amount of €500,000.
By way of defence, eBay argued that it was an intermediary service provider within the meaning of Section 4 of the E-commerce Directive (2000/31/EC) and, more specifically, a provider of hosting services under Article 15 of the directive. The directive has been implemented into Belgian legislation.
The qualification of 'hosting provider' has the following implications:
  • Under Article 14 of the directive, hosting providers are not liable for the content of the information stored at the request of users. This exemption is subject to the following conditions: 
    • The service provider must not have actual knowledge of illegal activities or information; and
    • Upon obtaining such knowledge, the service provider must act expeditiously to remove or disable access to the information in question.
  • Under Article 15 of the directive, it is illegal to impose on hosting providers a general obligation to: 
    • monitor the information stored on their websites; and
    • seek actively facts or circumstances indicating illegal activity.
In the present case, Lancôme contested eBay's status as a provider of hosting services under the directive.
The Brussels Commercial Court held that the exemption under the directive was directed at "a type of services" provided by intermediary service providers, rather than at service providers themselves. Therefore, the juridical qualification of eBay's activities was the central issue of the case. 'Hosting services' are defined in the law as "the storage of information provided by a recipient of the service". A 'recipient of the service' is defined as any person who uses the service, in particular for the purposes of seeking information or "making it accessible".
Lancôme argued that eBay's activities did not qualify as hosting activities, as eBay was offering other ancillary services. Therefore, according to Lancôme, eBay's activities went far beyond the mere storage of information. The court held that, under the law, an intermediary service provider which provides hosting services will benefit from the liability exemption in relation to those services. Other activities conducted by the intermediary service provider through its website or the income generated by those other activities are irrelevant.
Moreover, the court noted that Lancôme's claim was directed only at eBay's hosting activities (namely, the display of offers for sale), but did not refer to the ancillary services provided by eBay. The court concluded that, with regard to the posting of offers for sale on its website, eBay was to be considered only as a provider of hosting services and, consequently, could rely on the exemption.
Lancôme also argued that: 
  • eBay could not rely on the exemption because it did not comply with the conditions set forth by Article 14 of the directive;
  • eBay had acted wrongfully and/or negligently under general principles of civil law; and
  • Once a provider of hosting services has been informed of the posting of an illicit offer, the provider must not only withdraw the specific offer, but also take measures in order to avoid similar offers in the future.
The court rejected this argument, holding that Lancôme:
  • had failed to establish a lack of diligence on eBay's part; and
  • had in fact acknowledged that eBay had acted promptly upon being notified of the posting of illicit offers on its website. 
In addition, the court also made it clear that eBay was not required to take preventive measures to avoid the reiteration of illicit acts. The court clarified that this position did not provide service providers with total immunity. In the present case, the court emphasized that the mechanisms set up by eBay to fight counterfeiting activities and cooperate with IP rights owners were not artificial. 
The court concluded that eBay had behaved in the manner of a normally prudent and diligent e-commerce operator, and rejected all of Lancôme's claims.
Nicolas Clarembeaux, Altius, Brussels

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