First court of appeal decision on eBay's liability issued

In Hermès International v eBay France (July 20 2010), the Court of Appeal of Reims has held that eBay could not be considered as a hosting services provider and, therefore, was liable for the sale of infringing products on its auction platform.  
In 2007 and 2008 Hermès International sued eBay International AG and eBay France (collectively eBay) and a seller of fake Hermès bags (whose username was barbie.cindy7) for trademark infringement.
On June 4 2008 the Court of First Instance of Troyes held that eBay and the seller had infringed Hermès's trademarks. The court found that eBay was both a hosting services provider and an online services provider, and was in breach of its obligation to discourage use of its services in a reprehensible manner (for further details please see "eBay held to be jointly responsible for sale of Hermès fakes").
The Court of Appeal of Reims affirmed. In particular, it reiterated that, at the time when the fake Hermès bags were sold, eBay did not provide appropriate information tools to enable users to identify items for sale correctly and differentiate genuine goods from counterfeits.
However, the Court of Appeal went further than the lower court in its analysis of the case and of the legal consequences of eBay’s liability. The Court of Appeal pointed out that a hosting services provider whose services aim to take advantage of the value of the stored data went beyond hosting. Therefore, it could not be regarded as neutral and was fully responsible for the content of the website.
In this context, the court performed a concrete analysis of the services offered on eBay's auction platform. In light of the ‘purchase suggestion’ links, marketing tools, warranties offered by PayPal and amounts paid to eBay based on the sale price of the goods, the court concluded that eBay's services were not purely technical and automatic. eBay’s actions were decisive in determining the content of the ads presenting the items offered for sale. 
This is the first time that a French appellate court has issued a decision on eBay’s liability - the decision in the present case was thus eagerly awaited. The Court of Appeal of Reims not only confirmed the lower court's finding that eBay was liable for the sale of the fake handbags, but also demonstrated that eBay cannot benefit from the hosting services provider defence. It remains to be seen whether the French courts will follow the approach of the Court of Appeal of Reims - bearing in mind that the facts of the case go back to 2006 and that eBay’s system has evolved significantly in four years.
Franck Soutoul and Jean-Philippe Bresson, INLEX IP EXPERTISE, Paris

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