L'Oréal sues eBay for failing to combat the sale of fakes

As an increasing number of counterfeit products are sold on eBay for an estimated amount of several million euros, L'Oréal, the world's largest cosmetics group, has launched legal action against eBay, the world leader in online auctions. Proceedings are pending not only in Germany, but also in France, the United Kingdom, Spain and Belgium.

According to L'Oréal, eBay is insufficiently active in combating the sale of counterfeit products offered on its internet platform. Other luxury groups have also initiated proceedings against eBay (eg, LVMH Moët Hennessy Louis Vuitton and its parent company Dior, US jeweller Tiffany & Co and, more recently, Hermes).

L'Oréal's case focuses on the scope of liability of online auctioneers. Despite the existence of harmonized trademark legislation in the European Union and of the Community Trademark Regulation (40/94/EC), there is no consistent case law on the liability of online auctioneers.

In its most recent decision, the German Federal Supreme Court confirmed its previous case law and held that online auction websites must take action if they are alerted to an obvious case of infringement by a trademark owner; consequently, online auctioneers must not only remove the specific auction, but also disable the account of the user in question. In particular, the court held that the exemption from liability pursuant to the Act on the Use of Telecommunications (which implements the Information Society Directive (2000/31/EC), the Disclosure Requirements Directive (2003/58/EC) and the Provision of Information Directive (98/34/EC)) is not applicable where injunctive relief is sought. However, the definition of an 'obvious' case of trademark infringement remains unclear.

According to the court, an online auctioneer cannot be held liable for committing the infringement, as the auctioneer itself does not sell and/or promote the goods or use the infringed trademarks. However, an online auctioneer may be held liable as 'disturber' or 'interferer' (Störerhaftung in German) - that is, where the auctioneer wilfully participated in a situation which resulted in an unlawful interference by a third party, even though the auctioneer could have prevented the interference.

The principles established by the Supreme Court may provide guidance to courts in other EU member states. However, the last part of the ruling is not directly transferable to other member states, as the Community Trademark Regulation does not refer to the concept of 'Störerhaftung'. However, the introduction of the concept of 'intermediary' in Recital 23 of the IP Rights Enforcement Directive (2004/48/EC) appears to go in the same direction as the German ruling, as it implies that online auctioneers may be held liable in cases of infringement.

It remains to be seen whether the dispute at hand will be referred to the European Court of Justice; it is hoped that the court will provide clear guidance on the liability of online auction websites in the European Union.

Philipe Kutschke, Bardehle Pagenberg Dost Altenburg Geissler, Munich