It is clear that online businesses can no longer rely on avoiding responsibility on the basis that they act merely as a facilitator or conduit for transactions between users of their services.

L’Oréal brought a case in the UK High Court against eBay concerning the sale of counterfeit L’Oréal products without L’Oréal’s consent. L’Oréal alleged that eBay was using L’Oréal’s trade marks to direct people to infringing goods on the eBay website and that eBay was involved in the infringements committed by its users.

Under EU law, an online business can obtain an exemption from liability where trade mark infringing goods are offered on its site and it has merely acted as an intermediary provider. The European Court of Justice (ECJ) has now made it clear that the exemption will not apply and the business can be held liable:

• Where the business plays an active role in relation to offers of trade mark infringing goods placed on its site
• Where the business is aware of facts and circumstances that would lead a diligent economic operator to suspect that the online offers for sale were unlawful and having such knowledge failed promptly to remove the data concerned from its website or to disable access to the infringer

The ECJ also emphasised that the courts when considering such cases must ensure that measures are taken to end the infringement and to prevent further infringements e.g. an injunction ordering suspension of the account of an infringer.

Some commentators had been heralding this decision as apocalyptic for online commerce, which is not correct. This case took approximately two years from the time the questions were referred until the ECJ’s decision was finally handed down.  In the meantime, the world has moved on, and it is understood that many of the practices required arising from this case have been already adopted by eBay.

What this case does highlight is that: 1) there is a need to review the services being provided by online businesses to assess if these could play an active role in an infringement case; and 2) businesses operating an online marketplace must have a system in place enabling them to act quickly where they become aware of infringing activity.

Contributed by David Cullen.

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