Companies providing an online marketplace that facilitate infringement of trade mark rights by their users, can be held liable for those infringements, according to a European Court decision.  Liability can arise from active involvement and negligent failure on the part of such companies, making the decision more far-reaching than had been expected.  Once aware of unlawful activity, reference to infringing goods must be promptly removed from the website to avoid liability.

Background

L’Oréal brought a case in the UK High Court against eBay concerning the sale of 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.

The High Court asked the European Court of Justice (the “ECJ”) to clarify the position regarding the liability of providers of online marketplaces for trade mark infringements and to clarify their obligations to prevent such infringements.

Awareness and Diligence Required

Under EU legislation, 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 ECJ has now made it clear that the exemption will not apply and the business can be held liable:

1. Where the business plays an active role in relation to offers of trade mark infringing goods placed on its site. This includes: (a) having knowledge or control of data relating to offers, or promotion of online offers for sale, or (b) providing assistance in the presentation of online offers for sale; or
2. 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.

Measures to End Infringement

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. An online business may also be requested to make it easier to identify commercial sellers on its site.

This article was contributed by David Cullen.