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The Court of Justice of the European Union (CJEU) has confirmed its brand-owner friendly reputation in a decision (L'Oréal v eBay ) published last week which should ensure operators of internet marketplaces such as eBay take greater responsibility for policing issues of trade mark infringement on their sites. The Court held that such companies can be liable for trade mark infringement as a result of the postings of its users. This may be where the operator:

• itself uses sponsored links without making it clear whether the goods for sale bearing that trade mark originate from the proprietor of the trade mark or, on the contrary, from a third party;
• plays an "active role" which gives it knowledge of, or control over, the information relating to the unlawful offers for sale on its marketplace, such as when it provides assistance to optimise the presentation of the offers for sale or promoting those offers; or
• has gained knowledge of facts or circumstances which should have put it on notice that the offers for sale on its marketplace were unlawful and it failed to act promptly.

The decision represents a shift in favour of brand owners who should now more easily be able to obtain injunctions against future infringing activity. The message for the online marketplace is that they will need to implement more robust systems to tackle infringing activities by users, particularly where they are actively involved in the presentation of offers on their sites or are liable to become aware of facts or circumstances which should have identified the illegality.

Background
As trade mark law continues to struggle to keep up with e-commerce and the internet age, recent years have seen a proliferation of litigation, both in various member states of the EU and in the US, between brand owners and intermediary operators of online marketplaces, such as eBay. This particular ruling, in response to a reference from the English High Court, concerns proceedings in which L'Oréal complained that eBay was involved in trade mark infringements committed by users of its website relating to its role in the sales of:

• counterfeits;
• free samples;
• unboxed products; and
• products intended for non-EEA jurisdictions.

While the English High Court at first instance had held that eBay was not jointly liable for acts of trade mark infringement through the sale of infringing products by its users (despite there being, in the Court's view, more that eBay could have done to prevent such sales from occurring), it requested guidance from the CJEU as to whether eBay was liable for trade mark infringement as a result of its use of sponsored links on third party search engines and its own site, insofar as they lead people to postings for infringing products. Guidance was also sought as to whether sales of testers and unboxed goods constituted trade mark infringement, as well as to the scope of injunctive relief available.

Website offers made by sellers from outside the EU
The CJEU confirmed the now fairly well established principle that, in relation to websites which can inevitably be accessed globally, EU trade mark law will only apply to trade marked products offered for sale from a non-EU state where the offer for sale is targeted at consumers in an EU state covered by the mark. Where the offer for sale is accompanied by details of the geographic areas to which the seller is willing to dispatch the product, such detail will be particularly relevant although ultimately the question is one for national courts to assess on a case-by-case basis.

Offers for sale of free testers / products not intended for sale
Where trade marked items are supplied free of charge or are otherwise not intended for sale, they cannot, in the absence of evidence to the contrary, be regarded as being put on the market by the trade mark proprietor and therefore the trade mark proprietor can prevent their sale.

Marketing of un-boxed goods
The proprietor of a trade mark may oppose the resale of goods, on the ground that the person reselling the goods has removed their packaging, where the consequence of that removal is that essential information, such as information relating to the identity of the manufacturer or the person responsible for marketing the cosmetic product, is missing. Even where the removal of the packaging has not resulted in the absence of that information, the trade mark proprietor may nevertheless oppose the resale of an unboxed product bearing his trade mark, if he establishes that the removal of the packaging has damaged the image of the product and, hence, the reputation of the trade mark.

Trade mark use by eBay
The CJEU considered whether the use of L'Oreals trade marks on eBay's website or as advertising key words constituted "use" of the mark by eBay under European trade mark law:

On eBay's website: The CJEU held that merely by providing a service enabling its customers to display on its website offers for sale with third party trade marks, eBay did not itself use those signs. The trade mark use is therefore made by the sellers who are customers of the operator of that marketplace and not by that operator itself.

eBay's use of adwords: In so far as eBay used keywords corresponding to L'Oréal trade marks to promote its customers' offers for sale of goods bearing those marks, that constituted "use" in relation to identical goods or services even though it was in relation to goods of a third party.

As regards to whether the use of a keyword corresponding to a trade mark is liable to have an adverse effect on one of the functions of the trade mark, the Court (applying Google France) stated that there is such an adverse effect where that advertising does not enable reasonably well informed and observant internet users to easily ascertain whether the goods or services referred to by the advertisement originate from the proprietor of the trade mark (or associated entity) or from a third party.

"Hosting" exception under the e-Commence Directive
While the extent to which liability arises for an operator such as eBay is a matter for national courts, the scope of the exception provided by Article 14 of the e-Commerce Directive, which restricts the liability of service providers in relation to the "hosting" of information provided by the recipients of its services, is a matter of EU law.

A service provider does not fall within the exception where, instead of confining itself to providing that service neutrally (i.e. by a merely technical and automatic processing of the data provided by its customers), it plays an "active role" of such a kind as to give it knowledge of, or control over, those data.

The mere fact that the operator of an online marketplace stores offers for sale on its server, sets the terms of its service, is remunerated for that service and provides general information to its customers is not by itself insufficient to constitute an "active role". However, where the operator has provided assistance which entails optimising the presentation of the offers for sale in question or promoting those offers, it must be considered to have played an "active role". In such circumstances, it cannot rely on the exception and may therefore be liable for any trade mark infringement by its customer.

However, even in situations in which that provider has confined itself to a merely technical and automatic processing of data, it may nevertheless still fall outside the exception where it has had "actual knowledge of illegal activity or information", has been "aware of facts or circumstances from which the illegal activity or information is apparent" or, having obtained such knowledge or awareness, it has not acted expeditiously to remove, or disable access to, the information.

Obligation to prevent future infringements
National courts must be able to order intermediary companies to take measures intended not only to bring to an end infringements of intellectual property rights, but also to prevent further infringements of that kind. Such injunctions must be effective, proportionate, dissuasive and must not create barriers to legitimate trade.

Therefore, if the operator of the online marketplace does not decide, on its own initiative, to suspend the perpetrator of the infringement of intellectual property rights in order to prevent further infringements of that kind by the same seller in respect of the same trade marks, it may be ordered, by means of an injunction, to do so.

Furthermore, in order to ensure that there is a right to an effective remedy against persons who have used an online service to infringe intellectual property rights (i.e. acting in the course of trade rather a mere private transaction), the operator of an online marketplace may be ordered to take measures to make it easier to identify its customer sellers.