EU court says eBay must comply with trademark rules

L'Oréal scored a point against an ongoing legal dispute with eBay over sales of gray-market imports and unpackaged perfumes

European Union trademark law does apply to sales on eBay, and the online marketplace operator must help identify sellers who do not comply, a European court ruled Tuesday.

The European General Court's ruling is part of a case brought against eBay in the U.K. by French cosmetics manufacturer L'Oreal.

That case raised questions about the applicability of E.U. trademark law that the U.K. High Court decided to refer to the General Court, the E.U.'s highest court, and could have consequences for anyone making a living from online sales of trademark products without the brand owner's approval.

The court's decision is an advance in dealing effectively with counterfeit brands and products on the Internet, a L'Oreal spokeswoman said via e-mail. The cosmetics manufacturer has accused eBay of involvement in trademark infringements committed by its users, and maintains that the company does not do enough to prevent the sale of counterfeit goods.

But L'Oréal's complaint was not just about sales of counterfeit goods: it also wants to stop online sales of certain genuine L'Oréal products too. The company welcomed the court's decision that national courts should be allowed to stop e-commerce platforms from selling genuine products not intended by their manufacturer for sale in the European Union, the spokeswoman said.

In L'Oréal's case, those genuine products include samples intended for use in stores as testers, bottles of perfume without their original packaging, and parallel or "gray market" imports into the E.U. of products originally intended for sale outside the E.U.

The General Court ruled, at the U.K. High Court's request, on the interpretation of a number of points of E.U. law, and that interpretation will be binding on other national courts in the E.U. facing similar questions.

Among the matters decided by the court, online marketplaces such as eBay will be required to apply E.U. trademark rules even to sellers outside the E.U., as soon as it is clear -- perhaps from the shipping options they propose -- that their goods and advertisements are targeted at consumers in the E.U.

The court also considered that online marketplaces are liable when they play an active role in the sale that gives them knowledge of such details -- for example by helping sellers optimize the presentation of their offers, or by promoting them through keyword-based online marketing.

Finally, the court ruled that national courts must be able to order online marketplaces to stop trademark infringements, and prevent future infringements, and those steps could include ordering the marketplace to reveal the identities of their users conducting a business through the site.

It will now be up to the U.K. High Court to take the General Court's ruling into account in order to reach a final decision on L'Oreal's complaint against eBay and a number of eBay sellers.

Peter Sayer covers open source software, European intellectual property legislation and general technology breaking news for IDG News Service. Send comments and news tips to Peter at peter_sayer@idg.com.

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