The case of L’Oréal SA v. eBay International AG was a case decided by the European Court of Justice in 2011 which questioned whether the online marketplace eBay could be held liable for trade mark infringement by users who listed counterfeit goods for sale using the website.
In the case, the High Court ruled on the question of whether eBay could be held liable for listings posted by users of their platform which infringed L’Oréal’s trade mark rights. L’Oréal claimed that the fact that eBay purchased advertisements on other sites, particularly via Google AdWords - which made reference to L’Oréal trade marks and advertised infringing goods - meant that they were jointly liable for infringements with sellers using the platform. The High Court ruled in eBay’s favour, suggesting that the site would not be held jointly liable in this scenario, but did refer some questions to the European Court of Justice (ECJ) for clarification.
The ECJ ruled that a service provider such as eBay could not rely on the Article 14(1) “hosting” exemption of the e-Commerce Directive if they had taken an active role “of such a kind as to give it knowledge of, or control over, those data”. The Court suggested that this could include “optimising the presentation of the offers for sale in question or promoting those offers”. The Court was not asked to make a determination of whether eBay’s use of Google AdWords would fall within this description, though it could reasonably be assumed that this would be the case.
The ECJ ruled that a service operator could not rely on the “hosting” exemption even in situations where they did not play an “active role” if they were aware of facts or circumstances on the basis of which a diligent economic operator should have realised that the offers for sale in question were unlawful”. This means that a provider such as eBay could attract liability if it was aware of information which would suggest that listings made by their users were in violation of trade mark rights.
The ECJ also ruled that an operator such as eBay, when it fails to remove infringing listings of their own initiative, could be ordered to identify the sellers who are posting the infringing listings on the site. EU law, as the Court notes, specifies that the relevant national courts of Member States are able to order the operator of a service to take action which contributes to ending specific infringements, and also preventing future infringements of that kind.
There has been some suggestion that the significance of this decision has been interpreted widely by overcautious service operators. Service providers should be aware that the decision in L’Oréal does not create any precedent that means they might attract liability for damages done by users of their service who may be infringing trade mark rights.
The decision in L’Oréal does not mean a service operator needs to take a proactive role in seeking out or removing infringing content on their platform, and providers may continue to rely on the e-Commerce Directive’s ‘hosting’ exception as long as they do not promote sales listings by processing particular data and keywords, and do not otherwise take an “active role” in any infringing sales on their platform. The provider must additionally ensure that they take action when they are made aware of information about a listing on their platform which would suggest that infringements are taking place. A failure to act when provided with that kind of knowledge could lead to the service provider no longer being able to rely on the ‘hosting’ exemption.