Legal victory for trademark litigants over intermediary liability

By EDRi · July 13, 2011

This article is also available in:
Deutsch: [Markenschutz-Verfechter erringen juristischen Sieg in Sachen Providerhaftung |]

On 12 July 2011, the European Court of Justice ruled on the liability
of online marketplaces for trademark infringements by users and the
scope of the hosting safe harbour of the E-Commerce Directive. The case
results from legal proceedings between L’Oréal and eBay in the UK. The
ECJ concluded that the safe harbour for hosting providers only applies
to third party data processing that is merely technical and automated,
as well as passive and neutral. In the Court’s view, an online market
place is not passive enough if “it provides assistance which entails, in
particular, optimising the presentation of the offers for sale in
question or promoting them.” Although the actual liability of eBay will
have to be established by the referring Court in the United Kingdom, the
answers of the Court are a victory for proponents of stricter online
trademark enforcement.

L’Oréal’s legal action not only concerns the sale of counterfeit
products under its trademark on eBay. It is more generally aimed at
preventing the use of its trademark on eBay for the sale of its own
products without its permission. In this context, the ECJ agrees with
L’Oréal that EU trademark law forbids the sale by third parties without
permission of free samples on an online marketplace.

The significance and potential negative impact of the ruling for the
scope of the safe harbour for intermediaries goes beyond the protection
of trademarks online. The ruling concerns the so-called hosting safe
harbour in article 14 of the E-Commerce Directive for intermediary
services that store third party information and keep it available
online. This provision protects such services against liability under
the condition that they remove or disable access once knowledge of
illegal activity or information is obtained. While it applies to the
‘classic’ hosting activities of ISPs, a range of other online services,
such as online marketplaces, user generated content sites, social
networking sites and search engines have used it as a shield against
liability for the potential unlawful activities of their users.

Building on its decision in the case between Google and Louis Vuitton,
the ECJ ruled that the safe harbour does not apply “where the service
provider, instead of confining itself to providing that service
neutrally by a merely technical and automatic processing of the data
provided by its customers, plays an active role of such a kind as to
give it knowledge of, or control over, those data.” These additional
conditions for the safe harbour to apply come directly from recital 42
from the preamble of the E-Commerce Directive. Unfortunately, the Court
ignores the explanation of Advocate General Jääskinen that this recital
clearly concerns mere conduit and proxy caching activity. It also
ignores his warning against the use of these additional conditions since
“the objectives of the Directive 2000/31 would be seriously endangered
and called into question”.

The Court also had to answer the question regarding what kind of legal
measures could be imposed on eBay to stop or prevent trademark infringement
from taking place on its service. The Court answered that EU countries are
not only allowed but actually have to ensure that their courts can order the
operator of an online marketplace to take measures “which contribute, not
only to bringing to an end infringements (…), but also to preventing
further infringements (…)”. While not answering the question of what kind
of court orders would be able to fulfil these criteria, the Court adds that
“(t)hose injunctions must be effective, proportionate, and dissuasive and
must not create barriers to legitimate trade.”

Court of Justice of the European Union, Press Release No 69/11,
Luxembourg, 12 July 2011, Judgment in Case C-324/09 L’Oréal v eBay

European Court of Justice 12 July 2011, C 324/09 (L’Oréal and Others v eBay)

Court of Justice of the European Union, Press Release No 119/10,
Luxembourg, 9 December 2010, Advocate General’s Opinion in Case C-324/09
(L’Oréal and others v eBay)

(Contribution by Joris van Hoboken – Institute for Information Law, The