Trade Marks and E-Commerce: L'Oreal and Interflora

Over the last few months, there has been a spate of claims by luxury goods manufacturers against eBay. In RG 07/11365 L'Oréal SA c eBay France SA in which the Tribunal de Grande Instance of Paris dismissed trade mark infringement claims by L'Oréal against eBay for providing an on-line market for counterfeit goods on 13 May 2009. A similar case came before Mr Justice Anold in L'Oreal SA and others v eBay International AG and others [2009] EWHC 1094 on 22 May 2009. The questions that arose in both cases were summarized by the judge as follows:

"Are eBay Europe liable for trade mark infringements committed by their users? Do eBay Europe themselves commit infringements by using trade marks in relation to infringing goods? "

In this case the well known cosmetics, skincare and toiletries multinational, L'Oréal, sued a number of alleged counterfeiters and parallel importers for trade mark infringement. These were defendants 4 to 10. They also sued various eBay companies for providing a sales outlet for those counterfeiters (defendants 1 to 3). The judge found that it was by no means easy to identify counterfeit products. Often chemical; analysis was required. Of course, eBay did not condone counterfeiting or other IP infringement. On the contrary it provided a procedure by which IP owners could identify and remove infringing goods from its auction. But the judge still found that there were things that eBay could have done to inhibit counterfeiting.

His lordship identified the following issues:

i) Were the goods sold by the Fourth to Tenth Defendants infringing goods? This issue divides into four sub-issues concerning (a) counterfeits, (b) non-EEA goods, (c) tester and dramming products and (d) unboxed products.
ii) Are eBay Europe jointly liable for any infringements committed by the Fourth to Tenth Defendants?
iii) Are eBay Europe liable as primary infringers for use of the Link Marks in relation to infringing goods?
iv) Do eBay Europe have a defence under Article 14 of the E-Commence Directive?
v) Do L'Oréal have a remedy under Article 11 of the Enforcement Directive?
vi) Are the Distance Selling Regulations relevant to any of the foregoing issues, and if so how?

Upon those issues the judge reached the following conclusions:

i) The fourth to tenth defendants had infringed the claimants' trade marks. In the case of the fourth to eighth defendants the goods they sold were put on the market outside the EEA and L'Oréal did not consent to those goods being put on the market within the EEA. In the case of the ninth and tenth defendants the goods they sold were counterfeits.
ii) Whether the sale by sellers on the Site of testers and dramming products and of unboxed products amounts to an infringement of the trade marks depends upon questions of interpretation of the Trade Marks Directive as to which the law is unclear (see paragraphs 319-326 and 331-342 above). Although these questions are academic so far as the acts committed by the fourth to tenth defendants are concerned, they are potentially relevant to the question of what relief, if any, L'Oréal are entitled to. Accordingly, guidance from the ECJ was required on these points.
iii) eBay Europe are not jointly liable for the infringements committed by the fourth to tenth Defendants.
iv) Whether eBay Europe have infringed the claimant's trade marks by use in sponsored links and on the eBay site in relation to infringing goods again depends upon a number of questions of interpretation of the Trade Marks Directive upon which guidance from the ECJ is required (see paragraphs 388-392, 393-398 and 413-418 above).
v) Whether eBay Europe has a defence under art 14 of the E-Commerce Directive is another matter upon which guidance from the ECJ is needed (see paragraphs 436-443 above).
vi) As a matter of domestic law the court has power to grant an injunction against eBay Europe by virtue of the infringements committed by the fourth to tenth defendants, but the scope of the relief which art 11 requires national courts to grant in such circumstances is another matter upon which guidance from the ECJ is required (see paragraphs 455-465 above).

The only issue upon which eBay might have been liable was in relation to sponsored links. eBay had purchased keywords which triggered sponsored links on third party search engines such as Google, MSN and Yahoo. The effect of this is that a search of one of those keywords on Google wpi;d generate a link to eBay's site. If the user clicks on the sponsored link, he or she is taken to a display of search results on the for products by reference to the keyword which sometimes included counterfeit or parallel imports as well as licensed products.

Much the same issue arose in Interflora, Inc and another v Marks & Spencer Plc and another [2009] EWHC 1095 (Ch) upon which the same judge delivered judgment upon the same day. Marks & Spencer had purchased Google sponsored links which sometimes led Interflora customers to the Marks & Spencer site. Interflora complained that Marks & Spencer had infringed its trade marks by:
i) selecting the Interflora Signs as keywords;
ii) nominating the Interflora Signs as keywords;
iii) associating those keywords with M & S's URLs;
iv) setting the cost per click in relation to those keywords;
v) scheduling the timing of the display of M & S's sponsored link; and
vi) using the Interflora Signs in business correspondence relating to the invoicing and payment of fees and/or the management of an AdWords account.

The question whether the purchase of sponsored links infringes a trade mark had come before several other courts and there had been several references to the European Court of Justice. Marks & Spencer applied to Mr Justice Arnold for a stay pending those references. Interflora opposed such a stay without undertakings from Marks & Spencer which that company refused to offer. In the course of argument the judge indicated that he would make yet another reference to Luxembourg without extracting undertakings from Marks & Spencer.

The precise formulation of the questions is still to be decided in both cases. The European Court's decision will be relevant not just to the issues in these two cases but also to the domain name disputes. Panellists up to now have held that parking a domain on a site that generates sponsored links is usually but not invariably evidence of bad faith. An instance where it was not is Admiral Insurance Services Limited v. Mr. Adam Dicker, WIPO Case No. D2005-0241. I had to wrestle with those same issues in Case No. D2008-1531 Intesa Sanpaolo S.p.A. v. George Papadakos. I shall be personally interested in the ECJ's guidance.

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