EBay has 'no legal duty' to protect others' trade marks, says High Court

Online auction site eBay has "no legal duty" to protect other companies' trade marks or stop its sellers from infringing them, the High Court has said.

Cosmetics company L'Oréal has failed to show that eBay was jointly liable with the sellers of fakes and illegally imported goods and had "participated in a common design" to infringe its trade marks, the Court said.

L'Oréal has embarked on over 100 lawsuits in Europe over eBay trade in its goods. The company is taking action against sales of its products or counterfeits of them which it believes damage its business and reputation.

In its High Court case L'Oréal submitted evidence which showed that of 287 test purchases that it made on eBay, only 84 products were legitimate and intended for sale within the European Economic Area (EEA).

It said that the agency it employed to conduct the purchasing had not deliberately targeted auctions likely to carry fakes or grey imports, but that still 14 of the products were counterfeits, 49 were never intended for sale and 139 were put on the market outside of the EEA and not intended for import.

L'Oréal took a case against the sellers of the goods bought in the test purchases, and won its argument that those people had infringed its trade mark rights, either by selling fakes or by selling goods put on the market outside of the EEA and not intended for import.

It then sought to prove that eBay bore joint liability for these trade mark infringements because it did not do enough to prevent them.

EBay argued that it has a scheme that helps to police trade mark infringement. The scheme is called VeRO (Verified Rights Owner). L'Oréal does not participate in the scheme and said that it is unacceptable because it puts the onus of preventing infringement solely on the trade mark holder and does not punish rogue sellers enough.

Much of the case was argued on the basis of European Union law, but the question of eBay's liability, both sides agreed, was not one that was harmonised at EU level, but was simply a question of the law in England and Wales.