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eBay loses legal battle with L’Oréal over counterfeit goods liability

eBay has lost its legal battle against cosmetics firm L’Oréal and other brand owners, with the European Court of Justice having ruled that it should be liable for counterfeit goods sold on its website.

The court ruled that eBay and other online marketplaces were not exempt from license infringments and that they were aware that such sales were illegal.

As a result of the ruling, brand owners will be able to sue online marketplaces for facilitating the sale of counterfeit goods.

The ruling goes against one made the High Court of Justice for England and Wales, which found in favour of eBay in 2009.

Kirsten Gilbert, Partner at Marks & Clerk Solicitors, said that the ruling meant that trade mark owners such as L’Oreal, no longer had to fight for online brand protection.

“Companies which facilitate sales can be held accountable for the goods which pass through their hands,” she continued.

“Brands have been concerned for years now that the internet has facilitated the trade of counterfeit goods. Items which would otherwise be available only from back-street traders have become instantly available to consumers in the privacy of their own homes. L’Oréal and other brand owners will be hoping that online marketplaces like eBay now sit up and pay attention to the sales of counterfeit items which go through their sites.

 “European trade mark law has been straining under the pressure of dealing with the internet age. The information revolution and the rise of online commerce have created a host of scenarios never envisaged when our laws were drafted. Today’s ruling will give national courts guidance on how to approach just one of these scenarios.

“We have seen over the past years different national courts finding in favour of opposing parties in similar cases. Inconsistency in the area of the online counterfeiting trade will be reduced following this ruling. Brand owners will now be working with a legal system which protects one of their key assets – their brand identity.”

Yesterday a warning was sounded that the loss of this decision could see eBay and other online auction sites increase their prices for users selling goods to compensate with the loss of business as a result.

Featured by The Drum