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Europe’s Top Court Says eBay Could Be Liable in Sales of Counterfeit Goods

Posted Jul 12, 2011 6:31 AM CDT
By Debra Cassens Weiss

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Europe’s top court has ruled that online auction sites such as eBay could be liable for trademark infringement if they actively promote counterfeit goods.

The court ruled after L’Oreal alleged in a series of suits that eBay was liable for selling counterfeit goods and imported L’Oreal products not intended for the European market, the Guardian and the Independent report. L’Oreal had complained that eBay was directing its users to goods that infringe trademark law by buying keyword ads for L’Oreal trademarks. EBay said it shouldn’t be liable unless a trademark holder notifies it of infringement and eBay fails to respond.

The European Court of Justice said the liability exemption for online service providers in European trademark law doesn’t apply when retailers play an active role in promoting counterfeit goods, according to the stories. Nor are retailers protected if they are aware of circumstances under which a diligent online company would realize sales were unlawful, and they fail to remove the material.

However, online merchants aren't liable simply for allowing customers to display signs corresponding to trademarks, the opinion said. Courts may use injunctions to end infringement and to prevent further infringement, the court said.

The ruling is likely to be seen as more positive for companies with luxury brands than for companies like eBay, the Financial Times (reg. req.) reports.

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