Following a six year bitter legal battle over the sale of counterfeit goods, L’Oreal and eBay have called it a day and settled out of court. L’Oreal, the world’s biggest cosmetic company, has been battling eBay since 2007 in several jurisdictions, accusing the company of doing little to combat the sale of counterfeit L’Oreal products.
The law can often have difficulty keeping up with new technology, in particularly with intermediaries such as eBay, Google and Amazon that offer innovative services located between producers and consumers along the digital supply chain. Should internet service providers be liable for the violations of copyright committed by its customers? In recent years a number of high profile fashion companies have launched legal battles against these intermediaries in an attempt to hold them liable.
Following rulings in the UK and Belgium, in 2011, the European Court of Justice considered L’Oreal’s lawsuit against eBay and handed down a judgement which provided clarification to national courts on the liability of companies operating internet marketplaces for trade mark infringements committed by users.
They ruled that operators could be liable for infringement where they fail to promptly remove listings when they are aware of circumstances which suggest that those listings are unlawful. Where the operator of an online marketplace provides assistance intended to optimise or promote offers for sale by users, it will be playing an active role. The ECJ indicated that not only should national courts be able to take measures against ISPs to end existing infringements, but also to prevent further infringements. This could include suspending accounts and identifying the infringing users.
The ECJ decision was in contrast to that of the US courts in a similar case. In 2008 eBay were sued by jewellery brand Tiffany & Co. eBay successfully argued that it was a platform for buyers and sellers to interact and, therefore, not liable for counterfeit items posted by sellers. Brand manufacturers, eBay maintained, were responsible for finding the items they believed to be fakes and requesting their removal. eBay immediately takes down items in response to complaints, leaving sellers to take up their case with the rights holder. The Court held that Tiffany failed to establish that eBay intentionally set out to deceive the public; much less that eBay’s conduct was sufficient to create a presumption that consumers were being deceived.
According to reports, financial terms of Wednesday’s settlement are in L’Oreal’s favour, but the details remain confidential.
“L’Oréal acknowledges eBay’s commitment in the fight against intellectual property infringement,” the company said in a joint statement with eBay. “The parties believe that cooperation, rather than litigation, is the way forward to fight against counterfeiting.”
We can only imagine the lawyers are happy it took seven years for the parties to decide litigation was not the answer!
The announcement that the companies have settled comes just weeks ahead of a an expected decision in cosmetic company Lush’s lawsuit against Amazon. Lush does not allow Amazon to sell its products as the founders do not agree with the manner in which Amazon operate .It brought trademark infringement proceedings against Amazon on the basis that when the term ‘Lush’ was searched for on Amazon’s website, the results returned were for goods which, although they featured the word ‘lush’ in a number of contexts, were not in fact made by Lush. Amazon had also bid on the Google AdWord ‘Lush Bath Products’ but did not, in fact, sell any Lush products. If Lush is successful, it could prohibit online retailers from making suggestions for alternatives to products that they do not sell.
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