Intellectual Property/International Law: European Court of Justice Rules Online Retailers May Be Liable for Users' Sales of Infringing Goods

On July 12, in L'Oreal SA v. eBay International AG, Case C-324/09, the European Court of Justice issued a decision in which it indicated that online auction services such as eBay may be liable when users of such services offer for sale goods that infringe on intellectual property rights. The case came to the European Court of Justice in 2009 on reference for a preliminary ruling from the Chancery Division of the United Kingdom High Court of Justice.
The Court held, in pertinent part, that "[o]n a proper construction of Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94, the proprietor of a trade mark is entitled to prevent an online marketplace operator from advertising – on the basis of a keyword which is identical to his trade mark and which has been selected in an internet referencing service by that operator – goods bearing that trade mark which are offered for sale on the marketplace, where the advertising does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods concerned originate from the proprietor of the trade mark or from an undertaking economically linked to that proprietor or, on the contrary, originate from a third party." It also stated that "the third sentence of Article 11 of Directive 2004/48 must be interpreted as requiring the Member States to ensure that the national courts with jurisdiction in relation to the protection of intellectual property rights are able to order the operator of an online marketplace to take measures which contribute, not only to bringing to an end infringements of those rights by users of that marketplace, but also to preventing further infringements of that kind. Those injunctions must be effective, proportionate, dissuasive and must not create barriers to legitimate trade."