[JURIST] The EU Court of Justice (ECJ) [official website] ruled [case materials] on Tuesday that online auction company eBay [corporate website] may be liable for trademark infringement on the part its users. L’Oreal [corporate website], the world’s largest cosmetics producer, is accusing [press release, PDF] eBay of facilitating the sale of items not meant for EU markets and also for lack of protection against counterfeiting. The High Court in the UK, before whom the case is still pending had asked the ECJ “a number of questions concerning the obligations to which a company operating an internet marketplace may be subject in order to prevent trade mark infringements by its users.” The ECJ concluded that Member States have the jurisdiction to require website operators to enforce prevention of infringement. The court held once a product is targeted at consumers in the EU that EU trademark rules apply but that the operator is not liable if it merely allows users to post trademarked products on its website. However, the court further held that an operator could be liable for infringement if it takes an active role in assisting with or optimizing the presentation of trademarked products for sale.

The L’Oreal case is not the first infringement claim against eBay. Last year, the Paris Court of Appeals upheld [JURIST report] a 2008 judgment against eBay for its role in the sale of counterfeit goods but significantly reduced the amount of damages eBay had to pay. The appeals court cut the damages [AP report] to be paid to French luxury goods giant LVMH Moet Hennessy Louis Vuitton (LVMH) [corporate website] from 38 million euros (USD $49 million) to 5.7 million euros (USD $7.3 million). The original judgment against eBay [JURIST report] found that the website failed to prevent the sale of counterfeit luxury goods that infringed on registered designs. It established [press release] that in France, eBay was liable for the sale of counterfeit goods or goods that were selected for special distribution. The court dismissed eBay’s claim that it was just a mere host for selling services. Both sides claimed the appeals court ruling a victory. LVMH was pleased that the judgment was not overturned, while eBay claimed it as a win for the company and French consumers since the damages were so drastically reduced.