Ebay vs. L’Oréal: a summary of Judgment in Case C-324/09 focus on use of a keyword corresponding to a trade mark.

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Ebay still in the public eye.

On the 12th July 2011, the Court of Justice of the European Union published its decision concerning the case opposing L’Oreal to eBay

L’Oréal (manufacturer and supplier of perfumes, cosmetics and hair-care products)  complains that eBay (operator in electronic marketplace on which are displayed listings of goods offered for sale by persons who have registered for that purpose with eBay and have created a seller’s account with it. eBay charges a percentage fee on completed transactions) is involved in trade mark infringements committed by users of its website. Moreover, it claims that, by purchasing from paid internet referencing services (such as Google’s AdWords) keywords corresponding to the names of L’Oréal trade marks, eBay directs its users towards goods that infringe trade mark law, which are offered for sale on its website. Furthermore, L’Oréal is of the view that eBay’s efforts to prevent the sale of counterfeit goods on its website are inadequate. L’Oréal has identified various forms of infringement, including, inter alia, the sale and offer for sale, to consumers in the EU, of goods bearing L’Oréal’s trade marks intended, by L’Oréal, for sale in third States (parallel importation).

The position taken by the court follows in the footsteps of the Google decision (Joined cases C-236/08 and C-238/08) and is unequivocally for a restrictive interpretation of article 14 of the Electronic Commerce Directive, the provision limiting the liability of intermediaries hosting third party content.

By decision of 16 July 2009, the High Court of Justice decided to stay the proceedings and refer the following questions to the Court for a preliminary ruling and I would focus on the fifth question “(5) Where a trader which operates an online marketplace purchases the use of a sign which is identical to a registered trade mark as a keyword from a search engine operator so that the sign is displayed to a user by the search engine in a sponsored link to the website of the operator of the online marketplace, does the display of the sign in the sponsored link constitute “use” of the sign within the meaning of Article 5(1)(a) of [Directive 89/104] and Article 9(1)(a) of [Regulation No 40/94]?

eBay, by selecting in the Google search engine keywords corresponding to L’Oréal trade marks, caused to appear, as soon as internet users performed a search including those words with that search engine, a sponsored link to the website www.ebay.co.uk, accompanied by a marketing message about the opportunity to buy, via that site, goods bearing the trade mark searched for. That advertising link appeared in the ‘sponsored links’ section, located on either the right-hand side, or on the upper part, of the screen showing the search results displayed by Google.

As we know 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 the operator without the proprietor’s consent – the marketplace and goods bearing that trade mark which are offered for sale on it.

Next, in so far as eBay used keywords corresponding to L’Oréal trade marks to promote its customer-sellers’ offers for sale of goods bearing those marks, that use related to goods or services identical with those for which those trade marks are registered. In that regard, the words ‘in relation to goods or services’ do not relate solely to the goods or services of a third party which is using signs corresponding to the trade marks but may also refer to the goods or services of other persons.

The use of a keyword corresponding to a trade mark is liable to have an adverse effect on one of the functions of the trade mark, the Court has made clear in other cases that there is such an adverse effect where that advertising does not enable reasonably well-informed and reasonably observant internet users, or enables them only with difficulty, to ascertain whether the goods or services referred to by the advertisement originate from the proprietor of the trade mark or from an undertaking economically linked to it or, on the contrary, originate from a third party ( Google France and Google , paragraph 99; and Case C‑558/08 Portakabin and Portakabin [2010] ECR I‑0000, paragraph 54).

Furthermore, the role of the online marketplace operator cannot be assessed under Directive 89/104 or Regulation No 40/94, but must be examined from the point of view of other rules of law, such as those set out in Directive 2000/31, and in this connection the operator of an online marketplace does not ‘use’ – for the purposes of Article 5 of Directive 89/104 or Article 9 of Regulation No 40/94 – signs identical with or similar to trade marks which appear in offers for sale displayed on its site.

The Court ruled that, on 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 that 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.

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