Counterfeiting on the Internet - EBay held jointly responsible for the sale of counterfeit goods for the first time in France
After several decisions denying any responsibility for Internet auctions platforms such as eBay regarding counterfeit goods sold on such platforms, on June 4th, 2008, a French court (the Troyes High Court) held the companies eBay France and eBay International responsible for the sale of counterfeit goods jointly with the seller.
The Troyes High Court ruled that "in offering for sale Hermès branded bags and accessories on the www.ebay.fr website and by failing to act within their powers to prevent reprehensible use of the site, Mrs. X, the company eBay France and the Swiss company eBay International AG, have committed acts of trademark infringement".
The Troyes High Court considered that eBay France and eBay International, in their capacity as "providers of online communication services" for a brokerage activity, had the obligation to discourage the use of their website in an unlawful manner by providing appropriate means to sellers and purchasers as well as IP rights owners to prevent such use.
The Troyes High Court indicated that the information and tools provided by eBay at the time the counterfeit goods were sold and notably the "Verified Rights Owner" (VeRO) programme were not sufficient means, and gave precise examples of what more could have been done by eBay to fulfil its obligations, i.e.:
- ensure that sellers indicate in their offers appropriate means to identify the product sold (reference, serial number, authenticity certificate....),
- warn sellers and purchasers about:
(i) the civil and criminal consequences of IP rights infringement,
(ii) the ability of IP rights owners to query the authenticity of the products offered for sale, and
(iii) the fact that personal data can be transferred to IP rights owners.
This constitutes a major turn in French case-law since the previous decisions ruling on similar cases did not convict eBay or other auctions platforms on the basis that they were merely "technical intermediaries" and/or "hosting services providers". Indeed, pursuant to French law, Courts ruled that eBay as a hosting services provider had neither the obligation nor the possibility to control the contents of its websites and had no responsibility in this respect except in very specific circumstances, i.e.:
- in case of actual knowledge of the unlawful character of the content, or
- in case it is aware of facts and circumstances that make this unlawful character apparent, and
- in case the hosting services provider has not acted promptly to remove content once it had knowledge or awareness of such unlawful character.
The Troyes High Court awarded € 20.000 damages to Hermès for a total of 4 counterfeited bags traded by Mrs. X, as well as ordering the publication of the decision in 4 magazines, the front page of the ebay.fr website and on the Hermès group's websites.
The issue of liability for trade in counterfeits on online auction sites is the subject of much attention in many jurisdictions. The highly anticipated decision in the US case brought by Tiffany against eBay in relation to sale of fake Tiffany branded product is yet to be handed down after the case was heard in November 2007. In France, it will be very interesting to see if the Paris High Court will follow this new trend in the actions brought before it by the Louis Vuitton and Dior Couture groups against eBay concerning similar trade, particularly due to the significant amount of damages requested (respectively € 20 Million and € 17 Million). The cases brought by L'Oreal against eBay in 5 European jurisdictions including France will also be closely watched for how the law develops in this area of responsibility for online trade in counterfeits.