Brand names – Electronic commerce – Infringement – Trademarks

(1) L’Oréal SA (2) Lancôme Parfums Et Beauté & Cie (3) Laboratoire Garnier & Cie (4) L’Oréal (UK) Ltd v Ebay International AG & nine ors: (Ch) Ch D (Mr Justice Arnold): 22 May 2009

The claimant cosmetics companies (L) brought claims for trademark infringement against the defendant companies (E) and seven individual sellers (S).

E ran online selling and auction services. L owned a number of UK and community registered trademarks for cosmetic products. L’s investigators purchased a number of products from E’s website, including 17 products from S. Of those products, L claimed that two of them were counterfeit, and the remaining 15 had been manufactured for sale in the US and Canada. It also claimed that S had offered other products for sale which were unboxed or tester products, and that S had used copyrighted images or text in their listings on E’s site without L’s permission. L entered into settlement agreements with five of the individual sellers, and obtained judgment in default of defence against the remaining two individuals. However, E denied that it was jointly liable for S’s infringing activities and brought contribution claims against S for breach of user agreements between E and S. E’s claims were stayed pending the determination of L’s claim against E. The main issues to be determined were whether S had sold infringing goods which were: counterfeit, non-European Economic Area goods, tester products or unboxed products; and if so whether E was jointly liable for the infringements committed by S.

Held: (1) The proprietor of a registered trademark could only succeed in a claim for trademark infringement under article 5(1)(a) of Directive 89/104 if six conditions were satisfied, namely: (a) there was use of a sign by a third party; (b) the use was in the course of trade; (c) it was without the consent of the proprietor of the trademark; (d) it was a sign which was identical to the trademark; (e) it was in relation to goods or services which were identical to those for which the trademark was registered; and (f) it affected or was liable to affect the functions of the trademark, in particular its essential function of guaranteeing to consumers the origin of the goods or services. Article 5(1) was not confined to use by a third party of a sign in relation to the third party's goods, but extended to use of a sign in relation to the trademark proprietor's goods, Adam Opel AG v Autec AG (C-48/05) [2007] CEC 204 ECJ (1st Chamber) and O2 Holdings Ltd v Hutchison 3G UK Ltd (C-533/06) [2009] Bus LR 339 ECJ (1st Chamber) considered. The sixth condition did not appear in article 5(1)(a) but had been read into that article by the European Court of Justice as a matter of interpretation. However, the sixth condition in reality added nothing as, once it was shown that the first five conditions were satisfied, the case fell within article 5(1)(a), and the question then was whether the use was saved from infringement by articles 6 or 7. The first five conditions were satisfied in S’s case. Unchallenged evidence had been given that two of the products sold by S were counterfeits, and 15 of the products were non-EEA goods. S’s actions had therefore infringed L’s marks. However, the position as to testers and unboxed products could not be said to be acte clair, and further guidance from the ECJ was necessary, Re Perfume Tester Bottles, (I ZR 63/04) [2009] ETMR 9 BGH (Ger) and Zino Davidoff SA v A&G Imports Ltd (No1) [2000] Ch 127 Ch D considered.

(2) In the circumstances, E was not jointly liable for S’s infringement. E was under no legal duty or obligation to prevent third parties from infringing L’s registered trademarks, CBS Songs Ltd v Amstrad Consumer Electronics Plc [1988] AC 1013 HL considered. E’s systems and policies did not favour or encourage the listing or sale of counterfeit goods, testers or unboxed products. However, E did actively encourage the listing and sale of goods from outside the EEA to buyers in the UK, and provided specific facilities to assist sellers to do so. However, that was not enough to make E jointly liable for infringement as its facilities did not inherently lead to infringement and were capable of use in a manner which did not infringe third party trademarks.

(3) A reference was made to the ECJ for clarification concerning: (a) whether E had infringed L’s marks by sponsoring internet links which led to listings on E’s site, including listings for infringing goods; (b) whether E had a defence under article 14 of Directive 2000/31; and (c) the scope of the relief which article 11 of Directive 2004/48 required national courts to grant against intermediaries such as E.

Judgment for first, second and third defendants in part; reference made to ECJ.

Henry Carr QC, Tom Mitcheson (instructed by Bristows) for the claimants; Geoffrey Hobbs QC, Philip Roberts (instructed by Olswang) for the first, second and third defendants; No appearance or representation for the fourth to tenth defendants.