Internet auction site eBay Inc is generally not liable for trademark infringements committed by users on its site, a European Court of Justice legal expert said on Thursday, ahead of a final court ruling.
ECJ Advocate General Niilo Jaaskinen also said in a non-binding opinion that if eBay was notified of infringement of a trademark by a user who continued to repeat the offence, it could be held liable.
He also found a trademark holder has the right to prevent the sale on electronic marketplaces of samples or testers marked not for sale, or products which have had their packaging removed, if this damages its reputation.
The ECJ, Europe's highest court, upholds opinions by advocates' general in the vast majority of cases. The court's judges are expected to rule in a few months.
The issue relates to previous unsuccessful legal attempts by L'Oreal, the world's largest cosmetics maker, to claim trademark infringement through sales of goods on eBay.
The use of the disputed trademarks as keywords by eBay does not necessarily result in misleading the consumers as to the origin of the goods offered, the advocate general found in his written opinion.
In cases where the ad itself is not misleading as to the nature of the advertising Internet marketplace operator, the function of the trademark of indicating the origin of the product is not likely to be jeopardized.
L'Oreal said it believed the Advocate General's opinion supported combating counterfeit sales activity online.
This balanced opinion is overall consistent with the stance that L'Oreal has held for several years, the cosmetics firm said in a statement, adding that it was awaiting the final court ruling with confidence.
Jaaskinen found that if a seller uses a trademark on an Internet market website, such as eBay, it cannot be considered to be used by the marketplace operator, but by the seller. So the marketplace operator could not be blamed for any resulting problems caused to the trademark holder.
One of L'Oreal's complaints was over the selling of samples or testers marked not for sale. In such cases, Jaaskinen said, the company retained the right to prohibit their sale as they could not be considered to have been put on the market with approval.
Jaaskinen also said a trademark holder could oppose the sale of unpackaged goods, if the removal of any packaging damaged its reputation or undermined its efforts to show the origin and quality of its goods.
L'Oreal also had the right to protect its trademark if a website offered goods for sale in the European Economic Area that the company itself had not yet offered in the same market.
In March, the ECJ found that Google Inc had not breached trade mark law by selling keywords to trigger ads, after luxury goods maker Louis Vuitton, part of LVMH, and two other firms said the practice undermined their brands.
Jaaskinen said eBay was also entitled to such protection, even though it instructs its clients in drafting advertisements and monitoring the contents of listings.
And while it is generally exempted from liability for information stored by its clients on its website, it still remains liable for the content of data it communicates as an advertiser to a search engine operator.
EBay said it was encouraged by Jaaskinen's findings.
Despite the complexity of the issues and the preliminary nature of the advocate general's opinion, we are encouraged that the (court's) final judgment will reinforce European consumers' freedom to buy and sell authentic goods online, the Internet marketplace company said in a statement.
(Writing by Rex Merrifield; Editing by David Holmes and Erica Billingham)