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French Courts Take a Strict Line on Ebay

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French Courts Take a Strict Line on Ebay Column Written by Jean-François Bretonniere & IP Lawyer Virginie Ulmann French courts take a strict line on eBay In June 2008, French courts rendered sellers and buyers to whom the goods were Paris went on to rule on the sale of genuine three decisions that held eBay liable delivered, the language used for the LVMH products in breach of a selective for the sale of counterfeits on its advertisements and so on. distribution network. As eBay is not an eBay also claimed that as a mere hosting authorised dealer of perfumes and online auction platform services provider, it should benefit from the cosmetics of the Christian Dior, Kenzo, provisions of the French law implementing Givenchy and Guerlain brands, the court Not a month after a French High Court the European E-commerce Directive and found eBay guilty of serious negligence and decided that eBay should be held jointly should not be held liable unless: it had actual omissions, and parasitism infringing the liable for the sale of infringing products knowledge of the unlawful character of the rights of LVMH. based on the provisions of the French content; or it was aware of facts and Intellectual Property Code on trademark circumstances that made this unlawful Damages infringement (High Court of Troyes, 4th June character apparent; and it had not acted The Euros 38 million damages granted to the 2008), the Paris Commercial Court had to promptly to remove content once it had trademark owners included: rule again on eBay's liability for similar knowledge or awareness of such unlawful • Compensation for unauthorised activity. On 30th June, it decided three character. The court denied eBay this status, exploitation of LVMH rights (calculated cases, all initiated by companies in the ruling that it acts principally as a broker and on the basis of a royalty). LVMH Group (LVMH), regarding the sale of not as a mere technical intermediary. • Compensation for disruption of the counterfeit goods and breach of a selective perfume selective distribution network. distribution network for the distribution of Unlawful marketing • Compensation for prejudice to the LVMH perfumes and cosmetics. In two of the three cases, the Paris reputation of the trademarks, as well as In its judgments, the court found against Commercial Court concluded that eBay had for moral prejudice. eBay and awarded almost Euros 40 million the obligation “to ensure that its activity damages to LVMH. The court stated that does not generate unlawful acts, notably The claims for damages were supported eBay “favoured and amplified the unlawful counterfeiting acts, which are prejudicial to” by the report of a well-known expert, which large scale marketing” of counterfeit goods the companies of the LVMH Group. In this proposed a method of calculation based on and goods belonging to a selective regard, the decision of the Paris Commercial estimated sales of counterfeits over three distribution network. Court was stricter for eBay than the earlier months on eBay websites (and in However, unlike the Troyes High Court, ruling by the High Court of Troyes, which accordance with eBay’s own statistics). the Paris Commercial Court based its concluded that eBay did not have the These estimates were then used to decisions not on trademark infringement obligation to “ensure” the absence of determine prejudice over the whole period provisions, but instead on the French civil unlawful act, but rather the duty to “act from 2001 to 2006. liability regime. This provides that any within its powers to prevent reprehensible In addition to these damages, LVMH intentional act, negligent conduct or use of its site”. secured the right to publish the decisions in imprudence whatsoever, which causes Despite steps – such as the Verified newspapers and on all eBay websites – in damage to another, requires the damaging Rights Owner (VeRO) programme – taken by both French and English – for three weeks. party to compensate its victim. eBay, the court found that for the period Each of the six infringed companies within considered, eBay had not “implemented the LVMH group also received Euros Objections and defence efficient and appropriate measures” to fight 100,000 as reimbursement for counsel fees. As advertisements for the LVMH products the sale of counterfeits on its platform. The In the decision concerning LVMH perfumes, were hosted in the US and were mostly in stance on this issue differs greatly from that the judges ordered that eBay cease and English, eBay claimed that the Paris of the US District Court for the Southern prevent the use of the Dior, Guerlain, Kenzo Commercial Court was not competent to District of New York. In its 14th July 2008 and Givenchy brands in all advertisements repair the prejudice allegedly suffered by decision relating to a case brought by Tiffany for perfumes or cosmetics, subject to a daily LVMH. The court dismissed these & Co, the court declared that eBay Inc was fine of Euros 50,000 for non-compliance. arguments. It ruled it was competent to not liable for trademark infringement, eBay has appealed the decisions of the repair the damage that occurred in France as trademark dilution, unfair competition or false Paris Commercial Court, with the hope of the eBay websites (including foreign advertising. In particular, the court ruled that obtaining as favourable an outcome as in its websites) were accessible to the French eBay cannot be held liable for trademark US case against Tiffany & Co. public. Therefore, when assessing the infringement based solely on its generalised prejudice suffered by LVMH, the court took knowledge that trademark infringement might into account all advertisements that included be occurring on its websites. Jean-François Bretonniere and Virginie LVMH trademarks on all eBay websites, Having found eBay liable for the sale of Ulmann are partners in the Paris office of regardless of the place of residence of the counterfeit goods, the Commercial Court of Baker & McKenzie 80 Intellectual Asset Management August/September 2008 www.iam-magazine.com.
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