eBay, other sites may be liable for counterfeit goods 'if played an active role'--EU Court of Justice

The EU Court of Justice in Luxembourg ruled today that national courts can order an online marketplace like EBay to stop infringements if it “played an active role” that would “give it knowledge of or control over the data relating to the offers for sale.”

The case was brought by cosmetics giant L'Oreal, who has been consistently victimized by counterfeit items in recent years.

The ruling means that courts throughout the EU may order companies like eBay to take steps to prevent counterfeits from being sold online.  This has been l'Oreal position for some time.  As Laurence Balmayer, a L’Oreal spokeswoman put it: “National courts must be able to order companies operating Internet marketplaces to take measures to prevent the sales” of fakes, products outside their original packaging, not-for-sale items and goods imported without the rights-owner’s consent."

There has not been clarity in the EU on whether the courts had such power.  Some similar cases in 2009 were rejected by courts, while a French court slapped eBay with a $63M fine.  This has led some opponents of legal action against counterfeiting, like the site TechDirt, to picture the ruling as out of step and exceptional. In fact, the courts written rulings have cired out for clarity--not advocated inaction--and the leading court in the U.S. has given to them.  But this ruling is definitive and puts some teeth in anticounterfeiting measures aimed at the internet, which has been a critical driver in the recent explostion of worldwide counterfeiting.  The U.S. would do well to implement a similar policy.

An eBay spokesman was dismissive of the ruling.  "We’ve moved on -- we fulfill most of these conditions now anyways,” said Stefan Krawczyk, EBay’s European government-relations director.

Regular eBay users would doubtlessly beg to differ.  A quick glance over the site shows uncountable, obviously faked products like "Mer de la Mer," an obvious knockoff of  Estee Lauder 's upscale facial cream "Creme de la Mer."

These sites could easily require proof of production authentication, but such a step has never even been publicly considered by eBay or others.