L’Oréal v eBay: what the Advocate General says

On 22 May 2009 Mr Justice Arnold told us that he was referring a number of questions to the Court of Justice of the European Union for a preliminary reference in one of the most exciting and potentially important trade mark law disputes to be heard in England and Wales in recent times -- the titan struggle between luxury cosmetic kings L’Oréal SA and online auction host eBay (see IPKat post here for background). Today in Case C‑324/09 L’Oréal SA, Lancôme parfums et beauté & Cie, Laboratoire Garnier & Cie, L’Oréal (UK) Limited v eBay International AG, eBay Europe SARL and eBay (UK) Limited Advocate General Jääskinen delivered his keenly awaited opinion.

To refresh readers' memories, the questions referred were as follows:

‘(1) Where perfume and cosmetic testers (i.e. samples for use in demonstrating products to consumers in retail outlets) and dramming bottles (i.e. containers from which small aliquots can be taken for supply to consumers as free samples) which are not intended for sale to consumers (and are often marked “not for sale” or “not for individual sale”) are supplied without charge to the trade mark proprietor’s authorised distributors, are such goods “put on the market” within the meaning of Article 7(1) of [Directive 89/104] and Article 13(1) of [Regulation No 40/94]?

(2) Where the boxes (or other outer packaging) have been removed from perfumes and cosmetics without the consent of the trade mark proprietor, does this constitute a “legitimate reason” for the trade mark proprietor to oppose further commercialisation of the unboxed products within the meaning of Article 7(2) of [Directive 89/104] and Article 13(2) of [Regulation No 40/94]?

(3) Does it make a difference to the answer to question 2 above if:

(a) as a result of the removal of the boxes (or other outer packaging), the unboxed products do not bear the information required by Article 6(1) of [Directive 76/768], and in particular do not bear a list of ingredients or a “best before date”?

(b) as a result of the absence of such information, the offer for sale or sale of the unboxed products constitutes a criminal offence according to the law of the Member State of the Community in which they are offered for sale or sold by third parties?

(4) Does it make a difference to the answer to question 2 above if the further commercialisation damages, or is likely to damage, the image of the goods and hence the reputation of the trade mark? If so, is that effect to be presumed, or is it required to be proved by the trade mark proprietor?

(5) Where a trader which operates an online marketplace purchases the use of a sign which is identical to a registered trade mark as a keyword from a search engine operator so that the sign is displayed to a user by the search engine in a sponsored link to the website of the operator of the online marketplace, does the display of the sign in the sponsored link constitute “use” of the sign within the meaning of Article 5(1)(a) of [Directive 89/104] and Article 9(1)(a) of [Regulation No 40/94]?

(6) Where clicking on the sponsored link referred to in question 5 above leads the user directly to advertisements or offers for sale of goods identical to those for which the trade mark is registered under the sign placed on the website by other parties, some of which infringe the trade mark and some which do not infringe the trade mark by virtue of the differing statuses of the respective goods, does that constitute use of the sign by the operator of the online marketplace “in relation to” the infringing goods within the meaning of 5(1)(a) of [Directive 89/104] and Article 9(1)(a) of [Regulation No 40/94]?

(7) Where the goods advertised and offered for sale on the website referred to in question 6 above include goods which have not been put on the market within the EEA by or with the consent of the trade mark proprietor, is it sufficient for such use to fall within the scope of Article 5(1)(a) of [Directive 89/104] and Article 9(1)(a) of [Regulation No 40/94] and outside Article 7(1) of [Directive 89/104] and Article 13(1) of [Regulation No 40/94] that the advertisement or offer for sale is targeted at consumers in the territory covered by the trade mark or must the trade mark proprietor show that the advertisement or offer for sale necessarily entails putting the goods in question on the market within the territory covered by the trade mark?

(8) Does it make any difference to the answers to questions 5 to 7 above if the use complained of by the trade mark proprietor consists of the display of the sign on the web site of the operator of the online marketplace itself rather than in a sponsored link?

(9) If it is sufficient for such use to fall within the scope of Article 5(1)(a) of [Directive 89/104] and Article 9(1)(a) of [Regulation No 40/94] and outside Article 7(1) of [Directive 89/104] and Article 13(1) of [Regulation No 40/94] that the advertisement or offer for sale is targeted at consumers in the territory covered by the trade mark:

(a) does such use consist of or include “the storage of information provided by a recipient of the service” within the meaning of Article 14(1) of [Directive 2000/31]?

(b) if the use does not consist exclusively of activities falling within the scope of Article 14(1) of [Directive 2000/31], but includes such activities, is the operator of the online marketplace exempted from liability to the extent that the use consists of such activities and if so may damages or other financial remedies be granted in respect of such use to the extent that it is not exempted from liability?

(c) in circumstances where the operator of the online marketplace has knowledge that goods have been advertised, offered for sale and sold on its website in infringement of registered trade marks, and that infringements of such registered trade marks are likely to continue to occur through the advertisement, offer for sale and sale of the same or similar goods by the same or different users of the website, does this constitute “actual knowledge” or “awareness” within the meaning of Article 14(1) of [Directive 2000/31]?

(10) Where the services of an intermediary such as an operator of a website have been used by a third party to infringe a registered trade mark, does Article 11 of [Directive 2004/48] require Member States to ensure that the trade mark proprietor can obtain an injunction against the intermediary to prevent further infringements of the said trade mark, as opposed to continuation of that specific act of infringement, and if so what is the scope of the injunction that shall be made available?’

The Advocate General -- whose recommendations are accepted on average around 75-80% of the time -- has advised the Court to rule thus:

(1) Where perfume and cosmetic testers and dramming bottles which are not intended for sale to consumers are supplied without charge to the trade mark proprietor’s authorised distributors, such goods are not put on the market within the meaning of Article 7(1) of ... Council Directive 89/104 ...and Article 13(1) of ... Regulation ...40/94 .... [this fits with the Court's ruling in Case C-127/09 Coty Prestige Lancaster v Simex, noted by the IPKat here]

(2), (3) and (4) The trade mark proprietor is entitled to oppose further commercialisation of the unboxed products within the meaning of Article 7(2) of Directive 89/104 and Article 13(2) of Regulation No 40/94 where the outer packaging have been removed from perfumes and cosmetics without the consent of the trade mark proprietor if, as a result of the removal of the outer packaging, the products do not bear the information required by Article 6(1) of Council Directive 76/768 ... on the approximation of the laws of the Member States relating to cosmetic products [in which case repackaging in non-fancy, information-bearing boxes would still be fine], or if the removal of outer packaging can be considered as such as changing or impairing the condition of the goods [but is the glamour of the packaging to be regarded as part of the 'condition of the goods'?] or if the further commercialisation damages, or is likely to damage, the image of the goods and therefore the reputation of the trade mark [This may not be as clear-cut as it sounds, since presumably evidence of damage to reputation must be tied to the circumstances of each type of sale and cannot be presumed in all cases. Thus ...]. Under the circumstances of the main proceedings that effect is to be presumed unless the offer concerns a single item or few items offered by a seller clearly not acting in the course of trade.

(5) Where a trader operating an electronic marketplace purchases the use of a sign which is identical to a registered trade mark as a keyword from a search engine operator so that the sign is displayed to a user by the search engine in a sponsored link to the website of the operator of the electronic marketplace, the display of the sign in the sponsored link constitutes ‘use’ of the sign within the meaning of Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94 [there's some interesting analysis in the Opinion; this is not identical to the Google France sort of situation, since the use here is by eBay as an electronic marketplace operator, not by an ordinary trader selling goods].

(6) Where clicking on the sponsored link referred to in point 5 above leads the user directly to advertisements or offers for sale of goods identical to those for which the trade mark is registered under the sign placed on the website by other parties, some of which infringe the trade mark and some which do not infringe the trade mark by virtue of the differing statuses of the respective goods, that fact constitutes use of the sign by the operator of the electronic marketplace ‘in relation to’ the infringing goods within the meaning of Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94, but it does not have an adverse effect on the functions of the trade mark provided that a reasonable average consumer understands [as is likely to be the case nowadays, but might not have been in the early days of electronic marketplaces] on the basis of information included in the sponsored link that the operator of the electronic marketplace stores in his system advertisements or offers for sale of third parties.

(7) Where the goods offered for sale on the electronic marketplace have not yet been put on the market within the EEA by or with the consent of the trade mark proprietor, it is none the less sufficient for the exclusive right conferred by the national or Community trade mark to apply to show that the advertisement is targeted at consumers within the territory covered by the trade mark.

(8) If the use complained of by the trade mark proprietor consists of the display of the sign on the website of the operator of the electronic marketplace itself rather than in a sponsored link on the website of a search engine operator, the sign is not used by the operator of the electronic marketplace ‘in relation to’ the infringing goods within the meaning of Article 5(1)(a) of Directive 89/104 and Article 9(1)(a) of Regulation No 40/94.

(9)(a) The use referred to in point 5 does not consist of or include ‘the storage of information provided by a recipient of the service’ by the electronic marketplace operator within the meaning of Article 14(1) of Directive 2000/31 ... on certain legal aspects of information society services, in particular electronic commerce, in the Internal Market, whereas the use referred to in point 6 may consist of or include such storage.

(9)(b) Where the use does not consist exclusively of activities falling within the scope of Article 14(1) of Directive 2000/31, but includes such activities, the operator of the electronic marketplace is exempted from liability to the extent that the use consists of such activities, but damages or other financial remedies may be granted pursuant to national law in respect of such use to the extent that it is not exempted from liability.

(9)(c) There is ‘actual knowledge’ of illegal activity or information or ‘awareness’ of facts or circumstances within the meaning of Article 14(1) of Directive 2000/31 where the operator of the electronic marketplace has knowledge that goods have been advertised, offered for sale and sold on its website in infringement of a registered trade mark, and that infringements of that registered trade mark are likely to continue regarding the same or similar goods by the same user of the website [there's an interesting point at stake here: is a person's knowledge actual if it relates to a likely but uncertain future event? If I now know that the rain which is currently falling is likely to be falling in an hour's time, do I have actual knowledge now of rain which may or may not fall then, or do I have actual knowledge only of a possibility or probability? And what did the legislature intend? And if I'm 60% likely to have actual knowledge of an event that is 60% likely to take place in the future, do I have actual knowledge of that event if it subsequently happens?] 

(10) Where the services of an intermediary such as an operator of a website have been used by a third party to infringe a registered trade mark, Article 11 of Directive 2004/48 ...on the enforcement of intellectual property rights requires Member States to ensure that the trade mark proprietor can obtain an effective, dissuasive and proportionate injunction against the intermediary to prevent continuation or repetition of that infringement by that third party [even if the identity of the third party infringer is unknown, the AG reminds us]. The conditions and procedures relating to such injunctions are defined in national law.

The IPKat keenly awaits the court's ruling.