eBay denied joint liability, arguing that any infringement liability was solely that of the individual eBay sellers. It adduced evidence of its policy against counterfeits (but not parallel-traded products), software used to identify and take down counterfeits, and its procedure to enable rights owners to complain about infringing listings.

L’Oréal argued that eBay was actively involved in the unlawful transactions by virtue of actively promoting such products, proxy bidding, buyer protection and commission charging. L’Oréal also argued that, in practice, eBay did little to act against suspicious trades and traders even though it had detailed account histories. L’Oréal criticised the infringement complaints procedure as inadequate because it operates on a listing-by- listing basis rather than on the basis of traders in unlawful goods.

Arnold J found all the example products to be unlawful by virtue of being counterfeit or non-EEA parallel traded but held that eBay’s involvement in the transactions fell short of common law joint tortfeasance.

A party may only be liable for infringement of IP rights as a joint tortfeasor where he intends and procures and shares a common design that the infringement takes place (CBS Songs Limited v Amstrad Consumer Electronics Plc [1988] AC 1013; Unilever Plc v Gillette (UK) Limited [1989] RPC 583). eBay’s knowledge and involvement was found insufficient to amount to a “common design”. Arnold J noted that the position may be different under Article 11 of the Enforcement Directive (see “Article 11 injunction” below).

He identified the following measures which eBay could adopt to reduce the volume of unlawful trade on its site:

• Filter listings before they are posted on the site.

• Use additional filters, including filters to detect listings of testers and other not for sale products and unboxed products.

• Filter descriptions as well as titles.

• Require sellers to disclose their names and addresses when listing items, at least when listing items in a manner which suggests that they are selling in the course of trade.

• Impose additional restrictions on the volumes of high-risk products, such as fragrances and cosmetics, that can be listed at any one time.

• Be more consistent in its policies; for example, regarding sales of unboxed products.

• Adopt policies to combat types of infringement which are not presently addressed and, in particular, the sale of non-EEA goods without the consent of the trade mark owners.

• Take greater account of negative feedback, particularly feedback concerning counterfeits.

• Apply sanctions more rigorously.

• Be more rigorous in suspending accounts linked to those users whose accounts have been suspended.

eBay had purchased various L’Oréal trade marks to use as advertising words in sponsored links. These allow an internet user to click on the link and be sent to eBay’s site displaying goods with the requested trade mark. Some of the goods listed on the landing page resulting from the search were unlawful.

Arnold J commented that the display of sponsored links by eBay was use of L’Oreal’s sign and that the sponsored links and infringing goods displayed on the eBay landing page targeted UK consumers. In considering whether the trade marks had been used in the UK with regard to sponsored links, Arnold J found that it had because of the targeting of UK consumers. He expressed agreement with L’Oréal’s submission that there had been an infringement by eBay but considered the law was not clear and required ECJ guidance.

eBay contended it was exempt from liability by virtue of Article 14 of the E-Commerce Directive. L’Oréal argued that the defence did not apply as eBay’s activities went beyond the mere passive storage of information and, further, that the defence did not apply where the provider such as eBay was controlling the recipient of the storage service (that is, eBay members). Arnold J commented that he preferred the arguments of L’Oréal but considered the interpretation of Article 14 was not clear and that guidance of the ECJ was required.

The Enforcement Directive provides the power to injunct third parties who have not infringed but, nonetheless, have participated in infringing acts as an intermediary or accessory (Article 11). L’Oréal argued that even if eBay was not liable for infringement, it should be injuncted to prevent the same or similar infringements in future. It was agreed that the UK had not taken specific steps to implement the last part of Article 11, However, Arnold J confirmed that the UK court had the power to grant such an injunction but commented that the scope of the injunction available was unclear and further guidance from the ECJ was required.

Certain of the parallel-traded products were also originally disseminated for promotional purposes and not for sale. The question arose as to whether these had been “put on the market” by L’Oréal with the result that the trade mark rights were exhausted. Arnold J required this issue to be referred to the ECJ.

The issues to be referred to the ECJ will be key to forming EU law and policy on “accessory liability” for infringement of IP rights. They should also provide welcome clarification for ISPs as to the ambit of “hosting” and similar defences under e-commerce law. A balance will need to be struck between the interests of IP rights owners and internet traders and platforms.