Amazon and eBay can be held responsible for counterfeit goods sales

Online marketplaces like eBay and Amazon can now be held liable for the sale of some counterfeit goods on their sites, after a ruling by the European Court of Justice (ECJ) on Tuesday.

The court sided with cosmetic company L'Oreal in its action against eBay for allowing fake versions of its products to be sold on the site.

The ECJ made it clear that online marketplaces need to act decisively and diligently to stop persistent infringers from using their sites.

While L'Oreal said that it was pleased with the verdict, Emily Devlin, an intellectual property specialist at law firm Osborne Clarke, argued that there were no "outright winners" in the case.

"There may be disappointment that the court didn't go further and make platforms like eBay responsible for actively policing the way in which their sites are used, but the judgement recognises that this would be an impossible task given the scale of these sites," she said.

The ECJ also drew a distinction between personal users of online marketplaces selling one-off items, and traders who use the platform for their business. Only the latter could be accused under the new ruling.

"So intermediaries like eBay may now decline to take action in relation to infringing actions posted by individuals. This then leaves it open to businesses to masquerade as individuals to sell counterfeit and other infringing goods," said Devlin.

L'Oreal initiated legal proceedings against eBay in 2009 and the High Court in the UK ruled that the auction firm was not guilty. However, confusion over the ruling meant that the case was referred to the ECJ.

The confusion stems from the fact that a French court ruled in favour of the Louis Vuitton group when it sued eBay for €1.7m last year, while a US court ruled in favour of eBay when it was sued by jewellery maker Tiffany & Co.

EBay has always insisted that it simply provides the platform for customers to buy products, and should not be held responsible for the quality of goods on offer, but after today's ruling, the auction site will need to take more responsibility in policing the sales on its site.

"We have seen over the past years different national courts finding in favour of opposing parties in similar cases," said Kirsten Gilbert, partner at law firm Marks & Clerk.

"Inconsistency in the area of the online counterfeiting trade will be reduced following this ruling. Brand owners will now be working with a legal system which protects one of their key assets - their brand identity."