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August 1, 2011 / gavinlaw

L’Oreal’s Fight Against Ebay, A Sign of Things to Come for Google Adword and the Rosetta Stone Case.

by Tony Guo

The European Court of Justice (ECJ) ruled that if eBay played an “active role” in promoting infringement it could be liable for damages. This decision could influence the Fourth Circuit as it ponders whether the purchase of a trademark as an adword constitutes infringement (the Rosetta Stone case). The ECJ ruled that if eBay intentionally directed users to infringed goods it would be liable for damages. This logic can be extrapolated to the use of Google adword. In Google adword an infringer buys a search term such as Tiffany and redirect searches for this term to its own website. The infringing company would use Tiffany’s famous mark to confuse buyers. The ECJ’s ruling comes as good news for Rosetta Stone.

The rapid expansion of online services has largely outpaced corresponding intellectual protection. Companies like L’Oreal and Rosetta Stone have not stopped fighting. Under L’Oreal’s urging the European Courts are taking a more staunch approach on identifying infringement. European Courts in the past focused on whether the infringer has an “active role.” The Court in the L’Oreal case ruled that an operator infringes “if it was aware of facts or circumstances on the basis of which a diligent economic operator should have realised that the online offers for sale were unlawful and, in the event of it being so aware, failed to act promptly to remove the data concerned from its website or to disable access to them.” The subtle wording is important. Companies like Google and eBay are no longer able to hide under the “I didn’t know” doctrine and now must operate under the “reasonable operator” standard. If the Fourth Circuit uses the “reasonable operator” standard, Google could be in trouble.

L’Oreal was content with the decision and their spokesperson said: “This decision is in line with the position L’Oreal has taken for several years and is applicable in courts throughout the European Union.” More surprising was eBay’s support of the ECJ decision. eBay seemed relieved that some of the vague guidelines were now cleared up. The best result for Rosetta Stone and Goggle may be for the Fourth Circuit to clear up the vague language that surrounds the issue.

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