EBay wins court fight against L'Oreal in UK

Susan Scafidi in The Guardian (AP Foreign), May 22, 2009

A British court ruled Friday that Internet marketplace eBay is not liable for bogus beauty products sold on its Web site, dealing a blow to cosmetics company L'Oreal's legal campaign against the online auction giant.

In a written judgment, Justice Richard David Arnold ruled that eBay Europe was not liable for trademark infringements committed by its users. EBay called the ruling "a victory for consumers," although L'Oreal noted that the Arnold had made several suggestions for measures to help prevent trademark infringement.

L'Oreal SA took eBay Inc. to court across Europe, suing in Britain, Germany, France, Belgium and Spain over the sale of fake fragrances and cosmetics on the site.

The British legal rebuff to L'Oreal was one of several recently dealt to high-end brands in their attacks on the online auctioneer. In February, eBay won in a suit brought by the Rolex Group over the sale of counterfeit watches. In July of last year, eBay won its U.S. case against Tiffany & Co., which sued over counterfeit jewelry.

The decisions haven't all gone in eBay's favor. In June of last year a French court ordered eBay to pay more than $61 million to LVMH Moet Hennessy Louis Vuitton SA. Earlier this month, a French court ordered L'Oreal and eBay to settle their differences, giving them until May 25 to come up with a mediated agreement.

The outcome of that mediation will be closely watched in the luxury, fashion and cosmetics industries, according to fashion law expert Susan Scafidi of Fordham Law School. But she said in a statement that legal opinion seemed to be settling against those "who have argued that, like a brick and mortar landlord, eBay should be assume significant liability for fakes sold on its site."