## Facts

- L’Oréal and related companies owned national and EU trade marks for perfumes and cosmetics and marketed through a selective distribution system.
- Third-party sellers used an online marketplace operated by eBay entities to sell (i) counterfeit L’Oréal goods, (ii) genuine goods first marketed outside the EEA, and (iii) “tester”/sample goods and products sold without original packaging or with removed codes.
- eBay’s platform included user terms barring counterfeit sales and a notice-and-takedown program for rights holders.
- L’Oréal alleged the marketplace failed to take sufficient measures against infringing listings and that the marketplace operator also infringed by displaying marks on its site and purchasing sponsored search keywords corresponding to L’Oréal marks that directed users to listings.
- The High Court of Justice (England & Wales) referred questions to the CJEU for a preliminary ruling on trade mark “use,” exhaustion, platform liability, safe-harbor conditions, and available injunctions.

## Issues

1. Whether offering for sale or advertising trade-marked goods on an online marketplace targeted at EEA consumers constitutes actionable “use” even when the goods are located outside the EEA at the time of the offer.
2. Whether trade mark rights are exhausted for goods first placed on the market outside the EEA or for goods commercialized after removal/alteration of packaging or identifying codes.
3. Whether resale of perfumes/cosmetics without original packaging or with removed codes can impair trade mark functions (including origin and reputation) so that the proprietor may oppose further commercialization.
4. Under what circumstances an online marketplace operator is itself responsible for trade mark “use,” including through sponsored keyword advertising, and when it may rely on the hosting safe harbor.
5. What injunctions may be issued against an online marketplace operator as an intermediary whose services are used for infringement.

## Decision

- The court ruled that EU-targeted online offers or advertisements of trade-marked goods can constitute infringing “use” within the protected territory, even if the goods are located in a third country at the time of the offer.
- The court reaffirmed that exhaustion arises only for goods first put on the EEA market by the trade mark proprietor or with its consent; goods first marketed outside the EEA are not subject to exhaustion.
- The proprietor may oppose commercialization of perfumes/cosmetics sold without original packaging or after removal of codes where that practice removes legally required information or is liable to harm the mark’s image and reputation or create doubts about origin/quality.
- Use of trade marks as keywords in sponsored search advertising can be actionable where the advertisement does not enable, or enables only with difficulty, the average internet user to determine whether the goods originate from the proprietor or an unrelated third party.
- The hosting safe harbor is unavailable where the marketplace operator plays an active role giving it knowledge of or control over listing data (including by optimizing presentation or promoting offers); otherwise, it may retain protection if it lacks knowledge and acts expeditiously upon notice.
- Courts may grant injunctions against marketplace operators to end infringements and prevent new infringements, provided measures are effective, proportionate, dissuasive, do not impose general monitoring, and do not create barriers to lawful trade.
- As a preliminary ruling, the court did not determine liability on the facts and returned the matter to the referring court to apply these standards.

## Legal Principles

- Online offers or advertisements of trade-marked goods are “use” in the territory protected by the mark when the listing is targeted at consumers in that territory, regardless of where the goods are physically located at the time of the offer.
- Exhaustion of trade mark rights is limited to goods first placed on the EEA market by or with the consent of the proprietor; first marketing outside the EEA does not exhaust EEA rights.
- For regulated goods such as cosmetics, removal of packaging or identifiers that eliminates mandatory consumer information, or conduct liable to damage the mark’s reputation or the origin guarantee, can justify the proprietor’s opposition to further commercialization.
- A marketplace operator’s own advertising activity (including keyword advertising) can infringe where it obscures commercial origin for the average internet user.
- Hosting safe-harbor protection applies only to neutral, passive hosting; an operator that optimizes or promotes listings may lose protection and may be required to take expeditious action after gaining knowledge of specific infringements.
- Injunctions against intermediaries may require targeted preventive measures against repeat infringement but may not impose a general duty to monitor user activity.

## Conclusion

The court clarified that EU-targeted online marketplace listings and ads can infringe trade marks even when goods are outside the EEA, that exhaustion generally requires first EEA marketing with consent, that certain unboxed or de-coded cosmetics sales may be blocked to protect trade mark functions, and that marketplace operators may lose hosting immunity and face proportionate, non-general-monitoring injunctions when they play an active role in infringing sales.


L’Oréal SA v. eBay Int’l AG, Case C-324/09 (C.J.E.U. 2011)