eBay vs L’Oreal Through a BitTorrent Prism

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In a recent court battle, among other things L'Oreal argued that eBay could prevent the sale of counterfeit items through its site and was therefore jointly liable for offenses committed by its users. The UK High Court disagreed and ruled in eBay's favor. We take a look at the case through a BitTorrent prism.

On Friday the High Court ruled that online auction site eBay is not liable when fake beauty products are sold to the public by its users via the site. Justice Richard David Arnold ruled that eBay could not be held liable for trademark infringements committed by its users, dealing a further blow to cosmetics company L’Oreal who had hoped to put an end to the activity in the UK after failing to do so last week in the French courts.

Since there appear to be some parallels with this case and the various BitTorrent sites and their users, we thought we’d take a closer look. This isn’t an in-depth legal analysis, but a look at the case as a layman, through a Mininova-shaped file-sharing prism.

Clearly some of eBay’s users were committing trademark infringement by selling counterfeit L’Oreal products, as much was never denied by eBay. It could also be argued that many users of torrent sites are breaching the copyrights of various companies when they engage in illicit file-sharing of their products. The focus of the L’Oreal case was how eBay should deal with these infringements.

Usually a brand owner would see the fake items for sale on eBay and make a request for the auction to be removed, which eBay would have no problem with. Equally, if a copyright holder sees a torrent on Mininova (or any other BitTorrent site) that could lead to a copyright infringement of its products, they can contact the site and have it removed too.

But for trademark and copyright holders, this takedown proces can prove to be a time consuming task. As soon as one auction is investigated and shut down, more take its place. Similarly, as soon as one torrent is removed, users upload more to replace it. The whole process has the permanence of spinning plates, something which copyright and trademark holders aren’t happy with.

In the case of eBay, L’Oreal tried to get the court to do something about this situation, arguing that the online auctioneer could stop the listing of fake products on its site, something akin to a ‘trademark infringement filter’. They argued that that in its absence, eBay was jointly liable for the trademark infringements of its users.

Over in The Netherlands, anti-piracy outfit BREIN feels that Mininova should take a similar approach by filtering out copyright works pro-actively, something which it hopes to force on the site through the courts, despite some voluntary overtures by the site recently.

Unfortunately for L’Oreal, they failed to convince the UK High Court that eBay should be responsible for policing its auctions, with the judge confirming that it is the responsibility of the brand owner to monitor and report suspect auctions in order to have them removed. This type of system has parallels with current DMCA-style takedown requests used to remove infringing content from torrent sites.

Had eBay failed it could have been forced to introduce proactive new measures to stop or at least massively hinder the sale of trademark-infringing goods via its site. The company must be breathing a collective sigh of relief that it will not be expected to be judge, jury and responsible for every auction listed on its site, and the activities of its users.

Although siding with eBay, Judge Arnold made some suggestions of actions the auction site could take to deal with future sales of counterfeit goods. One of these non-binding measures included logging the names and addresses of sellers. He noted that although eBay could probably do more to stop these infringements, it does not necessarily follow that it is legally obliged to do so.

So what will happen when the Mininova case goes to court in June – will it be forced to do what eBay avoided and pro-actively remove infringing items from its index? Will Mininova’s eBay-style “notice and takedown” policy be enough or will it be required (or not) to do more?

Stay tuned…

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