December 14, 2010, 3:12 PM

eBay shouldn’t allow sales of free product samples, European court official says

The finding is the latest development in the L’Oreal trademark infringement case.

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French cosmetic and beauty supply company L’Oreal SA should be able to prohibit the sale of its free product samples on the online marketplace operated by eBay Inc. But eBay still should be free to buy search marketing keywords that include L’Oreal trademarks to help direct shoppers to the auction site, according to an advisory finding handed down late last week by the advocate general of the European Court of Justice.

The ruling is the latest development in legal battle that stretches back at least three years between the French luxury goods company and the U.S.-based online marketplace. L’Oreal claims that the sale of its products through eBay, along with eBay using L’Oreal’s trademarked terms in paid search ads, infringe the French company’s trademarks. Though the Court of Justice, the highest judicial body on matters that relate to European Union law, has just begun deliberations on the matter, opinions of the advocate general reportedly are followed in most cases.

The advocate general, Niilo Jaaskinen, says that free samples, which are often marked with such phrases as “not for sale” and “not for individual sale,” should not be sold on eBay.

“They cannot be considered as being goods put on the market with the consent of the trademark proprietor,” according to Jaaskinen’s opinion. “Similarly, trademark protection can also be invoked where the goods offered for sale on the electronic marketplace have not yet been put on the market within the European Economic Area.” That area includes the 27 members of the European Union along with Iceland, Liechtenstein and Norway.

Jaaskinen, however, found for eBay when it comes to bidding on search keywords and phrases that help online shoppers find desired products for sale through web stores. “The use of disputed trademarks as keywords by eBay does not necessarily result in misleading the consumers as to the origin of the goods offered,” the opinion states.

The opinion gave no indication of when the court, commonly called the ECJ, would render its decision.

“Despite the complexity of the issues and the preliminary nature of the Advocate General’s opinion, we are encouraged that the ECJ’s final judgment will reinforce European consumers’ freedom to buy and sell authentic goods online,” eBay says in a statement.

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