"L'Oréal, eBay and tyranny of the unknown
The really interesting thing about this case is not the ruling but the circumstances in which businesses trade.
As a system, the referral of questions for a response works well in theory. ECJ rulings are binding on all national courts, inferior Community courts and tribunals. They ensure that, as far as possible, the same rules are interpreted and therefore applied consistently across a vast, multilingual and multicultural single market. But does the theory work in practice?
The reference of questions for preliminary rulings is not a novel notion, dating back to the ECJ's foundation in 1952. In that year, postwar Europe was still striving to rebuild shattered local and national economies. The creation of a single market consisting of even the original six countries—only three of which were of any real size—was an almost unimaginably ambitious goal, a far cry from the global markets for goods and services we take for granted today. Never mind computers: most households didn't even have a telephone or a refrigerator. It was a slow-moving world by modern standards. It was a world in which the interruption of litigation for around two years (the average time now taken for a preliminary ruling to be delivered) was, if not welcomed, certainly tolerated.
Fast-forward to 2011 and globalisation—though still far from uniform—has become the accepted means of implementing business strategies, not least through the internet. When enterprises like L'Oréal and eBay trade, their daily turnover is vast (at the outbreak of their dispute, L'Oréal's annual sales were a little short of US$ 20 billion; those of eBay were ‘only’ US$ 7.7 billion). What is more, this litigation was viewed by many as a test case since L'Oréal was by no means the only company that considered eBay was not taking adequate care to avoid infringing sales, and eBay is certainly not the only company hosting online sales, as the emergence and rapid growth of Alibaba has shown.
When all the other questions are answered, one remains. Should the ECJ's procedures be amended to provide a truly rapid response when legal issues arise, or is it better to let the parties adjust their commercial activities to lessen the risk of disaster in a market in which, two years down the line, they may be either the substantial winners or the losers in the wake of a ruling which they can seek to influence but cannot control?"
Latest JIPLP: L'Oréal, eBay and tyranny of the unknown
The October 2011 issue of the Journal of Intellectual Property Law & Practice (JIPLP) has been available in full to online subscribers since last week. The contents of this issue can however be viewed by everyone, whether they subscribe or not, by clicking here. Here's the Editorial: