Virtually since e-commerce sites were first launched there have been concerns from rights-owners that they can be abused for the sale of counterfeit products, without many of the checks and balances available through bricks and mortar retailers. Despite the huge growth in e-commerce no entirely satisfactory answer has yet been found to this issue. This has led to considerable friction between rights-owners and online service providers (OSPs) as to who is liable for doing what to control this trade. In an interesting move which may represent the beginning of a thaw in relations between the two sides, the European Commission has brokered an agreement between the number of rights-owners and OSPs about how such issues will be dealt with.

The Memorandum of Understanding (MoU), signed on 4 May 2011, applies to the countries of the European Union and to complaints concerning counterfeit products brought within them. It is not legally binding but sets out a series of principles which form the basis of a code of practice. Perhaps the most important element is that it imposes a moratorium on further litigation between signatories at least for the initial one year term of the MoU.

Instead of litigating, the MoU encourages cooperation.

• The rights-owners will do what they can to send appropriate notices and takedown requests to the e-commerce sites, avoiding abusive claims. No doubt, rights-owners say that they already do so.
  
• Apart from responding quickly to the notices and take down requests (which they will also say they already do) the OSPs agree to work with rights-owners to identify serial offenders as well as to take steps to improve their processes to keep counterfeit goods off their markets. These obligations are hedged around with numerous qualifications as the OSPs are anxious not to lose the legal protections they currently have, such as the absence of an obligation to monitor what is put onto their sites. Accordingly, they are only agreeing to do what is feasible, reasonable and ultimately at their complete discretion.

It comes against a background of cases which cause both sides some concern about the way the law is developing. On the one hand, there have been a number of cases in which the safe harbour protections afforded to OSPs have been confirmed. On the other, there are two decisions due later this year from Europe's highest court, the European Court of Justice, on related issues In both cases there have been some early indications that the courts may water down the protections currently afforded to OSPs (L'Oréal v eBay and SABAM v Scarlet).

The MoU will not fully satisfy any of its signatories; rights-owners will want the OSPs to do more while the OSPs will be worried that whatever they are able to do will became the new minimum standard expected of them. But it reflects the realpolitik: both sides need each other and increasingly work together commercially. The succession of legal disputes has not moved things on appreciably and an attempt to reduce suspicion and increase cooperation is overdue. The fact that the MoU has been signed by a reasonable number of high-profile signatories (including eBay, Amazon, LVMH and the Motion Picture Association) may indicate that this proposal has some potential to create a lasting framework.

To read the full text of the MoU, click here.

Author: Mark Owen is a Partner in Intellectual Property and eCommerce/Technology

11 May 2011