Liability of eBay Account Holder for Misuse by Third Parties

The Federal Court of Justice (BGH) held in a decision announced on 11.03.2009 (I ZR 114/06 – Halzband) that the holder of an eBay account may be liable for intellectual property infringements (trademark law, copyright, unfair competition law, etc.) committed by third parties if he has provided them with access to the user account or has not adequately secured the access credentials required for this purpose.

The subject matter of the proceedings was an offer posted on eBay which was advertised in the description using the term "Cartier" ("necklace, Cartier-style"), although it was undisputed that it was not a piece of jewellery from the house of Cartier. The eBay account holder in question defended himself with the assertion that the offer had been posted by his wife and that he was therefore not liable. The lower courts (Regional Court (LG) Frankfurt and Higher Regional Court (OLG) Frankfurt) confirmed this and rejected the claim for injunction and damages on the grounds that liability for intellectual property infringements presupposes that the account holder had knowledge thereof.

The Court's Decision

The Federal Court of Justice (BGH) has now taken a contrary position, set aside the appellate judgment and remitted the matter for reconsideration. In the Court's view, the account holder may also be held liable if he does not adequately protect the access credentials from access by third parties. In such a case, the account holder must accept being treated as if he had acted himself. The reason for attributing the conduct is to be found in the fact that the account holder has created the risk of uncertainty regarding the seller and thus the point of contact in the event of contractual and intellectual property rights violations.

Conclusion

Negligence in this area may consequently result in full liability for the infringement of copyright and trademark rights as well as unfair competition practices, which is why increased care in the handling of access credentials is recommended.