Online shopping sites such as eBay could be held liable for trademark infringements if they played an "active role" in the promotion of counterfeit goods, Europe's top court said in a ruling today.
According to analysts, the ruling, which had been eagerly awaited, would have huge implications for e-commerce.
The European court of justice in Luxembourg said national courts could order online retailers to stop infringements.
The verdict came on a series of cases brought by cosmetics and beauty giant L'Oreal across the EU to defend its brand name.
The company challenged the world's largest online auctioneer to clarify the obligations of internet marketplaces under EU law and claimed eBay was liable for the sale on its website of counterfeit goods and of "parallel imports" – L'Oreal-branded products not intended for the European market.
The case goes back to 2007 with L'Oreal's letter to EBay, expressing concerns over the ''widespread'' sale of fake products on EBay's European websites and asking it to address those concerns. L'Oreal later went to court saying EBay had not done enough.