In today’s economy Internet has grew to be the primary option for commercial businesses as it provides all the right circumstances for new business models. When compared with the limited number of business model options and the unlimited disadvantages of real world trade; such as the expensive costs of rents, shipping etc., to trade on the Internet is a very effective strategy not only for the commercial persons but also for the ordinary people.

In this regard, online auction websites may be viewed as the most popular and profitable business model that is completely introduced to us by Internet. People generally use these websites to sell their unwanted and/or out of use goods and get reciprocity out of it. The websites participation here occurs in facilitating the platform for the sellers.

However it can be easily confessed that not every seller’s motives are so innocent like selling second-hand goods that are not used by the owner anymore. According to the latest studies mostly because of the illegal activities going on on the online auction sites Internet become “a new distribution channel” for counterfeiting goods. That brings out the fact that naturally these websites faced with several legal actions in a variety of jurisdictions, depending mostly on the trademark infringements of the luxury goods as the owners of the rights seek to hold the action websites liable for these infringements. eBay was and still is one of the websites that has faced with severe infringement cases all around the world and got very varying decisions in different jurisdictions. Although there is no official eBay Turkey, by purchasing the biggest online auction website www.gittigidiyor.com, eBay has started to run its business via Gittigidiyor and therefore the infringement claims are directed to Gittigidiyor in Turkey.

In this context it is very crucial to comprehend the role and the mechanism of the online auction websites. The current system of the auction web sites initiates with a membership. A person who wants to join to the auction as a seller or a buyer has to sign in to the website at first. As a seller one can either carry out a noncommercial selling or can rent virtual stores where he/she can do the business commercially. To sign in to these sites are free of charge however the sellers pay an amount of money to list their goods and a provision to the website, which is calculated according to the selling price.

As the situation is like this it should be bore in mind while determining the liability of an auction website that these are only serving as an intermediary platform. In other words they are acting like a host provider. Therefore they have to be treated as hosting providers and subjected to the liabilities and exceptions that are directed to do the host providers.

At this point the art.14 of the EU E-Commerce Directive that covers the liabilities of host providers has to be mentioned. According to the related article service provider, provided that it is acting as an information host is not liable for the information stored at the request of a recipient of the service, on condition that; the provider does not have actual knowledge of illegal activity or information and, as regards claims for damages, is not aware of facts or circumstances from which the illegal activity or information is apparent or the provider, upon obtaining such knowledge or awareness, acts expeditiously to remove or to disable access to the information. This article sets out two requirements for the auction websites not to be subjected to an infringement claim directly or indirectly. So in order not be held liable either if the host provider does not have and does not need to have an actual knowledge about the infringement or if he removes the infringing information or the activity as soon as possible.

Although the legal situation seems clear, in the practice the online auction sites faced with several suits as mentioned above in US, UK, France and Germany. There are different decisions in all of the countries; nevertheless the recent decisions were mostly in favor of auction web sites.

In US the courts in general reach to a decision on the subject matter by testing the level of actual knowledge of the auction site from the infringements. Where the judge believes that the website is aware of the infringing acts but does not take an action against them, then they found jointly liable for the contributory infringement. The very first case on this issue was filed against eBay by Tiffany in 2004. Briefly Tiffany claimed that eBay was liable for contributory infringement, depending on the fact that eBay is the provider of the platform for the seller, who are directly liable for the selling of counterfeiting goods. Tiffany supported its claim by arguing that eBay has the actual knowledge and did not take the appropriate measures. Actually this claim has become the main claim for all the cases brought against eBay in different jurisdictions. District Court of New York reiterated the actual knowledge requirement, however ruled on the favor of eBay, since there were no evidences proving that eBay had an actual knowledge and since it removed all the alleged goods from the website once it was notified by Tiffany.

In L’Oreal v. eBay case in UK, eBay was again of the hook against the same claims argued in the Tiffany case. This time the court acknowledged that eBay could do more to prevent the infringing acts as eBay was facilitating these actions and profiting from them at the same time. However it is decided that this position of eBay does not constitute a contributory infringement. The essential point in this case was although eBay argued that according to the art. 14 of the E-commerce Directive the plaintiff needs to prove that eBay has the “actual knowledge”. The court did not express sympathy with this assertion and referred this issue to ECJ.

However in the France version of the case the argument of eBay based on the art.14 of the E-Commerce Directive was discussed. The court ruled as; “eBay was a host and could not be held accountable for the sale of fake products on its site unless knowledge of specific infringing content was brought to its attention and it failed to remedy it.” In this case again eBay was deemed to be fulfilled its obligations to L’Oreal.

There were three fundamental cases that the liability of online auction web sites was discussed before the courts in Germany (Internet Versteigerung I-II-III). All of the cases resulted in favor of eBay; stating that firstly it is impossible to deem an online auction web site liable as a perpetrator or as an accessory from the infringing sales. Secondly it is accepted that these websites can be hold liable as the secondary infringer, in the case of the presence of the knowledge and/or not taking the technologically feasible measures to prevent the future infringements. It is recognized by the German Federal Supreme Court (BGH) that the burden of controlling is not reasonable for this kind of business models; therefore the limit shall be an obligation of controlling only with respect to the easily identifiable infringements.

However when the issue brought forward before the IP courts of Turkey a controversial decision was held recently in the case L’Oreal vs. Gittigidiyor. Since –as mentioned above- Gittigidiyor is the Turkish business partner of eBay, the case filed against Gittigidiyor in 2007 by L’Oreal can be referred as the first eBay case of Turkey. The same arguments were claimed by L’Oreal. The decision of the first instance IP Court was completely in accordance with the ones in EU and US and found Gittigidiyor not liable for the trademark infringements. The judge grounded her decision by depending the art.14 of E-commerce Directive and stated that these web sites are treated as a service provider acting as a mere host of the information and therefore in order to hold them liable from the infringing acts it has to be proven that they have been notified by the plaintiff nonetheless continue exposing the sale of the counterfeiting goods. Since there was no notification made to the website as such and no proof of the actual knowledge, the case was dismissed.

Although the IP Court was in favor of Gittigidiyor, the Supreme Court reversed the judgment depending on the art. 61 of the Trademark Decree Law, the subparagraph (e) of the article prohibits to participate or to assist or to encourage or to facilitate in whatever form the acts referred in subparagraphs (a), (b) and (c) of the same article; which basically means that to facilitate to a trademark infringement is illegal regardless of the conditions. Moreover the Supreme Court also expressed that there is no obligation or precondition as such for the owner of the right to notify the infringer before filing the case according to the Trademark Decree Law. As a result Supreme Court ruled in favor of L’Oreal in Turkey; however the IP Court gave decision of insistence at the time of writing. Currently the case will be brought forward to the Assembly of Civil Chambers of the Supreme Court. The case in all likelihood will be concluded in 1.5 years.

The decision of the Supreme Court, which is a big drift compared with the other eBay decisions especially in EU, is very disputable. Furthermore the doctrine utters that this application of the art.61 of the Trademark Decree Law is not appropriate; since even if there would be no regulation under the art. 14 of the E-commerce Directive, according to the Turkish legislation the actual knowledge or to be in a position to have an actual knowledge are necessary to be liable from participating, assisting, encouraging or facilitating. Although there is no discussion on the matter that Gittigidiyor, as a host provider technically aided to the infringement, there is also consensus on the matter that to be subjected to the art. 61/e of the Trademark Decree Law the knowledge on the infringing act must me present.

In the circumstances that the case resulted in favor of L’Oreal in Turkey, it is for sure that the auction web sites will face with the burden of controlling every single entry to the websites, which renders the business impossible to run. Nevertheless the current situation in Turkey is in favor of holding the online auction web sites liable from the trademark infringements of the third parties.