Custo Barcelona v eBay

20 November 2006

Alexander Benalal, María Gomez

According to recent news reports in the Spanish media, the Spanish fashion company Custo Barcelona is preparing a claim against eBay for sales of fake garments through its auction website.

In this respect, Carlos Sagalés, corporate manager of Custo Barcelona, states that around 4,000 garments falsely branded as Custo’s are sold through eBay every day. eBay alleges that it has no control over the fake clothes, whilst Custo alleges that eBay is cashing in on the company's reputation. This announcement follows the claims filed by Louis Vuitton and Dior Couture and, as in these cases, Custo Barcelona claims that although it is going to sue for €15 million, the damages are incalculable because of the magnitude of the fraud.

This case will continue the debate about liability limits on the internet. In this respect and although everyone is responsible for its own activities on the internet, the Spanish Act on Information Society Services and Electronic Commerce states that some internet services providers can be released from liability when: (i) they only provide technical, passive or automatic services and do not know that the activities or information that they host is unlawful; (ii) if they are aware they must be diligent and try to stop the activity or remove the information. The question arising out of this is whether auction websites can control their content and therefore be responsible for the thousands of transactions that take place per day?