The High Court ruling in favour of eBay in a case brought by L'Oreal could reduce barriers to trade and make branded goods more easily available to consumers. This is because as well as deciding whether eBay was liable for counterfeit goods sold on its site, the case also considered the right of brands to restrict the auction site from selling some of their legitimate goods.
The issue is important for consumers because luxury goods companies have traditionally tried to restrict how and where their products are sold in an attempt to protect the exclusivity of their brands and help avoid counterfeiting.
Luxury goods manufacturers are nervous of eBay and other online auctions because they allow people to buy and sell their goods freely at prices determined by the market rather than the manufacturer. In addition, since online sites make it easier to buy and sell goods without the fixed costs of, for instance, a shop, it increases the amount of trading and number of goods in circulation.
Today's ruling means that it will be harder for brands to retain control of their goods and prices in the fast-expanding area of internet sales after the judge confirmed that it was the responsibility of the brand owner - and not eBay - to monitor sales.
L'Oreal had tried to shift the responsibility onto eBay by arguing that the internet site was responsible for policing its auctions. This would have forced eBay to introduce new measures that would likely reduce the availability of counterfeit or restricted goods.
Although counterfeits are illegal, it is not illegal for individuals to re-sell goods and so both eBay and consumer groups have argued against luxury brands being able to restrict the sale of their products. Rules to prevent counterfeit sales are important, consumer groups acknowledge, but it would be disproportionate if those rules also restricted legal sales of other goods.