L'Oreal is the world's largest cosmetics producer
Online marketplace eBay is not liable for the sale of any counterfeit L'Oreal products through its website, a French judge has ruled.
The Court of Justice in Paris said eBay was fulfilling its "obligation" to try to prevent the sale of fake goods.
However, the judge added that eBay must now work with L'Oreal to continue to tackle counterfeiting on its website.
This is the second case L'Oreal has lost against eBay, following a similar ruling in Belgium last year.
However, L'Oreal has similar legal proceedings against eBay continuing in Germany, Spain and the UK.
Paris-based L'Oreal, the world's largest cosmetics group, had alleged in the Paris court that eBay was profiting from the sale of counterfeit goods.
US giant eBay had countered that it spends $10m (£6.6m) a year fighting crime on its website.
The French judges concluded that preventing counterfeits "will only be effective through a close collaboration between rights holders and eBay".
As a result, they ordered eBay and L'Oreal to mediate over how they could best work together to stop future counterfeiting on the website.
The court has set a date of 25 May to hear how the talks have developed.
"This is a clear legal victory for eBay, and an important victory for consumers," said Richard Ambrose, head of trust and safety for eBay UK and Ireland.
A spokesman for L'Oreal said it was satisfied with the outcome.
"L'Oreal is glad to accept the court's decision to judicial mediation, to agree necessary and long-lasting measures to curb counterfeiting," he said.
While eBay has now defeated two legal cases brought by L'Oreal, it has lost two similar actions brought in the French courts, by luxury goods groups Hermes and Louis Vuitton-owner LVMH.