French Courts Hold Ebay Liable For Counterfeit Goods Sold On Its Website

There have been several court rulings involving online auctioneer eBay and a number of high-profile jewellery, cosmetics, accessories and perfumery manufacturers over the issue of counterfeit goods and eBay's responsibility in facilitating the sale of such products. In France, the online auctioneer has not been successful in defending its position in court.

Several prestigious French high-fashion houses, Hermès and LVMH Moët Hennessy Louis Vuitton (LVMH) – Louis Vuitton’s parent company – have taken eBay to court over the sale of counterfeit goods on its website. The prestigious French high-fashion house Hermès is one of the most prominent defenders of brand exclusivity. Hermès launched a lawsuit against eBay, arguing that the latter was not simply an innocent host for counterfeit products, but rather that its involvement in the sale of the goods was direct. According to Hermès’ lawyer, Emmanuel Colomes, eBay is an active player in the transactions that take place on its Website because not only does it offer a number of services to improve the sale, but when the service does not work well enough or fast enough, eBay intervenes on behalf of the client. Colomes further claims that e-Bay is perfectly informed of the transactions since it takes a percentage cut from the completed sales.

The French court ruled that eBay was directly responsible for the sale of two counterfeit bags and hence Hermès was awarded a EUR 20,000 settlement. Before the Hermès ruling was issued, LVMH and its sister company Christian Dior had accused eBay of not taking the necessary steps to ensure that the accessories sold on its Website were not counterfeit. They filed charges against eBay in the Paris commercial court, accusing the auction website of complicity in the sale of counterfeit goods.

LVMH, which represents several French luxury brands, succeeded in arguing that its businesses have been undermined by eBay. In an attempt to protect the integrity of French luxury brands, the French court ordered eBay to pay approximately USD 63 million to French companies whose products have become victim to counterfeit online sales.

As mentioned above, LVMH argued that its business has been undermined by eBay. eBay was accused of permitting counterfeit copies of Louis Vuitton and Christian Dior bags to appear on its Website. Additionally, the company was cited for permitting actual bottles of Dior, Kenzo, Givenchy and Guerlain perfume to be sold on their site. The latter constitutes a serious problem for LVMN and Dior since their products are supposed to be sold only in specialty stores according to the company’s policy of using only ‘selective distribution networks.’

Source – ibls.com, October 2008

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