French courts holds eBay liable for sale of counterfeit goods

July 2008


Two court decisions in France have left eBay reeling and the online commercial community nervous of further actions. Firstly a French court ruled that eBay must pay Hermes 20,000 euros for allowing counterfeit Hermes bags on its site. The court found that “By selling Hermes bags and branded accessories on the site, and by failing to act within their powers to prevent reprehensible use of the site… [both eBay and the seller] committed acts of counterfeiting and imitation of French brand names … to the detriment of Hermes international.” The court ordered that eBay must also publish the ruling on its homepage. Counsel for Hermes argued that eBay was more than a mere passive intermediary, instead: “eBay is an active player in the transaction because not only does it offer a number of services to improve the sale, but when it does not work well enough or fast enough, they intervene with the client…They are perfectly informed of the transactions since they take a percentage cut.” The IPKat adds that that it isn’t sure about the ruling adding that it “doubts whether someone at eBay really has knowledge of every transaction that is taking place” and that “forcing someone to check out if each branded item sold is real of counterfeit would make the business model untenable, which would remove a valuable service for consumers” as well as commenting on the relatively low level of damages. But this decision was followed by a second decision in the Paris Commercial Court in an action brought by luxury goods group LVMH for negligence in allowing the sale of fake bags, lipsticks and designer clothes. The court ordered eBay to pay LVMH E28.6 million euros for the sale of fake Louis Vuitton products Christian Dior, Givency and Kenzo perfumes. It was held that even if the perfumes were real the sale violated Dior’s distribution network and the court ordered eBay to stop selling the products or face a fine of 50,000 euros per day. Ebay say that they spend substantial amounts of money keeping their site ‘clean’ and believe the case is a ‘stalking horse’ that appears to be attacking counterfeit goods but is really about the sale of luxury products outside of agreed distribution routes. eBay had sales of $60 billion on its sites last year but faces new actions from New York Jeweller Tiffany, L’Oreal in the UK and actions in five other countries.

The Guardian  1st July 2008

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