EBay Ordered to Pay $61 Million in Sale of Counterfeit Goods
- .....and those who bought counterfeit stuff, what is their fate?
EBay Ordered to Pay $61 Million in Sale of Counterfeit Goods����
By DOREEN CARVAJAL
Published: July 1, 2008
PARIS � EBay said it would appeal a French court�s order that it pay 38.6 million euros ($60.8 million) in damages to the French luxury goods company LVMH, the latest round in a long-running legal battle over the sale of counterfeit goods on the Internet.
Antoine Antoniol/Bloomberg News
Pierre Gode, an LVMH adviser, outside of court.
�LVMH Mo�t Hennessy Louis Vuitton, a maker of high-end goods and fashion and luxury products, successfully challenged eBay for a second time in the French court, arguing that 90 percent of the Louis Vuitton bags and Dior perfumes sold on eBay are fakes.
The court ruled Monday that eBay, which earns a commission on the sales, was not doing enough to stamp out counterfeit sales. The decision, while costly, is unlikely to have a drastic effect on the way eBay conducts business because it has already made changes to police its site for counterfeit goods. As eBay moves to more fixed-price marketplaces, it wants access to brand-name products for the cachet and the revenue those brands can bring.
EBay said in a brief statement issued after the decision that the case went beyond counterfeiting to include manufacturers proscribing the territories in which its products could be sold.
�When counterfeits appear on our site we take them down swiftly, and today�s ruling is not about our fight against counterfeiting,� eBay said. �It�s about an attempt by LVMH to protect uncompetitive commercial practices at the expense of consumer choice and the livelihood of law-abiding sellers that eBay empowers every day. We will fight this ruling on their behalf.�
EBay has faced several legal challenges in France, where luxury goods companies are fiercely protective of their brands. In another recent case, a court ordered eBay to pay 20,000 euros to Herm�s International in Paris for not properly vetting the sale of handbags.
That court concluded that eBay was not doing enough to combat counterfeit sales and should be forcing sellers to post more product information to guarantee authenticity.
For the first decade of its existence, eBay tried to avoid the counterfeiting problem, asking companies to monitor auctions of their products and send them notices on items they thought were fraudulent. That frustrated rights-holders, who had to spend time and money scouring the site, particularly when counterfeiting exploded after the company expanded to China in 2004.
A result was lawsuits. In 2004, Tiffany & Company fired the first salvo, suing eBay in New York after concluding that 83 percent of its products sold on the auction site were counterfeit. The outcome of that trial is still pending.
In January 2007, after being sued again in Paris by Mo�t Hennessy over Louis Vuitton handbags, eBay changed course on counterfeiting. Under the rules introduced then, eBay sellers in a certain number of critical categories, like luxury goods and clothing, were limited on the number of items they could sell and could not hold the shorter one-day auctions, a favorite of swindlers who hope to take their money and disappear. EBay also introduced geographical restrictions, preventing sellers in China and Hong Kong, for example, from listing those items at all.
EBay also began delaying some listings from being published to the site to give its employees time to review the items. That tactic has ended up aggravating many honest sellers, who complain the delay cuts into their profits. EBay now says it has over 2,000 people worldwide to tackle counterfeiting and that 95 percent of fraudulent listings are removed before the auction ends. The company also said that last year it suspended about 50,000 sellers and blocked 40,000 previously suspended sellers from returning to the service.
Brad Stone contributed reporting from Boston.
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