Ebay fine: a finger in the dyke?
Monday 30 June 2008
eBay ordered to pay 40 million euros to LVMH for allowing auction of fake Louis Vuitton bags: The end of internet shopping as we know it or a "finger in the dyke" for the big luxury goods makers?
Ebay fine: a finger in the dyke?
By Raphael KahaneMonday 30 June 2008
A French court has ordered the online auction site eBay to pay 40 million euros to French luxury group LVMH for allowing sales of fake Louis Vuitton bags and other products.
Is this the end of internet shopping as we know it or just a "finger in the dyke" for the big luxury goods makers?
It’s difficult to restrict internet shopping. Online auction sites have become increasingly popular in recent years – eBay is the most-visited site in France - and the number of transactions has boomed.
eBay claims to have some 84 million active users in 39 markets worldwide. The total value of items sold on its trading platform last year was nearly 60 billion dollars. That’s more than twice the total sales of the main plaintiff, LVMH.
Many of these transactions are cross-border deals. From a legal standpoint, it’s becoming increasingly difficult to enforce intellectual property rights, and to know which country’s legislation is the most relevant - that of the buyer or that of the seller.
Still, this decision deals a real blow to eBay, which had so far argued that its specific status of host for independent vendors limited its responsibility and capacity to regulate what it sold on its site.
The decision comes just a month after the auction site was convicted by another French court of selling counterfeited goods and ordered to pay 20,000 euros in damages to French luxury group Hermès.
The new decision paves the way for a flurry of legal actions against eBay. Several lawsuits are currently under review by the Paris commercial court.
eBay has decided to appeal the ruling, accusing LVMH of commercial practices that exclude competition by selling their goods through specialized dealers.
Also, eBay says it has stepped up efforts to fight sales of counterfeit goods, by spending 20 million dollars annually on “trust and security” matters.
