French court imposes $61 million damages on eBay for selling counterfeit goods

A French court on Monday ordered the online auction giant eBay to pay €38.6 million, or $61 million, in damages to the French luxury goods company LVMH, in the latest round in a long-running legal battle over the sale of counterfeit goods on the Internet.

LVMH, a maker of high-end leather goods, perfumes and other fashion and luxury products, successfully challenged eBay for a second time in the Tribunal de Commerce, arguing that 90 per cent of the Louis Vuitton bags and Dior perfumes sold on eBay are fakes.

The court ordered the online auction giant to pay €19.28 million to Louis Vuitton Malletier and €16.3 million to Christian Dior Couture as damages for the sale of counterfeit products. In addition, eBay was told to pay €3.25 million to four perfume brands - Christian Dior, Kenzo, Givenchy and Guerlain - for infringing on a selective distribution network. All these six brands are part of the LVMH group.

The court also said it would impose a fine eBay €50,000 a day if it failed to stop advertising the sale of the perfume brands, plus another €50,000 a day if it did not prevent its members from featuring the brands in their announcements.

The online retailer sought to defend itself and its ilk against the charges by saying ''today's ruling is not about our fight against counterfeit; today's ruling is 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 everyday.''

"We believe that this ruling represents a loss not only for us but for consumers and small businesses selling online, therefore we will appeal. It is clear that eBay has become a focal point for certain brand owners' desire to exact ever greater control over e-commerce. We view these decisions as a step backwards for the consumers and businesses whom we empower everyday,'' it added, in an effort to rally support.

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, like series numbers. eBay makes money on every transaction carried out on its website.

As for the charges of not doing enough to counter counterfeiting, it said, ''eBay does more and more to combat counterfeit. We invest more than $20 million each year to ensure counterfeit goods are found and removed. We partner with over 18,000 brand owners around the world to identify and successfully remove counterfeit goods and employ over 2,000 people to carry out this fight on a daily basis. When we find counterfeit goods on our sites we take it down.''

The Paris court authorized LMVH to publish the ruling in three national or international newspapers, while requiring eBay to do the same in French and in English on all its websites for the next three weeks.

LVMH has pursued other Internet companies as well, saying they help counterfeiters by provided a marketplace for the items. The luxury goods company has won several rounds against Google in France in an attempt to force the search engine to remove online advertising from counterfeiters whose spots appear when the names of LVMH brands are typed in.

In similar case to the recent decision, a court in Reims, near Paris, ordered eBay earlier this month to pay €20,000 in damages to luxury group Hermes International. The ruling, was a first in France, found eBay directly responsible for the sale on its website of three Hermes bags, including two fakes, for a total of €3,000.