eBay Told To Dump Dior

Posted by: Catherine Holahan on July 11, 2008

A French court ruled July 11 that eBay must remove listings for LVMH perfumes while it appeals a $61 million decision in favor of the luxury brand manufacturer.

Last month, lawyers for LVMH successfully argued before a French tribunal that eBay was responsible for counterfeit items sold on its French site. The court ruled that eBay must pay LVMH $38.6 million euros in damages and remove all listings for LVMH brand perfumes. That includes well known names such as Dior, Guerlain, Givenchy and Kenzo.

EBay faces a 50,000 Euro fine for each day it does not comply. “This decision, which responds entirely to the demands of the LVMH Group, confirms the seriousness of the faults committed by eBay sites,” said LVMH in a statement.

EBay had hoped not to comply with the ruling until its appeal was heard. “We believe that we have a good case given the significant overreach of the Tribunal’s ruling,” said an eBay spokesperson.

EBay's lawyers maintain that the company is blameless for counterfeit sales on its sites. They say that eBay, like any Web message board, is not responsible for illegal activities by its users. Furthermore, they argue that eBay cannot be complicit because the company has no way of identifying illegal knockoffs until notified of their presence on the site by the brand manufacturer. Once alerted, eBay officials remove the itmes, operating in a similar fashion to other user generated sites such as YouTube.

EBay is also arguing that luxury brand manufacturers are trying to use counterfeit cases to keep legitimate high end goods from appearing on eBay's site, which is known for bargains.

The French case is the third one in Europe that eBay has lost. A decision in another counterfeit case-- this time filed in New York by high end jewelry manufacturer Tiffany--could come as early as Monday.

Should eBay lose that case, it would likely have to rethink how it runs its business. As it stands, eBay relies primarily on the brands and the community to flag counterfeit items. Should the company be forced to proactively remove such material, it could require a significant technology investment. It would also likely damage eBay's ability to offer higher end items for sale, since such items would, potentially, have to first be approved by the brand manufacturer.

Worse for eBay, some brands may be able to argue that their merchandise should never appear on eBay's site, as LVMH did before the French court. That would be a real setback for eBay which draws many users with the prospect of getting name brand items at a significant discount and has been attempting to break free of its online flea market image.

Reader Comments

GARRY

July 11, 2008 1:29 PM

EBAY has a lot of counterfeit stuff listed. Almost every POWERSELLER that sells USB flash drives is counterfeit.I proved it and EBAY did not remove seller. They are making big Money. Do no buy any SONY USB flash drives on EBAY, they are all fakes. I resolved my situation with local authorities in sellers area.

CD

July 11, 2008 2:08 PM

Why should ebay be responsible for protecting the brand of other manufacturers? If Tiffany and LVMH won't work with ebay's verified rights program then why is it ebay's responsibility. Fakes have been sold for ages on streets, out of the back of some car in a dark alley way, and flea markets, why don't the luxury brand manufacturer go after those guys. At least ebay warns bidders and offers advice, you wouldn't get that at a flea market. This ruling would hurt the ebay seller that just needs some cash and sells their designer goods for good.
Caveat emptor

Joshua

July 11, 2008 2:22 PM

eBay is absolutely flooded with bootleg trash and they have done absolutely nothing to deal with it. Why should they, they get the fees from the sale no matter what.

C

July 11, 2008 2:32 PM

If the French keep this up, it might just be easier for Ebay to 86 the entire country and everyone will lose out.

z

July 11, 2008 2:40 PM

If e-bay used the proper channels and became an authorized dealer for these items, like bose requires, and many other names here in the u.s. then there would be no quarrels.

Todd

July 11, 2008 3:00 PM

France never deserved an eBay website in the first place. It's a companies problem if there are fakes being made and sold, not eBay's.

Hans

July 11, 2008 3:41 PM

I really don't get it. Selling counterfeit stuff is a crime, right? Why is eBay responsible? This should be between the criminals and law enforcement. If a company finds something for sale that is counterfeit, they should be notifying the police and then suing them if they don't do anything about it...in which case eBay is only responsible for validating the identity of its sellers and making sure they know that they are responsible to the law. Same thing goes for YouTube. These companies - and excuse me France - screwed up judicial systems are just oportunistic scum chasing after the big bucks instead of pushing for real justice...lazy lazy lazy. Shame on them.

Crown

July 11, 2008 4:32 PM

As much as I agree with many of you that eBay is known to sell a lot of crap on their site, I believe it comes down to the designer companies wanting us to spend $1000's on their items when they are worth less than eBay prices.

Con

July 11, 2008 5:30 PM

eBay is being an agent for supplying the goods. If you are helping traffic counterfeit material, you are just as guilty. The problem is that eBay has no way to verify the fake from the legit. If someone duct tapes a kilo of cocaine to the bottom of my car and knows that every day I go to work and someone retrieves it at my destination, am I responsible? I don't check my undercarriage every day or even month. Now, if kilo's keep appearing there and the authorities tell me about it, is it my responsibility to check now that I know? What if the kilo looks like an extension of my wheel well or part of the muffler? That starts to become a real hindrance for my daily commute to do all that checking. Should I stop going to work? Get a new car? New job? Maybe there should be a sort of verified seller agreement by which you can only sell certain brands if eBay has your name and address on file (not that they don't kind of anyway). It will be interesting to see how this unfolds.

Tony S.

July 11, 2008 6:00 PM

EU is blackmailing US companies by penalizing them, just like they they have levied a hefty fine against Microsoft, they don't have innovation so they make big bucks this way!

Chuck G.

July 11, 2008 6:55 PM

Granted counterfeit items should be caught and not sold on ebay or anywhere, this is merely the luxury manufacturer trying to hide the fact that their mark-up is insanely high, though. The camera industry does something called MAP (Minimum Advertised Price) pricing. This is used to prevent legal dealers from selling below a certain amount to mainly prevent ebay from devaluing items too low below their high markup. The luxury industry is notorious for having a markup of 60%-70% (most products are only 15-40%) but on Ebay you find what an item is REALLY worth thanks to auctions and good old bargaining. This company is after ebay because ebay consumers pulled the blanket over their little scam and they are embarrassed by it and will use the counterfeit card to throw off computer-illiterate judges and lawyers.

eBay Expert

July 11, 2008 10:34 PM

I'm an eCommerce consultant and recognized expert on eBay within my supported industries. To be fair, both sides have valid arguments, and this is not a black or white issue. I would have to side with LVMH on this one, however. A lot of posters on this topic are shouting "greed" and the manufacturer's and praising "liberation" to eBay, but I think we are missing the issue when we do that. The concern is more related to the sale of counterfeits more than anything else. Believe me this is a genuine concern in textiles and luxury goods. I like the example used about cocaine being duct taped to the bottom of a car. In the extreme example, what if the cocaine looked like the muffler? So that it's almost impossible for you to reasonable tell if there's cocaine taped to your car? Well in this instance, the LVMH has basically provided very solid evidence that there is an extreme liklihood that the items are fake. So if you have evidence or warning that there was cocaine taped to your car, unfortunately, you would have the additional responsibility of coming up with a solution, or stop driving to work temporarily. This may be unfair on a single individual, but I found out that there was good evidence and support that I was unknowingly facilitating a crime, I for one would feel responsible enough to either desist, or figure out a solution as part of my responsibility to you and our society. Finally, I for one feel that companies like Dior that have established themselves as luxury brands, deserve to make their money. They spend top dollar on marketing, designers, etc. I do not feel like I need to slam them for working hard to create a premium into their brand name. If you don't like the idea of buying something expensive, don't buy it, but don't tread on someone else's hard work.

Paul Sweeney

July 14, 2008 10:41 AM

i am a company director doing reasonably well , an occasional customer for LVMH both personally and for gifts for customers.I am also a regular EBay customer,which I find fantastic for sourcing material for my hobbies.I am so annoyed by how LVMH has rected that I will not be buying anything from any of their companies for an indefinite period.I will buy from their competitors, and through EBay while I am at it.It is by no means all fakes - a great deal are unwanted gifts etc.Interesting point, by the way - as so much is unwanted gifts,it invites me to rethink what type of gifts people actually want.Sometimes the best gift is no gift or at least not the regular (if extremely expensive) tat.

DH

July 16, 2008 4:09 PM

Here's a thought: what if eBay only allowed users to sell one LVMH or Tiffany item per month? Don't counterfeiters usually put dozens of auctions on the site at once? Limiting auction posts would make it very hard for sellers of counterfeits to make money, but still allow an honest seller to get rid of an unwanted gift.

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Bloomberg Businessweek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, and Douglas MacMillan, dig behind the headlines to analyze what’s really happening throughout the world of technology. Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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