eBay lost a big case in Europe that has implications and bad news for sellers here in the US.
LVMH, the company that owns and operates Louis Vuitton and Dior won its lawsuit against eBay. this follows on the heals of a similar victory by Hermes.
LVMH sued eBay in European courts over counterfeit items made by Hermes being sold on eBay. eBay’s defense that is was just a selling platform and they had no control over what was sold didn’t hold up in French courts. The award was 40 million Euros –about $62 million. Although the amount of money is not that painful to eBay (eBay earns about $1 Billion a year), it is clear that eBay will have to stop or severely limit sales of all designer goods on the platform. The sale of those goods are a huge part of eBay’s gross merchandise value sold on the platform –and a source of some of eBay’s fee income.
The court’s finding bans eBay from allowing sellers to list designer perfumes, clothing and fashion accessories made by Louis Vuitton, Hermes and other LVMH subsidiaries.
LVMH stands for Louis Vuitton, Moet, Hennesy. They are the world’s largest luxury-goods maker. The company said it found “in 2006 that 90 percent of the Louis Vuitton and Dior- labeled perfumes, watches and handbags on EBay were fakes.
Tiffany and other luxury goods makers claim that online sales of counterfeit clothes, bags and jewelry cost makers of original products about $30 billion a year.
The French court ordered EBay to post the ruling on all its Web sites in English and French for three weeks and to pay for its publication in three French or international publications of LVMH’s choice.
But this is not over. eBay has vowed to fight with an appeal. A statement by eBay said:
“If counterfeits appear on our sites we take them down swiftly, but today’s ruling is not about our fight against counterfeits; 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 will fight this ruling on their behalf.”
On this one I have to side with eBay. Could eBay do more to fight counterfeits? Probably –and they owe it to the buyers to do so. But this ruling is nothing short of uncompetitive. The ruling is not just against eBay –it constrains anyone who sells on eBay.
It is nothing more than the French courts protecting a French company. The ruling, if upheld on appeal, even prevents eBay sellers from selling used merchandise on the site. So if you bought a Louis Vuitton handbag or a Dior dress at a thrift shop (yes they do show up there) or even if you bought one at one of their boutiques, you cannot sell it on eBay.
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