EBay Fined In Paris, Vindicated In NY - What Now For 'Genuine Fakes'? (France/USA)

Author:Ms Sara George

On 1 July 2008, a judge in Paris handed down the most

significant judgment to date in the ongoing battle between EBay

and some of the world's most famous luxury brands. Paris

District Court held that EBay had been guilty of "culpable

negligence" for failing to prevent the sale of counterfeit

Louis Vuitton handbags on its famous auction site, and awarded

€40 million (nearly £30 million) to LVMH, the parent

company of Louis Vuitton.

In addition, and more significantly, EBay has been prevented

from allowing the sale of LVMH products and those from its

subsidiary companies including Christian Dior, Guerlian, Kenzo

and Givenchy. EBay indicated that it would be appealing the

judgment, a significant move given that EBay has also recently

won a case in America brought against it by Tiffany. The

Parisian case is being heralded as a victory for those seeking

to protect their intellectual property; however EBay noted the

more damaging aspects of the French judgment which should be of

concern to those who are running auction and peer-to-peer sales

sites online. This aspect of the ruling found that LVMH should

be allowed to limit distribution of its perfumes and products,

preventing the sale of even genuine products on EBay and other

auction sites. If this decision stands, or, more worryingly, is

used as a precedent in other jurisdictions, it would give brand

owners almost unbridled power to block consumer selling of

branded goods online.

It was this point which led to the decision of the New York

court to find in favour of EBay, in the parallel case brought

by luxury jeweller Tiffany in the US. The New York District

court found that EBay's policy of removing counterfeit

items as soon as it was aware of them was proportionate and

sufficient to deal with the issue of "genuine fakes"

which dogs the luxury goods market. However, it emphatically

denied the right of Tiffany to "protect the brand" by

attempting to limit EBay's right to allow consumers to

re-sell genuine Tiffany products to each other. As a result,

the Court found for EBay, causing a worrying discrepancy in

treatment of the site between Europe and the US.

This case is interesting both for the placing of the onus on

distributors to prevent peer-to-peer online selling of

counterfeit goods, but in addition, argument over whether

luxury goods companies should be able to limit the selling of

their goods between consumers. By taking the battle to...

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