Fake Auctions at eBay

Moët Hennessy Louis Vuitton, a maker of high-end goods and fashion and luxury products, successfully challenged eBay for a second time in the French court, arguing that 90% of the Louis Vuitton bags and Dior perfumes sold on eBay are fakes.

The court ruled that eBay was not doing enough to stamp out counterfeit sales. The decision, while costly, is unlikely to have a drastic effect on the way eBay conducts business because it has already made changes to police its site for counterfeit goods.

EBay said it would appeal the French court's order that it pay 38.6 million euros.

EBay said in a brief statement issued after the decision that the case went beyond counterfeiting to include manufacturers proscribing the territories in which its products could be sold.

When counterfeits appear on our site we take them down swiftly, and today's ruling is not about our fight against counterfeiting, eBay said. It's 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 every day. We will fight this ruling on their behalf.

In January 2007, after being sued again in Paris by Moët Hennessy over Louis Vuitton handbags, eBay changed course on counterfeiting. Under the rules introduced then, eBay sellers in a certain number of critical categories, like luxury goods and clothing, were limited on the number of items they could sell and could not hold the shorter one-day auctions, a favorite of swindlers who hope to take their money and disappear. EBay also introduced geographical restrictions, preventing sellers in China and Hong Kong, for example, from listing those items at all.

EBay also began delaying some listings from being published to the site to give its employees time to review the items. That tactic has ended up aggravating many honest sellers, who complain the delay cuts into their profits. EBay now says it has over 2,000 people worldwide to tackle counterfeiting and that 95% of fraudulent listings are removed before the auction ends. The company also said that last year it suspended about 50,000 sellers and blocked 40,000 previously suspended sellers from returning to the service.

eBay has won a four-year legal battle with Tiffany over the jeweller's complaint that the online website amounted to a "rat's nest" auction of counterfeit watches, bracelets and necklaces.

A judge in New York ruled yesterday that eBay could not be held responsible for policing the contents of its site, and that it was Tiffany's role to draw fake designer jewellery to the auctioneer's attention.

The verdict is a relief to eBay which lost a similar case in Paris two weeks ago when a French court ordered it to pay €38.6m (£30m) in damages to the luxury goods manufacturer LVMH for allowing the sale of fake bags, perfumes and designer clothes.

In a written ruling, US district judge Richard Sullivan said: Tiffany must ultimately bear the burden of protecting its trademark. But he said he was not unsympathetic to Tiffany's complaint, and hinted that US law might need a fresh look: Policymakers may yet decide that the law as it stands is inadequate to protect rights owners in light of the increasing scope of internet commerce and the concomitant rise in potential trademark infringement.

The dispute between eBay and the 170-year-old jewellery boutique dates from June 2004 when Tiffany lost patience with the quantity of silver merchandise available on the internet which claimed to bear its brand.

eBay did not deny that counterfeit items sometimes appeared on its site, but argued it removed them swiftly whenever they were flagged up.

Update: Appeal

14th August 2008

Jewelry giant Tiffany & Co. is appealing a recent federal court decision that cleared eBay from responsibility for counterfeit items which appear on the online auction site.

Update: Fake L'Oreal products

17th May 2009

eBay has won an important legal case when a French court ruled that it was not liable for the sale of fake L'Oreal products through its website.

The Paris-based cosmetics company claimed not enough was being done to crackdown on couterfeit goods sold on eBay.

Ebay had already lost similar cases in France brought by Hermes and Louis Vuitton.

But today's ruling found that the internet giant had complied with its obligations and acted 'in good faith' to tackle the problem of fake goods.

Update: Fake L'Oreal products on UK eBay

26th May 2009. See article from google.com

A British court has ruled that eBay is not liable for bogus beauty products sold on its Web site, dealing a blow to cosmetics company L'Oreal's campaign against the online auction giant.

L'Oreal SA has taken eBay Inc. to court across Europe, suing in Britain, Germany, France, Belgium and Spain over the sale of fake fragrances and cosmetics on the site.

L'Oreal claims there is an increasing volume of counterfeit goods being sold on eBay. The online auctioneer said negotiations between the companies on the issue broke down because L'Oreal was being unreasonable.

Justice Richard David Arnold ruled in London's High Court that eBay Europe was not liable for trademark infringements committed by its users.