Paris–A French appeals court has ordered online auction site eBay to pay 5.7 million euros in damages for selling counterfeit products after more than four years of proceedings in a case instigated by French luxurygoods group LVMH Moët Hennessy Louis Vuitton.
The appeals court reduced the fines in a ruling on September 3, while upholding findings against San Jose, California- based eBay from the lower tribunal. The appeals court didn’t give any reasoning for the decision.
But both LVMH and eBay are claiming victory after eBay’s penalty was reduced from the 38.5 million euros (about $49 million) fine imposed by the Paris Commercial Court back in June 2008. Having paid the fine in 2008, eBay will get back roughly 33 million euros.
In the judgement, eBay was found liable for allowing its users to sell fake Louis Vuitton and Christian Dior goods between 2001 and 2006. It was also ruled to have flouted the selective distribution networks put in place for Dior, Guerlain, Givenchy and Kenzo perfumes.
The decision also dismissed eBay’s claim for exemption on the ground that it was acting as a mere provider of hosting services. And while the ruling only covers goods traded through eBay’s French site, it opens up the option for LVMH to take legal action against eBay in other countries too. It also prohibits eBay from violating selective distribution networks in the future.
LVMH said in a statement that it “welcomes the establishment of this case-law, which constitutes a major step in the further protection of consumers.The Court’s ruling helps to clarify the rules applicable to e-commerce in order to prevent illicit online practices and to ensure greater legal certainty to the benefit of consumers operating online.”
Like many luxury retailers, LVMH prefers to sell its products in approved outlets, which it claims ensures the authenticity and quality of products for consumers and boosts the standing of European luxury goods brands around the world.
But eBay believes these “selective distribution” agreements unfairly hurt online businesses and entrepreneurs and restricts consumer choice.
Google Case Pending
In another attempt to protect its brands online, LVMH is embroiled in a spat with search engine Google, which is now heading to France’s Supreme Court.
In March, the European Court of Justice (ECJ) ruled that Google’s practice of selling search words, including brand names, to advertisers did not infringe trademark law. However, the court added that both Google and the advertisers could be found liable if consumers were duped into buying counterfeit goods.
It also ruled that online advertisers could not use a registered trademark as a keyword in a search without first securing the consent of the trademark owner.