eBay Fined for Not Spotting Fakes
By Bernice Hurst, Managing Partner, Fine Food Network
LVMH (Louis Vuitton Moët Hennessy), the French holding company specializing in luxury goods, has successfully sued eBay for not taking sufficient steps to prevent fakes being sold through its auction site. A French court has ordered eBay to pay 40 million euros (U.S. $63 million) in damages. eBay was also ordered to cease all its sales of LVMH perfumes, whether genuine or fake.
The Independent newspaper in Britain reported that LVMH had claimed that 90 percent of the perfumes, watches and handbags with LVMH-owned labels offered for sale on eBay were actually fakes. Another part of the LVMH complaint asserted that perfumes with the Christian Dior, Kenzo, Givenchy and Guerlain labels should only be sold by trained staff in approved places.
Pierre Gode, an LVMH board member, said the ruling was a “groundbreaking decision that will help protect creativity.” Mr. Godet also called the ruling “an answer to a particularly serious question on whether the Internet is a free-for-all for the most hateful, parasitic practices.”
Announcing its appeal, eBay called the ruling an attack on consumers, rather
“This ruling is not about our fight against counterfeits,” it said in a statement. “It is about an attempt by LVMH to protect uncompetitive commercial practices at the expense of consumer choice and the livelihoods of law-abiding sellers that eBay empowers every day. We will fight this ruling on their behalf.”
eBay already spends $20 million a year worldwide on trying to identify fraudulent offers on its site, the company said. And since the original lawsuit was filed in 2006, eBay had intensified its efforts to the extent that it was “not the same company.” Its statement added: “The ruling also seeks to impact the sale of second-hand goods as well as new genuine products, effectively reaching into homes and rolling back the clock on the internet and the liberty it has created.”
This isn’t the first time eBay has been sued over its business model. In early June, the auction site was fined for the distribution of fake Hermes handbags. Tiffany & Co. has sued eBay in the U.S. on similar grounds although that suit hasn’t been settled.
Discussion question: Do you side with LVMH or eBay in this case?
- eBay fined
£31m over sales of fake luxury goods – Independent
- ebay has been fined for allowing the sale of fake handbags and perfume – IT Week
- eBay Vows To Fight For E-Commerce Following Overreach By Luxury Brands Manufacturer – eBay