Friday - 28 November 2014

Court ruling a blow to eBay business model

09 June 2008Written by ATG Reporter

A FRENCH court has ruled for the first time that eBay are directly responsible for what is sold on their website.

In what could prove a ground-breaking judgment, eBay were ordered to pay €20,000 (£16,670) to luxury goods firm Hermès for allowing counterfeit Hermès handbags to be sold on their site.

EBay have long held that they merely provide a platform for others to conduct transactions and have no legal liability for users’ misdemeanours. In recent years they have attempted to defend this position in the face of increasing opposition by introducing a raft of measures to tackle criminal activity by users. Key to eBay’s position is that they remove offending material from their site once it is brought to their attention.

But a string of luxury goods firms, including Tiffany in the United States and Louis Vuitton and Dior in Paris, have challenged eBay’s position in the courts, claiming that because eBay intervene to improve sales and charge a percentage on transactions, they are an active player on their own platform and so have a legal responsibility for what is sold there.

At the heart of the argument is whether eBay should be preventing fakes being uploaded onto their site for sale rather than reacting to demands to remove them once they are up there.

By failing to vet items prior to upload, and by benefiting financially from their sale, the luxury goods firms argue that eBay are effectively complicit in the sale of counterfeit goods.

Court rulings that support the luxury goods firms will challenge the very framework on which eBay have built a multi-billion pound business. Legal decisions forcing eBay to vet goods prior to being uploaded could prove a serious threat to an operation that sees millions of items posted for sale each day across the globe.

The Hermès case is the first to reach its conclusion, but the others may not be far behind. As well as those challenges listed above, L’Oreal have launched cases in five separate countries over the issue of counterfeit perfume.

By Ivan Macquisten

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