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Court order the latest salvo in eBay legal saga

22 February 2010Written by ATG Reporter

EBAY’s legal fortunes continue to seesaw, with a Paris court ordering them to pay 230,000 euros to Louis Vuitton Malletier in costs and damages.

The case, which concerned the use of internet search terms, hung on whether keywords used by eBay to redirect internet users who had misspelt names would be damaging to luxury brand names.

The court decided that the use of words such as ‘Vitton’ was parasitic and harmful to brands like Louis Vuitton, and eBay were told that they would have to pay more compensation if there were any further violations.

EBay say they plan to appeal but were comforted by the award being only a fraction of the damages sought.

The case is merely the latest in a seemingly endless trail of litigation between the online giant and some of the world’s best-known luxury brands as the latter attempt to wrest control of their image away from eBay and fight off fakes.

Back in early 2006, Tiffany announced that they would take on eBay in a bid to make them vet all items before they were uploaded in a bid to weed out fakes.

Such an undertaking would pose a serious threat to eBay’s business model and legal standing as an independent platform providing the opportunity for others to conduct business – but importantly, without legal responsibility for the business conducted.

Louis Vuitton and Christian Dior filed cases later the same year. Then L’Oréal launched actions in five separate countries over fake perfume.

In June 2008, Hermès scored a victory in the French courts, with eBay ordered to pay them 20,000 euros (£16,670) for allowing counterfeit Hermès handbags to be sold on their site.

A matter of weeks later another French court ordered eBay to pay £30m compensation to LVMH in a dispute over fake goods.

The ruling, which found eBay guilty of failing to prevent the sale of counterfeit goods on their site, also barred the company from allowing specific perfume brands, such as Dior and Givenchy, to be sold in future, because they were not being offered through approved outlets.

EBay vowed to appeal, saying this amounted to protectionism on the part of the luxury brands.

Things looked better for eBay almost immediately, as they won a landmark judgment in July 2008 in the US federal courts.

District judge Richard Sullivan ruled that eBay could not be held responsible for policing their site and that Tiffany must police their own trademark and draw fake jewellery to the auctioneer’s attention.

It meant that, in the US at least, eBay could not be forced to vet goods before they were uploaded onto their site.

This time, it was Tiffany who vowed to appeal.

There were other wins for eBay in 2008: against L’Oréal in Brussels and Rolex in Germany.

In March last year, L’Oréal brought their case to the UK, while still seeking redress in France, Belgium, Germany and Spain.

By May 2009, eBay had beaten L’Oreal in France and days later, the online giant scored another victory in London’s High Court. Within days, eBay UK launched a publicity campaign calling on the antiques industry to help them beat the fakers.

By September, however, it seemed that the tide had turned again.

On September 17, eBay delivered a 750,000-signature petition to the European parliament demanding a law change to stop luxury brands controlling where their goods are sold. But the next day, on September 18, a French court ordered eBay to pay 80,000 Euros compensation to Louis Vuitton for selling fake luxury perfumes.

The claims, counterclaims and appeals continue.

By Ivan Macquisten

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