LVMH challenge eBay’s protected status

If successful, the lawsuit could have far-reaching implications for the future of eBay.

The complaint, filed in a Paris court on September 21 by LVMH, mirrors the decision in February by the New York jewellers Tiffany to sue the online giant in a case that challenges the very formula that has made eBay such a phenomenon.

LVMH have reason to believe they will receive a sympathetic hearing in Paris. Anti-counterfeiting laws are particularly stringent in France (simply owning a fake Vuitton handbag merits a fine of twice the value of a genuine bag) and LVMH have won a recent victory in the French courts against Google, who had displayed advertising from merchants selling fake Vuitton goods.

In the recent filing LVMH are seeking $50m in damages from eBay. But perhaps more significant for the future of online trading, the French court could order eBay to remove fakes from their pages worldwide and effectively vet everything sold on their site.

eBay have long styled themselves as a marketplace, building success on the premise that they provide a platform for sales but take no part in them – and thereby have no legal responsibility if things go wrong. They have, however, racked up enormous revenues through transaction charges.

Earlier attempts to challenge eBay’s protected status have failed, but (like Tiffany) LVMH argue that eBay have a responsibility to prevent fraud, and yet are aiding and abetting it, first by allowing fakes to be advertised prominently on their site in a bid to attract buyers and, secondly, by knowingly profiting from commissions charged on their sale. eBay – who believe these cases are without merit – say they monitor their site for counterfeit goods and respond promptly to complaints. But LVMH’s test purchases from among roughly 300,000 Dior products and 150,000 Vuitton items offered on eBay during the first six months of this year showed that 90 per cent were fakes.