Jeantet scores LVMH victory against Ebay
French firm Jeantet Associés has scored a €40m win for retailer LVMH after a French court ruled that auction site Ebay failed to block the sale of counterfeit LVMH goods.
French firm Jeantet Associés has scored a €40m (£31m) win for luxury goods retailer LVMH, after a French court ruled that online auction site Ebay failed to block the sale of counterfeit LVMH goods.
Ebay will appeal the controversial ruling. The decision could damage its business model by suggesting the company is responsible for the counterfeit goods that appear on its website. The company issued a strongly-worded statement following the decision.
“If counterfeits appear on our sites we take them down swiftly, but today’s ruling is not about our fight against counterfeit, today’s ruling is about an attempt by LVMH to protect uncompetitive commercial practices at the expense of consumer choice and the livelihood of law-abiding sellers that eBay empowers everyday.”
Name partner of Alain Bensoussan Avocats and internet specialist Alain Bensoussan acted for Ebay. The company said that it invests more than $20m (£10m) each year to ensure counterfeit goods are found and removed, but that it is not legally obliged to do so.
The decision from the Tribunal de Commerce comes weeks after another French court ordered Ebay to pay €20,000 (£15,000) to luxury goods group Hermès in a similar dispute.
Readers' comments (21)
Anonymous | 2-Jul-2008 4:12 pm
French court
It's a French court so you know where their sympathies are
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IP Expert | 2-Jul-2008 4:35 pm
No chance
I don't think this will stand up in an EU court. This looks like to me a that LVMH is carrying on with its restrictive trade practices. There's no special treatment for things like handbags and perfume in EU competition law.
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French partner | 2-Jul-2008 4:54 pm
Big money
It's very interesting. I think the decision in the appeal courts will be very closely followed by IP practitioners here just for the amounts at stake.
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Anonymous | 2-Jul-2008 5:51 pm
The inevitable
Don't confuse the issue of fakes moving through eBay with LV's selective distribution networks. They are distinct. In terms of fakes, ask yourself a simple question - have we as a society deemed their sale illegal? Given that answer, should eBay be allowed to sit back and force brand owners to purge fakes from eBay's marketplace via the VeRO programme? Or should eBay take a pro-active role in purging fakes itself from its marketplace? Of course it should. In that respect, the French decision should be welcome in a society that has said no to selling fakes.
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Anonymous | 2-Jul-2008 10:09 pm
no chance...
IP expert.. last time I checked Dior and others in the same area had already had their Selective Distribution Agreements considered and accepted by the Commission.
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IP partner | 3-Jul-2008 9:38 am
Animal Farm
Ebay is a bit like Animal Farm if you look at their business ethics. Everyone is equal, no-one has any responsibility. What a wonderful world we would live in were that true!
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Anonymous | 3-Jul-2008 9:48 am
IP Farm
Some are more equal than others.
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French partner | 3-Jul-2008 10:33 am
Commercial Court
This is the Tribunal de Commerce. The judges are not professional judges - they are merchants. A president of a small company can be a judge but they won't have legal training. There are many rumours that they are more favourable to French companies.
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intheknow | 3-Jul-2008 10:44 am
controversial ruling
Come on, it's not a "controversial" ruling and not about French courts. Ebay received several warnings, top legal minds should be able to understand the fact that the current Ebay website business model contributes to increase counterfeit. Many countries should follow this French ruling for a change.
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Anonymous | 3-Jul-2008 10:45 am
The inevitable
Have to agree with "the inevitable". Yes, there is protection under the E-commerce regs until the ISP is aware of the infringement, but surely if the ISP knows of blatant, longstanding infringement then it should take greater steps to check the legitimacy of the sales. I suspect that the L'Oreal case in the UK will be unsuccessful - it'll be the Tiffany case in the US that will sort it.
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IP or not IP | 3-Jul-2008 10:47 am
So surprised
What surprises me is that before this decision the High Court decided several times that Ebay was not liable as a seller because it is a platform for sales.
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Oliver Sacchi | 3-Jul-2008 12:30 pm
The 'real thing'?
From a consumer's point of view rather than a lawyer's, it does strike me that if people aren't able to tell that 90 per cent of these things are fake, it might be because the 'real thing' is not actually any better than the counterfeit - just more expensive.
Further to that point, if people are stupid and shallow enough to want something not because it's better but just to show other people how much money they have to waste, I don't feel very sorry for them when they get ripped off - or for a company that sells such ordinary goods at such extraordinary prices.
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Anonymous | 3-Jul-2008 3:50 pm
hanbags at dawn
two elements here - illegal use of trade marks (possible 10 years in chokey in the UK!) and the civil issues of eBays responsibility for these sales.
Also many eBay traders do not relaise they are in trade or business and ignore relevant laws
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Anonymous | 3-Jul-2008 4:44 pm
Another French lawyer ...
To French partner and to anonymous :
- should I tell my French clients that when they are brought before an English or a Scottish court, we already know where the judge's sympathy lies?
- the current decision has been rendered by the Tribunal de Commerce de Paris, which has been judging some of the biggest commercial cases in France each year and for a few centuries ... It's true they are lay magistrates but it 's certainly not a valid reason to cast some doubts on the soundness of the judgment .
I rather think that "French partner" is a lay lawyer ... ;-)
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Anonymous | 3-Jul-2008 5:12 pm
It is fake... is it not?
Mmm - are they (all) really fakes? There are many branded goods manufactured in China. Are we merely seeing less expensive versions of products not necessarily in the traditional 'counterfeit' sense?
LV and others are facing new levels of unfair competitive practices (from a Western perspective that is). Perhaps this action is more a meaure to ensure the integrity of their SDAs..?
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Anonymous | 3-Jul-2008 10:25 pm
Not so surprised ...
This decision appears (and I say "appears" as I have not yet read it) consistent with established French case law on the liability of on-line service providers.
On-line service providers who provide their users with "valued-added" services and functionalities and have a high degree of visibility of the types of activities which go on through or on their site cannot simply wring their hands of responsibility for infringing conduct of its customers.
It appears in this case that the court considered that eBay was acting as more than just a "mere conduit". Moreover, I would note that the Paris Tribunal de Commerce, although comprised of "lay" judges (whatever that may mean) is indeed a respected jurisdiction in commercial matters.
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Anonymous | 4-Jul-2008 9:54 am
And the appeal...?
Not the first surprising decision by a lay judge in favour of LVMH. In 2002 they sued Morgan Stanley over the bank's analyst research coverage of LVMH and were awarded EUR30 million. In 2006 LVMH had to reimburse Morgan Stanley with the full amount when the Paris Court of Appeal overturned the judgment. Wouldn't be surprised if this ruling is also overturned at appeal.
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Anonymous | 4-Jul-2008 10:41 am
Repercussions?
Does this mean that those who facilitate street markets will now be held responsible for counterfeit goods sold from stalls?
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Paul Carlyle, head of media and technology, Shepherd and Wedderburn | 4-Jul-2008 11:33 am
Ebay
This is a slightly surprising decision. French courts have not traditionally been seen as sympathetic to the needs of brand owners. Previous decisions have been more orientated toward the impact on the consumer.
This ruling has the potential to fundamentally alter the way that online auction sites do business. With the finding in one EU member state that eBay’s Verified Rights Owner programme is inadequate, it is more likely that courts in other jurisdictions may make similar findings.
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Anonymous | 6-Jul-2008 2:50 pm
Hermes counterfeit
Three years ago, I bought a Hermes scarf on [popular auction website] from the US. When it arrived by post to the UK it was a counterfeit. I tried to complain to [the site] and raised a claim against the seller and i lost. The seller who sold me the fake scarf won. I was not even allowed to return it.
I stopped buying anything on [the site] after that. I am so glad that LVMH and Hermes are raising this issue and winning.
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Anonymous | 7-Jul-2008 3:04 pm
market liability
yep - it has already happened
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