backtop

Print E-mail del.icio.us 125 comment(s) - last by robinthakur.. on Jul 30 at 5:35 AM
EBay fights tooth and nail in court over decision which could spell doom to its apparel and cosmetics sales

EBay has suffered some hard times of late, but has pushed hard offering new growth strategies like user-created seller software.  However, a new court ruling in France may undermine eBay's efforts by cutting out a large portion of its business.

On eBay, a number of designer brand name purses, accessories, and perfumes sell every day.  It goes without saying that a large portion of these products are fake.  The number of fake Louis Vuitton items alone is staggering.  Of the smaller portion of items that are authentic, fewer still are from authorized retailers.

While this is good for eBay and the customer, it’s not such a happy trend for designers who making a killing off decadently high prices for the elite goods.  Louis Vuitton finally took eBay to court and now has won a decisive victory.

In a broad ruling by the Commercial Court of Paris on June 30, it was ruled in favor of LVMH Moët Hennessy Louis Vuitton that eBay must block all sales of counterfeit products and block sales of genuine perfumes from unauthorized retailers.  The decision opens the floodgates by setting a precedent by which other designer perfume brands can ban eBay sales.

EBay states that it is technically infeasible to automatically determine authentic items from fakes and it would be prohibitively expensive to manually detect fakes.  EBay is petitioning a higher French court, the French Court of Appeals, to grant a reprieve from the lower court injunction.  This reprieve would allow sales to continue as eBay appeals the decision.

If the decision sticks, it would virtually doom eBay's perfume sales of Christian Dior, Guerlain, Givenchy, and Kenzo brands (all marketed by LVMH) as currently there is no licensed LVMH that sells on eBay.  EBay may be safe in the U.S., though as the sales of genuine products through unauthorized channels, known as "gray marketeering" is generally legal in the U.S. as it is thought to benefit consumers.

The court decision additionally ordered eBay to pay damages to various LVMH units totaling $60.8M USD.  If a reprieve is not granted by the appeals court and eBay is deemed noncompliant with the ruling, it faces daily fines of 50k € ($80,000 USD).  Such fines add up quickly, as Microsoft found out in similar European ruling -- damages leveled against it eventually amounted to $1.4B USD.  The appeals court will rule on Friday.

French attorney Alexandre Menais, who works for eBay states, "We have to demonstrate that the injunctions are not technically realistic, and are impossible to execute."

LVMH’s outside counsel, Didier Malka of Jeantet Associés in Paris is unsympathetic, stating, "LVMH Group do not intend to hold off enforcing the injunction."

The new ruling could seriously dent eBay's designer merchandise sales and is likely to lead to similar legal complaints.  However, more troubling for the company are the broader implications.

The unauthorized reseller portion in particular poses an intriguing legal question.  Can retailers prevent the resale of their products which customers legally paid for?  If this is the precedent set, eBay could be in for a world of additional trouble in European Courts.

Comments     Threshold


This article is over a month old, voting and posting comments is disabled
More French Madness?
By jamdunc on 7/9/2008 4:55:50 PM , Rating: 3
Would it not be easier now for Ebay to just pull out of France?

And is this punishment only enforcable inside France?

I'd like to see what the French Public would say if they suddenly woke up to find that all French IP's were 'banned' from Ebay to protect itself.

I'm probably missing lots of info in my argunebts but it makes sense in my head with the little info I have :)




RE: More French Madness?
By ghost101 on 7/9/08, Rating: -1
RE: More French Madness?
By kinnoch on 7/9/2008 5:11:53 PM , Rating: 5
This real beef of the ruling has nothing to do with counterfits. Whats important here is that the court is saying that some one who purchased a real LVHM bag, and wants to resell it on ebay, can't do it because they are not an authorized reseller.


RE: More French Madness?
By ghost101 on 7/9/08, Rating: 0
RE: More French Madness?
By erikejw on 7/9/2008 5:24:26 PM , Rating: 5
Do I see a trend, everytime a US company can't walk over EU laws everyone screams, can't they pull out of EU and punish all those socialist so they see who are right, they so gonna miss US companies, they can't live without them ;)


RE: More French Madness?
By B3an on 7/10/2008 2:22:56 AM , Rating: 1
I was just thinking that myself, and i'm sick of hearing it from the fascist yanks on this site.
It's a perfect example of one of the many reasons why the rest of world generally dislikes the US. They have no respect for other countries laws/way of life.


RE: More French Madness?
By eyebeeemmpawn on 7/10/2008 7:21:50 AM , Rating: 1
quote:
It's a perfect example of one of the many reasons why the rest of world generally dislikes the US. They have no respect for other countries laws/way of life.


Well hey, just look at our leadership...soon we'll all just be a big bunch of capitalist crusaders ;)


RE: More French Madness?
By 16nm on 7/10/2008 12:53:38 PM , Rating: 4
Look, this has nothing to do with the US so let's drop it. The previous poster is correct that these are the laws in France, like it or not. All that eBay France needs to do is disallow the listing of any LVMH products. The idea that they would need to abandon France entirely is silly.

What's really sucky for the French people, which Jason aludes to, is that if one of them want to sell one of these products -- which they legally own -- then they may not, and it would seem to me that, according to French law, they may not legally sell it either through eBay or otherwise. It is hard for me to understand how a law like this could exist in a modern society like France. Or does it? ;)


RE: More French Madness?
By Oregonian2 on 7/10/2008 4:57:50 PM , Rating: 3
Could be that easy, but I suspect not. IMO it's not so much a matter if just saying that it's disallowed. It's a matter of enforcing it, policing it, and being responsible for those that violate it.

If illegal clones are sold by a street vendor, does the city it happens in get sued and have to pay for having allowed it to happen within their venue, using their facilities ? Maybe they do in France, I don't know.

It's probably a matter of how much eBay fees need to be in France to enforce this and all others that will come due to precedence (or to pay the court fees) and whether they're sufficiently profitable/competitive as a result.

That said, I don't fault France for what's going on (heck, I'm a quarter French heritage-wise), they're allowed to do whatever they want no matter how archaic or how progressive something may be. It's their thing.


RE: More French Madness?
By nemrod on 7/10/08, Rating: 0
RE: More French Madness?
By nemrod on 7/10/08, Rating: 0
RE: More French Madness?
By gyranthir on 7/10/2008 10:03:38 AM , Rating: 4
Well, 1st of all that law is totally idiotic. Not being able to resell your unused or unneeded wares that you own is freaking moronic, period.

French law is a bastardized set of archaic former monarchy and near totalitarian drivel meant to benefit the highest class.

Get over it, it's going to change sooner rather than later.


RE: More French Madness?
By theapparition on 7/10/2008 12:10:41 PM , Rating: 3
OK......OK

Everyone stop right now. This is simply not true.

Ebay is being asked to stop the sale of NEW merchandise by unathorized vendors, and of counterfeit items.

Individuals will still be able to sell a used handbag, or half bottle of perfume as USED. They will not however be allowed to sell it in an Ebay Store as new.

Apparantly, it is illegal in France to sell items if your not an autorized seller, so I don't see anything morally wrong with shutting down the Ebay "back door".

If the French dislike it so much, they need to petition to thier lawmakers, plus vote against the manufacturers who engage in such practices by not buying them.

I mean, it's only a stupid purse after all. :-)


RE: More French Madness?
By 16nm on 7/10/2008 12:58:39 PM , Rating: 3
So if a Frenchman received some perfume and never used it, he would have to use it once (dropping the value, of course) to legally sell it to another Frenchman? That seems crazy to me but the law is the law.


RE: More French Madness?
By Oregonian2 on 7/10/2008 5:05:08 PM , Rating: 2
They could indicate in the auction that it's used, but saying the only use has been to look at the packaging really hard. :-)

But in truth the opposite is more often true. Got something in the mail yesterday from an eBay purchase. Presented as "new", "NIB". Well, it was more like "UIB" (not used substantially, but certainly used -- including the opening of several of the previously sealed accessory sort of bags that comes with things even if it was neatly repacked). Needless to say their seller ratings for description accuracy isn't going to be great from me.


RE: More French Madness?
By omnicronx on 7/10/2008 10:11:27 AM , Rating: 4
You are kidding yourself if you think this was done for any other reason other than self preservation of french companies.

By the way I am not American, and I am not anti France, but why should a country of 30 million in which only a fraction of those are eBay users be able to change the way a company does business, especially when this is a gray area with french laws, let alone every other country in the world.

The way I see it, you should be able to sell any product as open box or used, regardless if it is counterfeit or not, its the new products that I have a problem with. You don't see electronics companies going around suing ebay because users are not registered resellers. It won't be too long until stuff likes this (10 inch quality ball point pen, free gift included: Louis Vuitton purse. starting bid 20$) happening regardless if ebay stop users from selling these products.