Ebay Fined $61M By French Court For Sales of Fake Goods

A court in France ordered eBay to pay more than 61 mega-dollars to the parent company (LVMH) of Givenchy, Fendi, Marc Jacobs and Louis Vuitton, because a user sold fake goods on the website. eBay has been sued by other 'luxury goods' vendors (such as Tiffany's (US), Rolex (Germany) and L'Oreal (EU)). Problems stem from some companies demanding that their merchandise (even legal merchandise) not be displayed nor sold as it is a violation of their 'property.' Others have complained that eBay is too slow to take down claims. Apparently eBay was hit with two violations: 1) eBay illegally allowed legitimately purchased and owned products made by LVMH to be resold on its website by 3rd parties not under the control of LVMH, and 2) not doing enough to protect LVMH's brands from illegal sales. eBay has said it will appeal. So eBay is to know what products every company allows to be sold before allowing them to on auction?

(There's also coverage at Yahoo News.)

Update: 07/01 17:15 GMT by T : That's LVMH throughout, rather than LVHM, as originally rendered.

Comments

Even by petty French standards, this is sad

[elrous0]

The French government and courts have a long history of issuing prejudiced laws and decisions in favor of French companies (especially in cases where the opposition are American or British companies), but this is disturbing even by their standards. While ostensibly about counterfeit goods, this ruling goes FAR beyond that--giving the original producer full control of resell rights for even LEGITIMATE goods. In short, the ruling (if allowed to stand) basically says that no one actually owns any physical object anymore or can resell said object without permission of the original producer.

Want to resell your Corrola? Sorry, you have to get Toyota's permission first.

Want to resell your house? Not unless the original builder says okay!

Want to sell your soul? Well, that one you can do. Just become a French judge!

Re:Even by petty French standards, this is sad

[haystor]

The French companies are laughing until they're sued by the raw goods producing companies and told they can't distribute their handbags.

Re:Even by petty French standards, this is sad

[Swizec]

So basically like what we have in the music and software worlds pretty much? You don't quite own that CD, you're just allowed to use it because the product they leased to you is on it ... something like that?

Re:Even by petty French standards, this is sad

[jellomizer]

And yet they wonder why the French Echonomy is sagging.
If the seller fears retribution from using and reslling french products. They will not get French products in the first place. 3rd party sales while doesn't direcly effect the bottom line it does get product awarenes of your goods.

If you get a used Toyota and you love it. If you choose to get a new car you may buy a Toyota. or other perople see that your used toyota has lased so long and they want a new car they would get a new Toyota, also the person who has sold the car if they liked it the chances are they would use the money to buy a new car of the same make, if they have brand loyality to that make.

I understand forgeries, as it could tarnish the brand names. But for legit items let them resell them.

Re:Even by petty French standards, this is sad

[Reziac]

That's a good point. Where does something become "restricted" from further sales -- at the retail level? At the wholesaler? at the initial processor of raw materials?? at the point of origin (mines, farms, sheep, etc.) for said raw materials?

I can just see it... "You may not resell this sweater without permission from all the sheep whose wool was used to create it."

Re:Even by petty French standards, this is sad

[RobBebop]

You either didn't read, or didn't understand the post you replied to, moron.

The argument was that corporations DO have the right to control the secondary market for the goods they manufactured as long as they are willing to be be a buyer who will pay the highest price to re-buy their products.

There was nothing about denying people the rights to sell the crap they own.

Re:Even by petty French standards, this is sad

[porcupine8]

3rd party sales while doesn't direcly effect the bottom line it does get product awarenes of your goods.

I would say it DOES affect the bottom line. Let's say I'm choosing between a Toyota and a Honda, pretty much equivalent models for $20,000 each. If I know I can resell the Toyota five years from now for $10,000 but that Honda won't let me resell the Honda ever, well, the Toyota just became a lot cheaper than the Honda in the long run!

Now, some people may not think this way when it comes to designer bags - but a LOT do. There are many women who can only afford to carry around a collection of $500-1000 bags because they keep one for a couple of months then sell it to a consignment shop for half price to help buy the next one. Still an expensive hobby, but suddenly within the reach of someone who's upper-middle-class instead of only celebrities.

Re:Even by petty French standards, this is sad

[Nursie]

"The French government and courts have a long history of issuing prejudiced laws and decisions in favor of French companies"

The US Government and courts have a long history of issuing prejudiced laws and decisions in favour of US companies (look at online gambling and a billion other things)

The British Government and courts have a long history of issuing prejudiced laws and decisions in favour of British companies (see the fiasco around BAE systems and the serious fraud office being stopped from investigating them for "National Security" reasons)

Everyone's at it. And the people of the whole world are the losers.

Re:Even by petty French standards, this is sad

[porcupine8]

My point (which I realized after I hit post I never stated directly) was that it can directly affect the bottom line because people are more likely to buy something they can resell than something they can't.

The example you give is an extreme case where it sounds like the market was flooded with used items due to the company screwing over their resellers, plus those people could have afforded new ones if the used ones hadn't been available.

People buy cars with the intention of selling them after a few years. People who buy older used cars often can't afford the new ones anyhow. If a car manufacturer suddenly stopped allowing their cars to be sold used, they would get far fewer new purchases because of it. Same for these people and their handbags - all the people who buy designer items BECAUSE they can then sell them at a consignment shop later. The people who then buy them on consignment could never afford them new. Cutting off any sale of a used handbag would result in fewer new sales, because the people who had been buying then selling would stop AND the people who had been buying used couldn't afford to start buying new.

First sale?

[llamalad]

Does France not have anything along the lines of the 'first sale' doctrine?

http://en.wikipedia.org/wiki/First-sale_doctrine

Reason to love America

[Rinisari]

IIRC, Americans enjoy the right to sell any of their possessions, provided they acquired them legally.

Re:Reason to love America

[rtb61]

EBay is simply an auction house, facilitating the auctioning of products. If people commit criminal acts viua EBay auctions then those individuals should be pursued, EBay should simply ensure that those people offering products for sale can be identified and should EBay fail in ensuring that the sellers of products can be identified then EBay should be held accountable.

So it is simply up to EBay to ensure it is not facilitating the anonymous selling of stolen or misrepresented products.

As for counterfeit products, as long as the buyer knows they are fakes who cares. The only thing you really end up paying for with 'genuine' fashion products is the bloated advertising costs as often enough the counterfeits come out of the same third world factories as the 'genuine' article.

Re:Reason to love America

[InlawBiker]

EBay is simply an auction house, facilitating the auctioning of products.

Ebay is not just a simple auction house. They're obligated to follow local laws within the areas they sell, and it's enormously complicated. Otherwise they'd just be a huge fencing operation for stolen or illigitimate goods (which one could arue they are, but that's another story.)

So the question becomes whether Ebay did everything required by law to stem the sale of conterfeit goods. I would imagine right now any company who has ever had their goods copied and sold on Ebay is on the phone with their lawyer figuring out how much they can squeeze from Ebay. The whole things smells like French protectionism. I mean, they're holding Ebay liable for the whole sale, not just the ~5% they raked off the top.

As for the "who cares" arguement, well, the people whose brand has been ripped off care and the law is on their side. Apparently it's *entirely* on their side.

Re:Reason to love America

[Brett Buck]

Bullshit. I can buy as many "counterfeit" goods I want and no one can say a damn thing about it. Suppose I think the "Rilex" is actually a better watch than the real deal, I can certainly buy one. Even the definition of "counterfeit" is entirely determined by who wants to sue to protect their copyright, etc. (aside from counterfeit money), but that is strictly between the "original" manufacturer and whoever is making and/or selling the fakes, not the buyers.

            Once I buy something physical, unless it was stolen, it is mine and I can do whatever I damn well please with it, as long as I don't misrepresent it.

          Brett

france is rapidly making itself irrelevant

[jacquesm]

Things like this show how far behind the times France has gotten.

At some point they even wanted to have French established as the official language of the EU...

Protectionism has never worked to any countries favour, France probably least of all.

Did you know that business meetings in France have to be in French ?

Craig'slist has the right idea.

[jd.schmidt]

While it is VERY silly to expect EBay to prevent all counterfeit items AND that whole resale of trademarked items is scary, it might point out a flaw in their business model. Consider a "consignment" store or pawn shop that takes a cut of each sale and is stocked with stolen and fake items. Eventually, if you have enough of this nonsense, I think it is fair to consider that store a fence and not a legitimate business.

The more EBay takes a "cut" of each sale, the more they become part of the transaction. Perhaps a flat fee. I am sure EBay wants to make as much profit as possible, but if they become a party to each transaction they can't help but take on some liability.

Two problems and some sanity...

[Noryungi]

Before everyone gets on their high horses about this, remember:

1) French companies sued mainly because fake goods were sold on eBay. Selling fake stuff (anywhere, on the net and off) is a big problem for French luxury companies.

2) French companies also sued to prevent people selling real luxury goods at cut prices. This is abusive since it criminalizes legal owners and sellers in order to protect their 'official' resellers. However, eBay has appealed and I am pretty certain this will be struck down by the French courts.

Finally, of course, this leaves the problem of certifying that, let's say a Chanel bag, is the real thing on eBay and not a fake. This could be helped by supplying some sort of authenticity voucher that sellers could produce if asked by eBay.

That would solve the problem: eBay could simply say to a seller "please show us the voucher that says this is the genuine article or pull your offer". Yes, I know, what's to say the seller is not going to produce a fake voucher, but still.

The thing with France right now is that they are trying to combine two things: e-commerce and checking that articles sold are genuine. Not an easy thing to pull off, and these fscking French companies are not taking the right path (suing instead of cooperating). Then again, maybe eBay just refused to cooperate, and they thought suing was the easiest way to obtain results and a more cooperative eBay.

So - as strange as it may seem right now - this could have a positive impact on the quality of eBay auctions. Think about it for a moment, before posting stupid French jokes.

Re:Two problems and some sanity...

[Anonymous Coward]

Mode parent up please.

The clause against selling legitimate, pre-owned (or non-channel-partner, but still legally purchased) should be thrown out by the appeals court -- or eBay should stand on principle and "quit France." As for the other part, I am pretty sure eBay is NOT doing enough to stop the sale/auction of illegal (fake Brand named) merchandise. They have always behaved like an outfit that will do the minimum necessary to "police" bad deals going down, and give the appearance of "profit maximization at all costs, including borderline unethical behavior."

Too bad both parties can't lose -- or may be they can!

I respectfully disagree

[D.McGuiggin]

You can't acquire counterfeit goods legally.

While I am not certain of the law (especially internationally), if you purchase counterfeit goods without knowing they're counterfeit, you have committed no crime and thus acquired them legally. Of course, once they're recognized as counterfeit, the police are within their obligation to seize them. I don't think the person who purchased the goods, barring some complicity, would be in any trouble.

Slashlawyers?

Not about fake goods at all

[Ed Avis]

Indeed, this has little to do with counterfeiting. From the BBC news article:

Four perfume brands - Dior, Guerlain, Kenzo and Givenchy - sued for what they called "illicit sales" of their products.
They alleged that even auctions involving their legitimate perfumes were illegal, because only specialist dealers were permitted to sell them.
The court barred eBay from selling the four perfumes in future.

It will be interesting to see what Brussels has to say about this.

Re:Stupid and dangerous

[DerekLyons]

This is not the first time that French courts show a complete misunderstanding of how the Internet works...

I sometimes think rather the opposite is the problem... The 'net and many of it's denizens don't understand how the real world works and don't think they should have to anyhow. As if the 'net was some free form construct completely unconnected to the real world.

Blind to the facts

[Senjutsu]

"The Rolex trademark recordation with Customs indicates "Import of Goods Bearing Genuine Trademarks or Trade Names Restricted." This means that genuine Rolex products can only be imported with the permission of the trademark owner, Rolex Watch U.S.A. Inc. A private individual can hand carry one Rolex watch from a trip overseas without obtaining permission. Bring in more than one, and they will all be seized as a trademark violation. Purchasing a Rolex from overseas by mail is also a trademark violation." Title 19 U.S.C. 1526(a) and (b)

Buy a legitimate Rolex from a foreign seller on eBay and try having it sent to you, and see how your tune changes.

Re:arrogant asshole

[TheMeuge]

I think the "arrogant asshole" term applies far more to yourself.

If you can't afford the Rolex, it's because you haven't made the money to do it. Don't hate people who are wealthier than you are, simply for having more money. If you must hate someone, hate yourself for being the kind of loser who would dub ANYONE who owns a Rolex an "arrogant asshole".

If you had any kind of self-respect, you'd at least have posted this under "anonymous coward".

P.S. I make $25'000/year at the moment, and I am unlikely to purchase a Rolex for MANY years to come.

You know, if you have to legislate your language..

[PRMan]

If you have to legislate the use of your language, isn't that just an admission that it ain't that great?

In English, we just take words from anywhere. Nobody makes us speak it. We don't see it as "polluted" by having French, Greek, Latin, Germanic or any other sort of words in it. It makes it "rich" and "interesting".

Know your role, businessman!

[sethstorm]

Why do business in France?

Perhaps there are countries in the world that put businesses in their place. That is, they don't let businesses lord over the country as with post-1980 US.

Re:arrogant asshole

[megaditto]

I forgot the original language, but it went something like:
An ambitious person compares herself to people above her, and arrogant person -- to those below.

Cockroach scatter

[t33jster]

What's especially stupid about this is that if LV winds up forcing eBay out of this category, 100 new markets will open up. This has already started with the counterfeit sellers who have been forced off of eBay.

Example: You can't buy a gun on eBay. I think it was after Columbine that eBay voluntarily exited the gun category. Since then there are a bunch of auction sites specifically for guns.

By keeping one big market, it will be far easier for LV, Tiffany, and others to manage the counterfit & legit gray market. This is basically another example of an old company failing to understand online commerce.