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

[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

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.

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.

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.