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

[RobBebop]

There are two pretty legitimate sides of this argument. (1) an individual has a right to sell the stuff that she owns, and (2) a company has a right to protect their "brand".

I don't know what the EBay policy is on selling "fake" items, but if the companies care so much about "defending their brand" they should feel obligated to "re-buy" their products from customers who no longer have a use for such things. That would seem to balance the resale market.

Basically, if Tiffany's, Rolex, and L'Oreal will pay a "market price" to buy back legitimate goods that their customers want to resell, they can claim that EVERYTHING on EBay is fake, broken, or otherwise overpriced.

Re:Even by petty French standards, this is sad

[Erez.Hadad]

I think that by collapsing the entire chain we get the alligators (or an animal activist acting on their behalf) sue the skin-producing companies for reselling their hides. At least that will get some good out of this.

Re:Even by petty French standards, this is sad

[gnick]

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?

I know what you're getting at but, under normal circumstances, there's nothing stopping you from buying and selling used CDs. Now, copying/distributing the content on those CDs via different media - That's where the system falls apart.

Re:Even by petty French standards, this is sad

[andphi]

In other news, the cows have filed charged Louis Vuitton with Mass Moo-der as well as filing a Motion for Summary Judgemoont against the plaintiffs.

Re:Even by petty French standards, this is sad

[The Ultimate Fartkno]

Even by pun standards, that's udderly horrible. I have quite a beef with you, my friend.

Re:Even by petty French standards, this is sad

[Pojut]

Stop mentioning everything that behooves your spotty opinions.

Re:Even by petty French standards, this is sad

[Fred_A]

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.

Of course, there are fewer French companies with an international reach than there are US companies, so this may explain that. When <foreign> company sues a French one it never makes the headlines after all (except here, sometimes).

However this does not explain the number of brain dead decisions by the local (yes, I'm French and live in Paris) courts that have happened lately. Now there *is* a cottage industry of resellers of fake handbags, mostly ordinary, everyday people, that supplement their income through eBay. The big names in this industry have always been nervous with counterfeiting as well as with the second hand market (the latter not making much sense).

For example one of the major luxury brands in Paris will allow Japanese tourists (Japanese are weird with this for some reason) only 3 bags per head in its shop. Those tourists (who of buy the bags that feature the brand most prominently on the outside) will actually recruit passers-by on the side walk to buy more bags for them.

Fakes (fairly poor quality ones for the most) used to be available in Vintimille, a border town on the Italian side. And a very popular destination, easily accessible by train or car. Apparently even the Italians got the message (although I heard the market only moved somewhere else).

Anyway this kind of stuff happens every now and then. This is our equivalent of your creationism. :(

Re:Even by petty French standards, this is sad

[The Ultimate Fartkno]

I don't know who you are, but you have quite a bit of nerve to come stampeding into a conversation you weren't involved in. Have you no manners? You act like you were born in a barn. I suggest you think before you post next time, lest you re-veal yourself to be more of a boor than you already have.

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

[Pojut]

I think you should quit with this cock-and-bull story you keep slinging...those old style politics should be put out to pasture, along with the rest of the sour milk. Or perhaps you think the rules should be chucked? You keep trying to flank 'round and shank me in the ribs, but I will kick your runp 'til it's rare!

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

[somersault]

Any companies that the government tries to pull this stunt on should just move elsewhere. I'm sure there would be a public outcry if eBay said "fine, we're not dealing with you jerks anymore". I've heard that the French public are quite good at their protesting - they brought the country to a standstill when the government tried to increase fuel taxes..

Re:Even by petty French standards, this is sad

[CyBlue]

I'd be really interested to see if your IP matched Swizec's.

Re:Even by petty French standards, this is sad

[Man On Pink Corner]

Never buy anything with PayPal that you don't fund with your credit card. Then, when something like this happens, call your credit-card company and request a chargeback.

That will get PayPal's attention and your money refunded. PayPal doesn't understand any language that doesn't include the term "chargeback."

Re:Even by petty French standards, this is sad

[querist]

The "Not for Individual Sale" has to do with FDA regulations. Packaged food products sold in the USA are required to have certain information on the label, including, but not limited to, nutritional information and information about how to request a refund.

Those individual Reese cups do not have the nutrition information on the packages, and thus are not to be sold individually in the USA.

There are certain other types of products (health and beauty aids as well as medications) that fall under this general rubric as well. There are certain requirements on the labels that are needed to permit the sale of an individual package.

I find it curious that some stores where I live will sell individual cigarettes at a cost that is clearly about twice what the proportionate price from the pack would be. I have often wondered if that was illegal due to the Surgeon General's Warning required to be on all tobacco product packages.

Slightly different issue.

Re:Even by petty French standards, this is sad

[Enigma2175]

Now, on the surface, your argument seems to have merit. However, let me drop one example on you. Take (or rather, purchase) an 8 pack of Reeses Peanut Butter Cups. You know, the pack of individually wrapped candies? Each one states quite clearly on the packaging that they are not for individual sale. You will find that this practice of designating the individual portions of a multi-pack as "Not For Individual Sale" is quite common.

So we find that if you want to resell your candy legally, you can't. Sure, you will argue that there is a huge difference between a car and a peanut butter cup. But if you did, you would be missing the point. If you purchase something that comes with an attached contractual agreement NOT to resell it, or purchase something with an attached contractual agreement not to resell it outside of the producing company's authorized distributors, then indeed the producer has full legal control over resale rights.

You may have a point but you picked a terrible example. If you go into a retail establishment and buy your peanut butter cups, you are free to do whatever you want with them, no matter what it says on the package. If you run a lemonade stand and want to offer those cups as well, you are free to do so, you entered into no contract with either Reeses or the retailer. Reeses would have absolutely no recourse under US law to stop the sale.

I don't really have experience with high-end perfumes or handbags, but I would assume that you are not required to sign a contract, therefore you did not give up your right to sell the item under US law. I don't know about French law but it seems anti-competitive and the EU may have something to say about it.

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.

Re:Even by petty French standards, this is sad

[S.O.B.]

I've never seen someone so shamelessly milking a pun.

Re:Even by petty French standards, this is sad

[phulegart]

It has been proven time and time again that you do not have to sign a contract to be contractually bound. Do you sign a reciept when you get gas and pay at the pump with your card? Yet you are contractually bound to pay for that gas.

And no, you are not free to do as you choose with something once you purchase it. Just because you THINK we should be able to do whatever we want with what we just bought, does not mean it is so. If you dispense gasoline into a non-approved container (milk jug), and a cop wants to give you a hard time, he can. In fact, there is another product that the purchase of carries with it limitations as to it's use, storage, and transportation.

Here is another one. Fireworks. You can buy them in lots of states where it is illegal to actually set them off. So you can purchase all the fireworks you want, but you can't light them. Will the cops overlook you lighting them (especially on the 4th of july)? Most likely. Does that make it legal? Nope.

Cigarettes. May a minor buy them? Nope. May an adult buy them and give them to a minor? Nope. You may not turn around a resell them legally, without purchasing a license to do so. Sounds like limitations.

Alcohol. May a minor purchase it? Nope. May an adult purchase it and give it to a minor? In some states, in specific places (a parent letting a child drink in their own home), yes. In most places, no. You also may not turn around and resell alcohol without the proper permit or license. Again.. sounds like limitations.

But, I guess that the intelligence of some Slashdot readers is exceptionally low today. I mean, these things are common sense, and you want to argue them? Oh, I know, you will attempt to provide specific reasons for the things I mentioned... but you would not be understanding that THESE ARE PRODUCTS THAT CARRY LIMITATIONS ON USE AND RESALE! Hello! Isn't that the point? You are saying that there are none, I am proving that there are indeed some.

Re:Even by petty French standards, this is sad

[Palinchron]

The difference is that on the cases you mention, you aren't contractually bound; instead, you are bound by the law. The people producing and selling these items don't set these restrictions, the government does.

Re:Even by petty French standards, this is sad

[Scroatzilla]

Enough already! Cud it out!

Re:Even by petty French standards, this is sad

[geekboy642]

My dad raises sheep. Frankly I think if they weren't shorn regularly the poor things would turn into immobile bleating balls of fluff. If sheep were smart enough to know what giving permission meant I bet they'd trot right up to the clippers.

First sale?

[llamalad]

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

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

Re:First sale?

[ScentCone]

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

No, but they really should have a "first, duck!" rule. Even public displays of their government at work can be very dangerous.

Re:First sale?

[Lord Crowface]

Indeed they do. It's called "Exhaustion of Rights" and is an EU-wide legal doctrine. At least in Germany, interpretations of this have gone so far as to completely void the "no resale" clauses in licenses for products like AutoCAD and various OEM releases from M$, but I'm not sure if the French interpret it quite as broadly.

Here's the Wikipedia article, for what its worth: http://en.wikipedia.org/wiki/Exhaustion_of_rights

L@@K

[larry bagina]

A++ douchebags, would sue again.

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

[elrous0]

You didn't read up on this case very well. The suing companies were not only saying that ebay had the obligation to remove counterfeit goods bearing their name, but unauthorized sales of LEGITIMATE goods as well. In other words, the companies were claiming the right to control ALL AVENUES of sale and resale of their goods (asserting that only they can authorize any sale or resale of their original product). And, sadly, the court agreed with them.

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

Re:Mega-dollars?

[Anonymous Coward]

When the hell did that become any sort of standard?

Three kilodays ago.

Re:Mega-dollars?

[Silver Sloth]

More importantly the context makes Mega-dollars $10^6 - however you might have understood this as $2^10. When it's a few bites on a hard disk who cares but when it's hard cash...

Not 'property'

[twatter]

It doesn't matter that the term is enclosed in quotes in the submission. We're talking about trademarks here. If these companies don't take action regarding this they will be allowing their trademarks to be diluted, making them more and more difficult to defend.

This has nothing to do with IP.

Any defendant in court for trademark infringement can bring up the fact that the plaintiff is allowing eBay to sell thousands of cheap imitations. And they would win the case based on that, probably.

Trademark law pretty much requires things like these be done, and the companies have no choice but to go after the entity facilitating the sales.

It's not nice, but that's what it is.

Laughed Out of Court

[Anonymous Coward]

This would get laughed out of court in the United States.

First Sale doctrine.

God Bless America!

Re:Laughed Out of Court

[gowen]

That's simply not true. The illegimate goods part of the case would, in all likelihood be equally upheld. Breach of trademark is breach of trademark, and ebay are facilitating this.

The problem with the legitimate goods on sale on ebay.fr is that they're grey market goods -- reimported against the condition of export sales. And the US Supreme Court has already refused to rule on whether non-US-manufactured copyrighted goods (which these are, as the logos are both trademarked and copyrighted) imported into the US as grey market goods are subject to the doctrine of first sale (QUALITY KING DISTRIBUTORS, INC. v. L'ANZA RESEARCH INTERNATIONAL, INC.)

Note also, that the before appeal District Court denied the first sale doctrine in all such cases, so a ruling just like this one has ALREADY been made in the US Court, but struck down on appeal.

Received from eBay yesterday, revised terms!

[ciscoguy01]

Received from eBay yesterday, revised user agreement and privacy policy terms. What a coincidence!

Received: Jun-30-08
Changes to the eBay User Agreement and Privacy Policy

I'm writing to let you know that the eBay User Agreement and eBay Privacy Policy have been updated, effective immediately for new users and on August 13, 2008, for current users.

The most important thing to keep in mind about this update is that your rights, and our responsibilities, under the User Agreement and Privacy Policy have changed very little. This update was spurred by an international project, rolling out now, that will make the user agreements and privacy policies for eBay platforms around the world much more consistent. This way, when you interact with any eBay platform around the world, you can be sure that very similar policies apply to you no matter where you do your transactions.

There is one substantive change to our User Agreement I'd like to point out. We changed the "Content" and "Liability" sections to accommodate a new program we're rolling out worldwide. That program makes catalogs of content and product descriptions available to sellers, so they can easily include complete and up-to-date product information for the items they list.

Similarly, we've revised the Privacy Policy's "Disclosure" section to make sure that the language we've used there accurately reflects the ways in which we're transferring information between companies in the eBay Inc. corporate family to streamline services, fight fraud and provide you with the best, most relevant experience when you use any of the sites or services of the eBay corporate family.

With these changes, we continue to make sure that our legal documents are consistent with the ways our sites and services are evolving and that we meet the needs of our user community. We hope you'll agree that these changes will make the eBay sites and services work better for you. If you accept the new User Agreement and Privacy Policy, you don't need to take any action. If you do not wish to accept the new User Agreement or Privacy Policy, please refer to our Help pages for instructions on how to close your account.

Thank you for using eBay and we look forward to many more successful transactions!

Sincerely,

Scott Shipman Senior Counsel -- Global Privacy Practices eBay Inc.

The important change is in the liability section:

Liability
You will not hold eBay responsible for other users' content, actions or inactions, or items they list. You acknowledge that we are not a traditional auctioneer. Instead, the sites are a venue to allow anyone to offer, sell, and buy just about anything, at anytime, from anywhere, in a variety of pricing formats and venues, such as stores, fixed price formats and auction-style formats. We are not involved in the actual transaction between buyers and sellers. We have no control over and do not guarantee the quality, safety or legality of items advertised, the truth or accuracy of users' content or listings, the ability of sellers to sell items, the ability of buyers to pay for items, or that a buyer or seller will actually complete a transaction.

We do not transfer legal ownership of items from the seller to the buyer, and nothing in this agreement shall modify the governing provisions of California Commercial Code 2401(2) and Uniform Commercial Code 2-401(2), under which legal ownership of an item is transferred upon physical delivery of the item to the buyer by the seller. Unless the buyer and the seller agree otherwise, the buyer will become the item's lawful owner upon physical receipt of the item from the seller, in accordance with California Commercial Code 2401(2) and Uniform Commercial Code 2-401(2). Further, we cannot guarantee continuous or secure access to our services, and operation of the sites may be interfered with by numerous factors outside of our control. According

Stupid and dangerous

[khton]

This is not the first time that French courts show a complete misunderstanding of how the Internet works... And this goes even further than net economics.

Most french used cars are still sold via a single newspaper called "La Centrale des Particuliers". Should this newspaper verify that each car is rightfully owned by its seller ? I cannot imagine any judge trying to enforce this...

Hopefully, this judgment shall be broken by the "Cour de Cassation", because it does not make any sense. Maybe the judge was only trying to get some publicity. This happens a lot,

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.

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.

This hurts eBay how?

[dada21]

eBay, while not a friend of mine, is a great tool to ascertain value in various markets. I use eBay daily to judge pricing for items I want to buy, or items I may wish to sell, notably collectibles (I hate collectibles, but own some). eBay's overhead is always passed on to sellers.

When eBay gets hit with a judgment for allowing someone else to sell a product, that judgment will only be passed on to sellers in the future. $60m is not a big figure, and considering that eBay lists hundreds of millions of items annually, the cost to offset this judgment as passed on to sellers is less than a penny per item. Not a huge cost to eBay.

The trademark holders are the ones who have a lot to fear, though, which is why they're going after eBay in friendly jurisdictions. I've seen some knockoff items sold online, and they're fairly good, and in some cases better quality, than the originals. With the coming economic recession, I'm sure many previous buyers of the overpriced consumer goods are likely pulling out of buying new products, so the trademark holders need these judgments collected just to keep their heads above water.

eBay should fight this, strongly, because they are merely a middle man, and they do offer the ability of a company to pull auctions if they're deemed illicit or illegal. Yes, eBay is probably slow on pulling every auction, but the fact that the market shows a demand for a given product, even a knock-off, means that the market isn't going away. Surely it will only hurt the trademark holders more when the news media tells consumers that knock-off products are so readily available and so cheap.

Good luck, eBay, I hope you win the appeal. If not, you'll just pass the cost on to sellers, and no one will be concerned a year or two from now.

Sales tax revolt

[Just Some Guy]

Sounds like a perfect excuse for the French to stop paying sales tax. If the item doesn't actually belong to you, why should you be responsible for paying for it?

Oh, and I think LVHM might want to explain to government why they've been hiding at least $61M of their property from the tax authorities.

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.

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?

Legal Disclaimer of Sales for eBay

[NovaHorizon]

You will not and have not sold, allowed the resell, schemed, plotted, or remained unaware of sales of any of [insert company name] products, ideas, images, trademarks, copyrights, materials both existent and non existent belonging to [insert company name] if it violets what [insert company name] believes to be it's profit margin with or without justification. Failure to adhere to this notice from this point forward, and or up until this point shall result in the immediate suing of every penny we believe we may acquire through the original purchase, and all subsequent purchases of product for it's entire existence in time including but not limited to the resell of the product after it has been recycled and put into pieces of many other commodities, all without deduction of expected or unexpected expenses involved with re-acquiring and reselling said product.

Have a nice day.

Could you fix the Company name in the Summary ?

[brufar]

Summary calls it LVHM, but the company website AND both news stories call it LVMH.

http://www.lvmh.com/

At the very least if you are going to capitalize the company reference multiple times throughout the article, please work on getting the 4 letters in the correct order..

Re:france is rapidly making itself irrelevant

[Alpha Whisky]

Well, I have to call bullshit, every business meeting I ever went to in France was conducted in English, and I was working for a half French company!

Re:france is rapidly making itself irrelevant

[Krojack]

Those international businesses should have employees on hand that speak French if they wish to do business in France. If anything it should be up to the business holding the meeting on what language should be spoken. They may want to speak English or Russian to please the client more, but a law forcing private businesses to speak the national language is just stupid.

If you come into my house I expect you to not smoke and speak English. I don't have to accommodate you and allow smoking and to speak some other language I don't understand.

Playing Devil's Advocate

[DragonPup]

eBay does let a lot of counterfeit and bootlegged products sell and they never seemed too concerned about removing them. I tried an experiment where I reported about 40 obviously bootlegged DVDs, and a few sellers who deal heavily in them. A few days later, not one auction pulled, not one user banned.

Until they get sued, they don't have a fiscal reason to pull an auction of bootlegs.

Re:france is rapidly making itself irrelevant

[jacquesm]

As I remarked elsewhere the rules are being broken left right and center, but they're in place just the same and that makes no sense at all to me.

Especially not when parties would voluntarily use a different language (such as English).

I personally walked out of one meeting a couple of years ago after being told that only French was acceptable because of a government requirement.

Too bad I was the guy representing a well paying customer, yes, I speak French but not good enough to get the finer points in a very intensive business meeting and definitely not when the matter is technological.

Half (or more than half) the technical English words have been forcibly given a French counterpart just to avoid 'pollution' (whatever that may be) of the French culture.

The interesting thing is that this 'island behavior' usually includes the French language somehow, check out Quebec and Belgium for instance.

Re:Mega-dollars?

[A.K.A_Magnet]

No, that would be a Mebidollar (I assume you were meaning $2^20, since $2^10 would be a Kibidollar). ;)

Re:france is rapidly making itself irrelevant

[jacquesm]

Actually they do not.

English is not even the official language of the US, I only have wikipedia handy as a reference and we all know I could have just edited that page:

http://en.wikipedia.org/wiki/Languages_of_the_United_States

But I swear I didn't, really...

as opposed to, say, Echelon?

[SuperBanana]

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.

As opposed to how the US does things? C'mon.

Credit Check!

[poormanjoe]

The problem is the merchandise is counterfeit!

Yes, of course an individual has every right to sell their own merchandise, but when criminals attempt to sell counterfeit items it's also a (good) companies prerogative to thwart common crooks from stealing their property. Ebay should implement a credit check. This wouldn't solve the problem but it sure would help. I don't want to buy fake goods any more than I want to buy stolen goods from an 18 year old who stole jewlery from her grandmother so she could get drunk and high all weekend. Chances are with either situation, their credit is extremly poor.

Why do business in France?

[Angst Badger]

Considering how often eBay gets sued in French courts, eBay management might want to consider doing a cost-benefit analysis of doing business in France in the first place. I'm not jumping on the knee-jerk anti-French bandwagon here -- it's their country, and they can run it any damn way they please -- but from a purely practical business standpoint, the barrage of lawsuits in the French market would give me pause, personally, if I was on the eBay board.

eBay doesn't care about finding real fakes

[sjbe]

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

You are right of course but eBay's problem is that eBay cannot be bothered to seriously check. The ONLY way to be reasonably sure an item is not a fake is to inspect it in person and have a full documentation trail detailing who bought it, where they bought it, and when. This is what they do in the art world to authenticate pieces. Since eBay never physically inspects ANY merchandise sold on their site, there is no way they can possible determine if an item is a fake.

From my own experience I've sold some high end luxury goods on consignment through eBay. (Louis Vuitton, Gucci, Rolex, etc) In each case I had a full documentation trail, the parties were known to me or my close associates, and we had the items physically inspected by an expert in that merchandise to ensure authenticity. Through eBay's VeRO program we were accused several times of pedaling fakes even though we had the real thing. There was no opportunity for us to prove that we had authentic merchandise though we certainly could have done so were there any means to plead our case. Our auctions were summarily taken down and we were given strikes with no recourse of any kind. To be sure there are a TON of actual fakes on eBay but eBay sure as hell can't tell the difference. Worse, to avoid lawsuits they've given brand holders full power to remove auctions that they should have no power to influence under the first sale doctrine.

The problem is that eBay's incentives are all wrong - they just want their fees and no lawsuits - and they've handed responsibility (through VeRO) to trademark and brand holders whose incentives actually contradict the law. Louis Vuitton doesn't want ANY of their products sold via eBay regardless of authenticity. So eBay users get screwed in the deal either way. Sellers can have their auctions pulled for no good reason and buyers can't be reasonably sure of authentic products because eBay refuses to check. The winners here are definitely not you and me.

Re:eBay doesn't care about finding real fakes

[croddy]

VERO is also the program through which Ebay has given Scientology carte blanche to illegally infringe on first-sale rights of people with used RTC gear. Until Ebay takes a modicum of responsibility for the rampant and obvious illegal abuse of VERO (or cancels it altogether) I want nothing to do with Ebay.

Unfortunately, everything Ebay's help pages say about canceling your account is a falsehood. I've been asking them to close my account since February and I am still able to log in and I still get their weekly spam messages about my favorite sellers.

Ebay was cool back when it had something resembling competition. Now it's just another bloated, useless pig doing the bare minimum it must to continue collecting monopoly rents.

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.

Maybe this is good

[blind biker]

I was sold a fake Kingston elite pro SD card. Those are one of the few SD cards with SLC Flash memory, 100.000 write/erase cycles. So, I was pretty adamant I wanted the real "elite pro", but got a forgery, which was visible from the very poor quality of print on the label as well as the packaging. Also, I had a few originals I could compare against. Finally, the cards failed to pass a few tests I threw at them, so I was adamant I wanted my money back. I notified eBay, but they never did a damned thing about this case.

I hope $60+ million will make eBay listen to their buying customers (not only their bigger sellers), when they report a forged item.

And forged memory cards and flash drives are massively present on eBay. If it's from China, Hong Kong or Australia, it's almost certainly a fake.

Re:GO USA!!!

[Anonymous Coward]

OH my GOD a FRANCE is INVOLVED!!! QUICK, hate speech!!! GO USA!!!!!

Quixotic lawsuits

[sjbe]

You could have sued Ebay too...

Not really. At the time I was making a significant part of my income selling stuff on eBay. Suing them would have been cutting off my nose despite my face. Not to mention that I do not have the money to fight a multi-billion dollar corporation over the loss of a few hundred dollars in listing fees and lost sales. Plus even if I won (which I wouldn't) the damages I could collect would be insufficient to seriously cause eBay to change practices anyway. Only real hope of that would be some sort of a class action lawsuit.

In the end the right solution was just to stop selling on eBay. I used to send close to $100,000 a year in fees to eBay/PayPal. Now they get $0.00 from me so I think that hurts eBay more than any lawsuit I could possibly have been involved in.

Re:Quixotic lawsuits

[fosterNutrition]

Hey, I'm sorry to sound like a pedant here, but you might be interested in knowing that the expression is "cutting off your nose to spite your face."

Anyway, interesting story, and I'd be really interested to know where you took your business, since any competitor to eBay would be an interesting place to explore.

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.

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".

Seems VERO upsets all sides.

[cliffski]

Its funny to see the VERO program criticised for being too strict, as I'm sure given ebays incompetence, it can sometimes be.
My experience with VERO is that it is useless to actually do anything about blatantly stolen property (in other words, people duplicating full versions of games on a CD burner, and openly selling them on ebay). In cases like this, ebay are VERY VERY slow to respond, and take no serious action against the sellers, sometimes removing a listing, rarely banning an account (new account takes a few hours).

For smaller IP holders like me, ebay and google are both unresponsive, disinterested bastards. Try getting pirated content removed from a blogger blog, for example...

Re:Don't hand the enemy your plans.

[macbeth66]

Where are my mod points when I need them?

Mod this up!!!

Re:arrogant asshole

[Omestes]

I can see the parents point, though. There is something fundamentally annoying about the "I Am Rich" bling, especially the stuff that really isn't much better than average priced stuff, but only exists as a very expensive brand name. Showing off your wealth (for the sake of showing it off) is at least crass, if not arrogant.

I personally don't have anything against people with more money than me, but I really dislike people who have to constantly make it known that they have more money than me.

Idiotic status symbols are pointless, and obnoxious. Are the wealthy REALLY that insecure feeling, that they must constantly point out that they can throw a grand at a stupid wrist watch with all the functionality and quality of my $50 Timex?

My Dad, on a recent trip to China, bought a Vacheron Constantin knock off (of a $25,000 watch), that has been appraised as genuine. It was $25. This leads me to the conclusion that its value ONLY exists as the brand name, and nothing else. This seems rather silly to me.

The "designers" need to be taken down a notch

[billcopc]

I'm sure everyone caught it, but for yet more emphasis:

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

LVMH can tell their retailers how to sell the products, as they have a direct contractual relationship. They CANNOT tell the end-user, or anyone else beyond that first hop, what to do with it, what to charge for it, or which orifice to insert it. There's no licensing agreement, you don't have to sign a 2-page contract in order to buy a stupid shiny watch or pink bag. There's no LVMH auditor that comes to your dressing room and checks your papers every time you spritz on a bit of Eau-de-Poopoo.

Next point: illegal sales (counterfeit items). Ebay does not handle the actual items. Ebay does not have omniscience and superman laser vision. Ebay has no way to even guess that a seller is peddling fakes. In many cases, even the end-user can't tell the fake from the original (which says a lot about how cheap the real one is!). With the intrinsic right of resale, you can't outlaw resale, so the guy selling fakes is indistinguishable from a reseller (well, except for his plentiful stock, delivered every week from Singapore)

The fact that a French court actually upheld this ridicule tells me Ebay should withdraw its services from France, along with all its subsidiaries and sister companies. If France wants to be hostile toward online businesses, then they're more than welcome to do without. Some smaller, skeevier company will fill in the void, until they get burned as well. The French government is a mockery, and everyone has the freedom to stand at their border, point, and laugh.

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.

Re: Control is on "name", not item

[lpq]

The subtlety that the French law turns on, I believe who owns the name of the object. It's complete caca, but but is an important distinction. If someone resold LVMH's toilet water as 'toilet water' (no label), then there would be no issue. It's when you use the name on the product.

I'm not sure how else you refer to an item without using its name. But having rules about language -- who may say what (some countries have official bodies to rule on grammar and word usage! ;^/ ). But I think part of the problem is most that Americans don't know how to finesse the French Court system. A plaintiff needs to engage a judge (in France) into *wanting* to help them to provide a solution. It's not strictly about fine points of law.

I suspect French companies are uniformly better at this than US entities/companies. An adversarial system is a poor way at achieving a just, fair or equitable solution. It's one of the worst -- as it hinges on who "argues" better, and has little to do with the merits of either side of the issue. Thus, lawyers in the US are exalted above common sense -- solely because they argue a "stance" more effectively. This isn't "justice", it's a friggin debate game.

Furthermore -- I'm pretty sure that French courts don't have the same idea of "precedence" that US court verdicts carry. That may be changing under pressures from non-local (non-French, usually) plaintiffs. But that pressure has always existed. In a way, its more about who better convince the judge to take their side. Unless US companies start employing local lawyers of great skill *and* social standing, we'll likely continue to lose -- since the French don't respect the US-standard of whoever argues better is 'right'.

It makes compliance difficult -- and the easiest thing to for a US company to do? Don't do business in France. If the French people get to a point of feeling their system needs change, they will change it. But their system is in place to protect its local citizenry, first. International "rights", will almost always be (and maybe should always be) a secondary consideration. Otherwise, you've simply put your country and culture up for sale to the highest bidder (who hires the best arguer(s)).

eBay can appeal and win -- if they finesse the courts properly -- but it may take some time. Meanwhile, I'd suspend operations there or have people selling there agree to some French-approved conditions in order to be able to list products in France. That would hopefully protect one's but enough -- if one asked the French government for help in setting standards, and assuring that the standards are implementable such that the listing company is not held to blame for violations.

L.

Summary is correct, you are not

[D.McGuiggin]

http://www.law.com/jsp/article.jsp?id=1202422673041

This ruling came down against eBay on two fronts. The court faulted the online company for "guilty negligence," for not doing enough to prevent fake goods from being sold on its site. The court also ruled that eBay was responsible for the "illicit sale" of perfumes from the LVMH empire, which can be sold only through the brands' "selective distribution networks."

The Yahoo blurb left that part out, which is where you got your misinformation from. So no, when you say "Still in France I can sell stuff I buy from LVMH, as soon as I buy it it is mine (first sale doctrine ?)" you are not correct.

Troll? Nice....

[NeutronCowboy]

I take it someone with mod points and no knowledge of France had a stick up his butt.

Look. I lived there for nearly 20 years. Some things are great about it, some things suck. But there are a couple of things that are critical to know if you want to have any chance at understanding how the French work:
- The state - and its bureaucracy - is the foundation of the nation.
- It's a country that is split along many lines.
- It's a country with a (self-defined) mission.
- It is conservative, but has a history of progressing through revolutions.
- Art and culture come first.
- Anglo-Saxon style survival of the fittest and invididualism is abhorred.

Pretty much everything follows from that.

Re:arrogant asshole

[ross.w]

Heh, I bought a fake Rolex in China for about $10. It was a nice looking watch, but the mechanism inside broke after two weeks. I've seen other fakes where the plating rubs off or water gets in after a short time. Basically, you do get a much better quality product with the genuine item (with watches, not so much with clothing, etc), but not $25,000 better.