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

[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

[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

[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.

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.

L@@K

[larry bagina]

A++ douchebags, would sue again.

Re:Mega-dollars?

[Anonymous Coward]

When the hell did that become any sort of standard?

Three kilodays ago.

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,

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.

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: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