In the matter of a lawsuit brought against eBay, the world’s largest online auction site, a French court has ordered the company to pay $61 million (€38.6 million) in restitution to LVMH, a Paris-based luxury items retailer. LVMH brought the suit against eBay over the sale of millions of dollars worth of counterfeit luxury goods in a series of online auctions.
LVMH specializes in high-end fashion, leather, perfumes and colognes. The suit charged that eBay Inc. was responsible for the sale of fraudulent luxury products on their French web site. LVMH claimed that as much as 90% of the high fashion items sold on the side, including expensive Louis Vuitton handbags were fakes.
Although eBay did not directly sell the fake items, a Paris court ruled Monday that the company did not do enough to rein in the widespread sale of counterfeit goods on their web site. Furthermore, because eBay earns a commission on each sale, the court found the company complicit in the crime, and charged that eBay did not take reasonable action to protect buyers from fraud.
Although eBay has announced that they will appeal the ruling, this is the second French court which has sided with LVMH, making it unlikely that a higher court will overturn the verdict. In a statement, and eBay representative said the company remained alert to auctions offering counterfeit products, adding “we take them down swiftly.”
This is not the first time eBay has faced legal trouble in France. Earlier this year, a French court ordered eBay to fork over €20,000 in restitution to Hermes International for not properly vetting the sale of the company’s handbags in online auctions. Among other statements, the court recommended that eBay require all sellers to post extensive product information and guarantees of authenticity.
France is a tough market for eBay. The French fashion houses are notoriously protective of their brand names, and aggressively pursue fakes. The French legal system also has a long history of siding with the fashion industry in these types of disputes. More than likely, eBay will wind up having to pay the $61 million; many analysts believe it is unlikely that a higher court will even hear the case for appeal.
In the United States, eBay has also had similar suits brought by the high-end fashion houses. For example, New York’s Tiffany & Company is currently suing eBay for millions in damages for allegedly failing to properly protect against the sale of fraudulent items. A verdict has yet to be reached in the Tiffany case.
