LVMH v. eBay: Paris' Tribunal De Commerce Holds eBay Liable

After two long years of legal wrangling, Paris' Tribunal de commerce ruled earlier today that online auction site eBay is indeed liable to LVMH for the sale of counterfeit luxury goods on its site as well as the illegal sale of authentic luxury perfumes and cosmetics. eBay has been ordered to pay damages in the amount of 38,6 million Euros (USD 60,824,052/GBP 30,509,052). (Source) More details follow after the jump.

Tribunal de commerce, Paris. Photo by Jacques Mossot, courtesy of Structurae.

By way of background, today's ruling is the result effectively of three seperate suits brought by various LVMH companies. The suits were joined because of the degree of similarity in the underlying facts of each case and the legal issues presented. The first two suits were brought respectively by Louis Vuitton Malletier (LVMH) and Christian Dior Couture (LVMH) and alleged essentially that eBay had not done enough to prevent the sale of counterfeit handbags, pret-a-porter apparel and Christian Dior cosmetics on its site by individual users. The main contention was that eBay's safeguards and penalties for intellectual property right infringements by its users were insufficient and that the lack of effective mechanisms to prevent the trade in counterfeit goods on the site amounted to negligence. The Tribunal de commerce agreed.

The second lawsuit involved the sale on eBay of perfumes and other cosmetics from LVMH brands Dior, Guerlain, Givenchy and Kenzo. The main argument in this suit was that regardless of the authenticity of the products sold on eBay, the sale of these products were illegal because they were conducted outside the selective distribution channel. In other words, the perfumes were not sold by authorized resellers. This argument touches upon one of the hallmarks of distribution and sale of luxury goods - selective distribution refers to instances where a particular product is distributed through a limited number of wholesalers or retailers in a given market. This allows the product's manufacturers to exert greater control over where their products are sold (high-end retailers) and how their products are marketed (displays, images, etc.). It is one of the ways in which luxury brands tightly control the image and status of their products. On this issue as well, the Tribunal de commerce sided with LVMH.

The ruling today differs from the ruling rendered earlier this month by the Tribunal de grande instance de Troyes brought by Hermes. Whereas Louis Vuitton and Christian Dior Couture argued that eBay had been merely negligent in preventing the trade in counterfeit luxury goods, Hermes successfully argued that eBay was in fact a direct participant in the sale of the counterfeit goods not only because they offer counterfeit traders a platform for their fraudulent transactions but also because eBay provides a number of services designed to enable the transactions to take place. The key argument in the Hermes suit was that eBay, by virtue of taking a commission from each sale that takes place on its site, was actually profiting from the counterfeit trade thereby making it a participant in the fraudulent transaction and not merely a passive host as it has contended in the past. In this respect, the ruling in the suit brought by Hermes went much farther than the ruling in the suit brought by LVMH. eBay has already filed an appeal of the Hermes ruling and plans to file an appeal of today's ruling as well.

Comments

[Amanda]

I would also like a copy of the opinion in English, if any of you have found it. Thanks!

Amanda

mamanda@law.upenn.edu

[Rebecca]

If anyone has received the English version, could they send it to me as well? email: rebeccamachacek@gmail.com
Thanks!

[Todd]

tlerner@GMAIL.COM

thanks

[Todd]

I would appreciate a copy of the ruling in English for a law review article I'm writing.

Thanks

[Margot]

I´d really appreciate a copy of the ruling aswell!
In English please :)
Many thanks!
E-mail: goootjuh@hotmail.com

[Marcin]

Hello, I would really appreciate if someone could send me a copy of the rulling at my email: marcin_koji@wp.pl . Thanks!
Marcin

[Chris]

Yes, please, could anyone send a copy of the ruling to me as well. Many thanks!
My email address is christopher_ko@sasa.com

[Donna]

I would really appreciate a copy of the ruling as well. Please e-mail dee.some@yahoo.com. Thanks!!

[diane]

Hi - I'm looking for a copy of the ruling. Can anyone help? My e-mail is diane@dianebourque.com
Thanks!
Diane