1 July 2008

PARIS - A French court on Monday ordered online auctioneer eBay to pay nearly EUR 40 million in damages to Louis Vuitton for selling fake luxury goods, in a ruling cheered as a victory for copyright protection.

The Paris commercial court ruled in favour of six LVMH brands and also barred eBay from selling four perfumes - Christian Dior, Kenzo, Givenchy and Guerlain - on its websites.

The world's largest online auctioneer, eBay immediately announced it would lodge an appeal, rejecting the view that the court had upheld copyright law.

"This decision is not based on combating counterfeit material. It is based on LVMH's desire to protect its commercial practices and exclude competition," said a spokeswoman for eBay in Paris.

"This is being done at the expense of the consumers and sellers to whom eBay is always offering opportunities," she added.

The court found that eBay had committed "serious errors" by allowing the sales of fake LVMH goods and violating the perfume sales distribution network set up by Louis Vuitton and Christian Dior Couture.

eBay was ordered to pay nearly EUR 40 million to the six plaintiffs including EUR 19.28 million to LVMH Malettier, which makes handbags, luggage and other leather goods.

It must pay EUR 16.3 million to LVMH sister company Christian Dior Couture for damage to its brand images and causing moral harm.

The court also ordered eBay to pay EUR 3.25 million to the four perfume brands for sales in violation of its authorised network.

LVMH hailed the decision as a coup against illegal sales on the Internet.

"It is a major first because of the principles that it recognises and the amount sought," Pierre Gode, an aide to LVMH president Bernard Arnault, told AFP.

Describing eBay's anti-counterfeit measures as "empty", Gode said the court decision was "important for the creative industry" and that it "protected brands by considering them an important part of French heritage."

LVMH, the world's leading luxury brand, was seeking EUR 50 million in damages from US-based eBay Inc. and its Swiss subsidiary eBay AG for the auctions of fake goods and unauthorised sales of perfumes.

It had argued during the case that began a year and a half ago that eBay knowingly allowed the sales of counterfeit products such as handbags, lipstick, perfume and clothes on its website.

The court issued a cease and desist order to eBay, barring it from running ads for the perfume and cosmetic brands or face a fine of EUR 50,000 per day.

The full text of the decision is to be posted on the eBay sites in English and French within the next three weeks, the court ordered.

The ruling came amid a flurry of legal action against the online giant, which claims to have some 84 million active users in 39 markets worldwide.

Three weeks ago, eBay was convicted by a French court of selling counterfeit goods and ordered to pay EUR 20,000 in damages to French luxury group Hermes.

That court ruling, which marked a first in France, found eBay directly responsible for the sale on its website of three Hermes bags including two fakes, for a total of EUR 3,000.

France's traditional auctioneers took legal action against the eBay in December, accusing it of encouraging trade in pirated and stolen goods.

A council representing the auction industry also accuses the Internet trader of breaking a French law that requires all auctioneers to be approved by the state.

According to eBay, the total value of items sold on its trading platforms in 2007 was nearly USD 60 billion.

[AFP / Expatica]