June 30, 2008
From Bloomberg - EBay Is Ordered to Pay EU40 Million in LVMH Lawsuit
June 30 (Bloomberg) — EBay Inc., the world’s largest Internet auctioneer, was ordered to pay LVMH Moet Hennessy Louis Vuitton SA 40 million euros ($63 million) over claims it didn’t do enough to stop the sale of counterfeit goods.
LVMH, the world’s largest luxury-goods maker, claimed in the Paris lawsuit that EBay has a heightened responsibility to prevent fraud. The ruling also places limits on the online sales of LVMH perfumes.
“It’s a groundbreaking decision that will help protect creativity,” said Pierre Gode, a member of LVMH’s supervisory board and adviser to chairman Bernard Arnault. “It’s an important precedent.”
LVMH said it found in 2006 that 90 percent of the Louis Vuitton and Dior-labeled perfumes, watches and handbags on EBay were fakes. Online sales of counterfeit clothes, bags and jewelry cost makers of original products about $30 billion a year, Tiffany & Co. and other retailers claim in a U.S. lawsuit.
EBay said in a statement that it would appeal.
“Today’s ruling is not about our fight against counterfeits; today’s ruling is about an attempt by LVMH to protect uncompetitive commercial practices at the expense of consumer choice and the livelihood of law-abiding sellers that EBay empowers everyday,” EBay said in an e-mailed statement. “We will fight this ruling on their behalf.”
`Trust and Security’
EBay already spends about $20 million annually on “trust and security” matters and has 2,000 employees around the world to fight counterfeits.
Another court ruled this month in a case filed by Hermes International SA that the San Jose, California-based company is a partner to its vendors and must take more steps to fight fakes.
The cases in France, EBay’s fourth-largest market, are seeking to raise the legal requirements on the company. The judge in the Hermes case said EBay should require certificates of authenticity and serial numbers for sales.
38.6 Million Euro.
$61 Million.
No matter which way you spin it, eBay execs really must feel like they woke up on the wrong side of the bed today.
LVMH Moet Hennessey Louis Vuitton today won a landmark case against eBay for allowing the sale of counterfeit goods. Announcing the decision after a two-year legal process, Paris’s Tribunal de Commerce cited “grave errors” on eBay’s part.
Louis Vuitton was awarded 19.3 million Euro ($30.5 million); Christian Dior Couture received 17.4 Euro ($27.5 million) and Parfums Christian Dior, Parfums Kenzo, Guerlain and Parfums Givenchy, were awarded around 3 million Euro ($4.7 million)
Following a smaller Hermes case from June 5 – 20,000 Euro ($34,000), we are only nearing halftime in this battle, however. eBay execs immediately stated that they will appeal the court’s decision. Meanwhile, the court ordered eBay to stop selling fragrances and cosmetics from those brands immediately, or face a fine of 50,000 Euro ($79,000) per day. Furthermore, they are facing similar lawsuits from perfume giant L’Oreal for approximately 30 million Euro ($51 million) in France and from jeweler Tiffany & Co. in New York City for an undisclosed – though reportedly quite sizable – amount.
I’d like to offer three industry experts for interviews today and in the coming weeks:
Michael Sheldon, CEO of Portero.com, a leading online luxury auction site, saw this problem with eBay over a year ago. After selling on the eBay platform for about a year and a half, he saw that luxury needed its own separate platform and established Portero in June 2007. Authentication is a necessary priority to Portero, as they sell only high-end items. Tiffany & Co., LVMH and L’Oreal are all sold on Portero and the site hasn’t faced any issues to date. Portero is based in New York. www.portero.com
Milton Pedraza is the Chief Executive of the Luxury Institute, an independent and objective research organization. He served as Senior Vice President and General Manager, Luxury Markets for the travel and leisure division of Wyndham Worldwide. Additionally, he is an independent advisor to Boards of Directors, Chairmen and CEOs of the world’s foremost Luxury Services and Luxury Goods firms. Mr. Pedraza speaks several languages and has spoken at the world’s foremost Financial Services and Luxury Conferences.
· Susan Scafidi is the first U.S. law professor ever to offer a course in Fashion Law. She has testified in Congress regarding the proposed extension of legal protection to fashion designs through the Design Piracy Prohibition Act. She is currently a visiting professor at Fordham Law School as well as a tenured member of both the law and history faculties at SMU. She has also taught at a number of other law schools, including most recently Yale and Georgetown. Professor Scafidi is the author of Who Owns Culture? Appropriation and Authenticity in American Law (2005) and also writes a blog on fashion and intellectual property, Counterfeit Chic.