Hi All,
Having seen many e-bay related discussions on this list, I thought people
might be interested in this article that popped up in Forbes....It appears
that a French court ruling held eBay liable for hosting sales of counterfeit
goods, with possible broader implications for Europe and elsewhere to come.
Regards,
Ricki in Utah - hot and sunny weather here!
* * *
LONDON -
Online auction house eBay is simply a host for transactions between buyers and
sellers, not liable for any dodgy dealings that go on, right? Wrong.
On June 4, a French court ruled against eBay
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in a case brought against it by French ultra-chic luxury retailer
Hermès over the sale of three Hermès bags, including two fakes, for a
total of 3,000 euros ($4,715.50). I
It's not so much the size of the fine that's likely to be keeping
eBay executives awake at night: 20,000 euros ($31,439.30) is relatively
small change for a company the market values at $38.5 billion. Rather,
it's the precedent that the ruling by the court in Troyes sets, as it
could apply to cases that might cost eBay a lot more and force it to
rethink its entire selling strategy.
In France, Christian Dior
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and LVMH Moët Hennessy Louis Vuitton have pending cases against eBay
over counterfeit goods, worth 17 million euros ($26.7 million) and 20
million euros ($31.4 million), respectively, while in the U.S., Tiffany's
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) case against the company completed its hearing stage last December.
Hermès is the first successful case against eBay in France, and the
second time an online intermediary has been found liable in relation to
counterfeit charges, says Georgie Collins, an intellectual property
lawyer at London-based business law firm LG. Last year LVMH was awarded
$400,000 against Google
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) because ad words linked to sites selling counterfeit products.
On June 4 the court said that by selling the bags on French site
eBay.fr, the company had "failed to act" within its power to prevent
the "reprehensible" use of the site, to the "detriment" of Hermès,
according to Agence France-Presse.
In response, eBay has said it takes counterfeiting very seriously
and points to the steps it has taken since the case was first launched
to improve its anti-counterfeiting measures. "We are disappointed LVMH
filed a lawsuit against eBay," the online auction giant said in a
statement. "We cannot discuss details related to pending litigation;
however, we do hope that we can resolve this conflict with LVMH."
Ebay has not yet indicated whether it plans to appeal.
Losing such a case sets an uncomfortable precedent for online
vendors. The verdict directly challenges eBay's argument that it is not
directly responsible for what is on its Web site. EBay says that while
it can take reasonable steps to ensure that it's not promoting
counterfeits (by limiting the number of goods one person can sell and
quickly removing goods after a complaint), there will be goods that
slip through its net. Vetting each and every product before it goes up
for sale online is not an option, the company contends.
"The judge has challenged the argument of Web sites such as eBay
that they are merely intermediaries and that the sale of counterfeit
goods has nothing to do with them," says Collins. "The judge is
essentially saying that they have to find a way of dealing with this."
The sophistication of counterfeiters makes the potential liability
of online vendors even more problematic. In some instances, the only
way to tell a real good from a fake one is to return it to the producer
and have it taken apart, says Collins. That means that the question of
who should bear the responsibility of determining whether a good is
fake has no clear answer, she adds.
Currently, the courts in France, home to many of the world's top
luxury brands, including LVMH and Hermès, have taken one of the
toughest approaches to counterfeiting cases, Collins says. "There is a
real acknowledgment, carried through practically, of the importance of
getting counterfeiting off the market."
Europe is taking a tough look at the responsibilities of online
vendors across the board. Last year in Germany, Rolex successfully sued
eBay over a breach of its intellectual property rights,
using the European Enforcement Directive of 2004, which harmonized
intellectual property rights across Europe. The European Commission's
e-commerce directive, which looks at the liability of intermediaries,
is also under review.
The International Anti Counterfeiting Coalition estimates that
counterfeiting has skyrocketed over the past two decades into a $600
billion industry. In her book on the history of luxury, Deluxe: How Luxury
Lost Its Luster, Newsweek journalist Dana Thomas argues that the
multibillion-dollar luxury goods
industry has been particularly vulnerable. The democratization of the
industry in the early 1990s brought luxury goods within the reach of
the world's middle classes, in no small part fueled by China's
emergence as a low-cost manufacturing center.
But along with the low-cost goods has come a raft of counterfeits.
"The convergence of the two, big demand and big supply," Thomas argues,
has had a "cataclysmic" effect on the luxury business.
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