eBay Fined in France for the Sale of Counterfeit Goods

On June 30, 2008 the Commercial Court of Paris (Commercial Court) issued an injunction and ordered eBay Inc (eBay) to pay 38.6 million Euros in damages to SA Louis Vuitton Malletier (Louis Vuitton) for selling fake goods bearing the names of the real, luxury goods manufacturers. eBay petitioned the French Court of Appeals to stay the injunction, but the appeal for the stay was denied on July 11. The injunction required eBay to block all sales of counterfeit Louis Vuitton and Christian Dior Couture products, and to block all sales of genuine Christian Dior, Kenzo, Givenchy and Guerlain perfumes, since eBay is not an authorized distributor. (The sale of genuine products by an unauthorized distributor may be legal in some countries, for instance the US, but is generally illegal in France). In effect, the Commercial Court ruled that eBay had not taken enough steps to police the authenticity of the goods being sold on its web sites. The ruling covers products sold not just on eBay.fr, but on all international eBay sites. eBay had argued that the French courts did not have the jurisdiction to govern the worldwide sites, but the court held that all eBay sites were subject to French law, as they were accessible from France. eBay also argued that even under French law, it was solely a provider of "host" services and not liable for the transgressions of its users. However, the Commercial Court ruled that eBay's role in facilitating sales and the fact that it receives a commission makes it a "broker" rather than a host, thus attracting liability. Since fashion items have been difficult to protect via intellectual property law, the industry may see the French court's ruling as an encouraging sign. eBay has indicated that it will appeal the decision. For the full text of the June 30 judgment en français, see: http://tinyurl.com/57bp7r For eBay's response to the June 30 judgment, visit: http://tinyurl.com/4wlfkx; and for eBay's counterfeit policy, visit: http://pages.ebay.com/againstcounterfeits/ Summary by: Lea Epstein