Online auction service eBay has been ordered by a French court to pay $63 million to French fashion company Moet Hennessy Louis Vuitton (LVMH), the company responsible for making Louis Vuitton and Dior branded handbags and perfume.
A two-pronged legal attack saw LVMH accuse eBay of "guilty negligence" claiming it didn't do enough to stop fake LVMH merchandise from being sold through the site. And any sale whatsoever of LVMH-branded perfume, fake or not, was considered illicit by LVMH since only approved distribution networks are allowed to sell the perfume to customers.
The San Jose-based auction site said LVMH filed the lawsuit out of spite, since the middleman is cut out of the deal when people buy LVMH products through eBay.
LVMH reportedly discovered up to 90 percent of all Louis Vuitton and Dior watches, handbags and perfumes sold through eBay were counterfeit. Although it's very difficult to police possible counterfeit items, this independent reviewer's warning indicates the service and its customers were both aware of the existence of counterfeit sales.
Companies have requested eBay stop selling their products -- even legitimate ones -- over possible trademark infringement, as well as the service's perceived slow pace in reporting fraudulent transactions.
"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 every day," eBay said in a statement. "We will fight this ruling on their behalf."
The service previously stated has a team of 2,000 employees worldwide working in a $20 million annual operation to crack down on the sale of counterfeit goods through the site.
Elsewhere in France, eBay has faced similar legal issues, with Hermes International receiving 20,000 euro after the auction site did not stop the sale of fake handbags. In US courts, the jewelry maker Tiffany has a multi-million dollar pending legal suit against eBay over claims that shoppers are purchasing counterfeit Tiffany jewelry. Merchandisers claim the sale of counterfeit items cost them as much as $30 billion per year.
