L'Oreal Loses Suit vs. eBay

Judge says auction site does enough to fight the sale of fakes.

by Auctiva.com staff writer
- May 13, 2009

eBay won another legal battle when a Paris court dismissed a trademark infringement case against the company, saying eBay was not responsible for the sale of counterfeit perfumes on its e-commerce site.

L'Oreal sought $4.8 million from eBay after finding fake perfumes for sale on the site. The cosmetics company said eBay was "undermining its distribution system" and taking away some of its revenue. It added that as many as 60 percent of the high-end perfumes sold on eBay were counterfeit, and that eBay's handling of payments and deliveries made it a participant in the sale of goods, including counterfeit items.

But the court disagreed and ruled that eBay was just a sales venue, and therefore not responsible for the sale of fakes. The judge also said eBay had done enough to fight the sale of knock-off merchandise.

eBay officials call the verdict a "victory" for eBay and consumers.

"We are delighted that eBay's meaningful efforts to fight counterfeits online have been recognized by the court, as has our status as an Internet-hosting provider," notes Mary Huser, eBay's general counsel.

eBay says it spends millions of dollars to prevent the sale of fake merchandise on its site, and that less than 0.2 percent of the 2.7 billion eBay listings are potentially counterfeit.

The win was eBay's first in a French court since the auction giant was ordered to pay more than $60 million to Hermes International and LVMH Moet Hennessy Louis Vuitton for being party to the sale of bogus Louis Vuitton handbags.

In the ruling, the judge notes the only way to fight the sale of fakes is through cooperation between eBay and the companies that think they've been infringed upon. So eBay and L'Oreal were ordered to come up with a way to counter the sale of counterfeit goods.

"L'Oreal is glad to accept the court's decision to judicial mediation to agree (on) necessary and long-lasting measure to curb counterfeiting," notes a L'Oreal spokesman.

This is an important legal victory, the Financial Times reports, because French courts have a reputation of being the strictest in Europe.

"If eBay is able to satisfy them, it does send a message that the company is possibly doing enough to fight the fakes," writes Maija Palmer of the Financial Times.

This was the second time L'Oreal lost a legal battle against eBay. A similar ruling was handed down in Belgium last year. L'Oreal has pending litigation against the online marketplace in Germany, Spain and the U.K.

About the Author

Auctiva staff writers constantly monitor trends and best practices of those selling on eBay and elsewhere online. They attend relevant training seminars and trade shows and regularly discuss the market with PowerSellers and other market experts.

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