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Mon June 30 2008 15:35:47

eBay-LVMH Fight 'Spins' Out of the Courtroom

By: Ina Steiner

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The French court ruled, the lawyers paused, and the Public Relations staff took control in the battle between French luxury brand LVMH and auction site eBay. The house of couture said eBay was guilty of gross misconduct, while eBay said the ruling overreached and was LVMH's attempt to "protect uncompetitive commercial practices."

LVMH and eBay issued dueling press releases (below) following the ruling that requires eBay to pay almost 40 million euros to LVMH for "negligence" and "illicit sales" over the sale of counterfeit goods on its online auction site.

eBay Found Guilty of Gross Misconduct towards the LVMH Group

PARIS - (BUSINESS WIRE) - The commercial court in Paris has, in a ruling announced today, upheld a claim made by Louis Vuitton Malletier and Christian Dior Couture against eBay.

The court has ruled that, by allowing the sale of counterfeit goods on its website to the detriment of Louis Vuitton Malletier and Christian Dior Couture, eBay was guilty of gross misconduct and of detrimental breach as, through accountable negligence, eBay had not taken the necessary measures to prevent the sale of the counterfeit goods on its site. [--break--]

The court has also ruled that, in allowing the sale of perfumes carrying the brands Christian Dior, Guerlain, Givenchy and Kenzo, products which can only be sold through the network of distributors, agreed by the companies which own these brands, eBay was guilty of practicing unlawful sales.

To compensate for all damages, the court has ordered eBay to pay 16.4 million euros to Louis Vuitton Malletier, 19.28 million euros to Christian Dior, and 3.192 million euros to the perfume brands. The verdict is one of provisional execution. Moreover, the court has also added that a report of the decision must be published in three French or international newspapers. Finally, eBay must report the verdict on both its French and English sites.

The Paris commerce court’s verdict will make case law. For the first time in France it clearly states the principle under which auction sites that operate on the web have to ensure that their activities do not permit unlawful dealings. The court has dismissed as without foundation the argument used by eBay to exonerate itself that its clients are solely responsible for their illegal undertakings when transacting. eBay is not a host but a broker.

This verdict represents an important step in the protection of brands and designs against parasitic practices. The court brings an important contribution to the protection of creative works which make up an important part of our national heritage and generate many jobs in France.

About LVMH

LVMH Moët Hennessy Louis Vuitton is the world's leading luxury goods group. The Group is represented in Wines and Spirits by a portfolio of brands that includes Moët & Chandon, Dom Pérignon, Veuve Clicquot Ponsardin, Krug, Ruinart, Château d'Yquem, Hennessy, Glenmorangie, Ardbeg, Belvedere Vodka, Chopin, 10 Cane, Chandon, Cloudy Bay, Terrazas de los Andes, Cheval des Andes, Green Point, Cape Mentelle, Newton.

Its Fashion and Leather Goods division includes Louis Vuitton, the world's leading luxury brand, as well as Celine, Loewe, Kenzo, Givenchy, Thomas Pink, Fendi, Emilio Pucci, Donna Karan, Marc Jacobs, Berluti, StefanoBi as well as eLUXURY, the authoritative online source for luxury goods on the Internet. LVMH is present in the Perfumes and Cosmetics sector with Parfums Christian Dior, Guerlain, Parfums Givenchy, Parfums Kenzo, Perfumes Loewe as well as other promising cosmetic companies (BeneFit Cosmetics, Make Up For Ever, Acqua di Parma and Fresh). LVMH is also active in selective retailing through DFS, Sephora in Europe and the United States, Le Bon Marché and la Samaritaine. LVMH's Watches and Jewelry division comprises TAG Heuer, Chaumet, Christian Dior Watches, Zenith, Fred and De Beers Diamond Jewellers Limited, a joint venture created with the world’s leading diamond group.

eBay Vows to Fight for E-Commerce Following Overreach by Luxury Brands Manufacturer

PARIS - (BUSINESS WIRE) - Following the ruling by the Tribunal de Commerce in Paris, France on June 30 2008 in relation to a suit by LVMH the French luxury goods manufacturer, eBay Inc. (Nasdaq:EBAY) issued the following statement:

"If Counterfeits appear on our sites we take them down swiftly, but today's ruling is not about our fight against counterfeit; 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.

"We believe that this ruling represents a loss not only for us but for consumers and small businesses selling online, therefore we will appeal. It is clear that eBay has become a focal point for certain brand owners' desire to exact ever greater control over e-commerce. We view these decisions as a step backwards for the consumers and businesses whom we empower everyday.

"We believe that the overreach manifests itself through an attempt to impose, in France, a business model that restricts consumer choice through an anti-competitive business practice.

"The ruling also seeks to impact the sale of second-hand goods as well as new genuine products, effectively reaching into homes and rolling back the clock on the Internet and liberty it has created. The attempt to use the ruling to confuse the separate issues of counterfeit and restrictive sales suggests that counterfeit suits are being used by certain brand owners as a stalking-horse issue to reinforce their control over the market.

"eBay does more and more to combat counterfeit. We invest more than $20 million each year to ensure counterfeit goods are found and removed. We partner with over 18,000 brand owners around the world to identify and successfully remove counterfeit goods and employ over 2,000 people to carry out this fight on a daily basis. When we find counterfeit goods on our sites we take it down.

"Overzealous enforcement of restrictive sales practices are anti-competitive and give consumers a bad deal. This is recognised by European Union policy-makers who are seeking to create a better framework for online sales to promote e-commerce in Europe. We support a free and fair market in Europe and the benefits this will bring for our sellers.

"eBay will continue to fight against counterfeit and continue to fight for consumer value through the promotion of e-commerce."

About eBay Inc.

Founded in 1995, eBay Inc. connects hundreds of millions of people around the world every day, empowering them to explore new opportunities and innovate together. eBay Inc. does this by providing the Internet platforms of choice for global commerce, payments and communications. Since its inception, eBay Inc. has expanded to include some of the strongest brands in the world, including eBay, PayPal, Skype, StubHub, Shopping.com, and others. eBay Inc. is headquartered in San Jose, California.




Comments (28) | Permalink

Readers Comments

eBay-LVMH Fight 'Spins' Out of the Courtroom   eBay-LVMH Fight 'Spins' Out of the Courtroom

by: Patricia

Mon Jun 30 16:37:15 2008

As an artist, I manufacture everything I sell and in that regard I can see where these manufacturer's have been wronged by ebay and should be paid restitution.  I know what its like to have someone rip off one of my images, print it and sell it for an original.  There is no difference and this has been happening on Ebay for years now and has virtually been ignored.  Its time they are made to pay for looking the other way and still raking in those fees and FVF's made from fraudulent items!  The bad part in all this is that ebay will turn around and beat this money out of sellers!

www.ACEOart.net

eBay-LVMH Fight 'Spins' Out of the Courtroom   eBay-LVMH Fight 'Spins' Out of the Courtroom

by: Mary

Mon Jun 30 18:12:47 2008

I sell designer Brand stuff used and NEW. But I have always listed serial numbers and put up pictures of labels and/or store receipts. So I never had issues with fakes or with eBay or VERO. But I had my pictures stolen by another member who did sell fakes but used my pictures to represent that his is real. I complained to eBay about it and they would not take my pictures down from his listing. They said that he could have gotten them off the internet and since I did not copy right them, so I have no real proof. One pic was that of my hand with a birth mark. No proof are they kidding me.

So in a way I am glad EBay got slammed with $61MIL, they deserve it. I tried to help eBay with preventing fakes being sold. They really did not care. In my final email to them I told them that I will contact Tiffany (I was selling my Tiffany rings) and tell them and contact the press and send copies of my emails to the press about how eBay is ignoring and perpetuating the sale of fakes on eBay knowingly. Since I have the camera, my hand and my proof of the original pictures of what I took for eBay posting that will be enough. Also, Tiffany knows its art work and I have no problem proving to Tiffany that I took those pics.

So, guess what, they removed my pics from his listing in less than an hour after that email.

Since then, I use water marks on every auction I sell on ebay. All my pics get my seller ids water marks on the items so that my pics cannot be used to sell fakes.

We have a professional studio so we take a lot of nice pics to sell our items on ebay. We never use pictures from the internet. I even state in my auctions that the pictures are of the item you will be getting from me. That these are not generic pics but actual pics of the item that is being sold.

That really helps with the sales. Buyers want to see what they will get, not a catalog pic of what it should look like.

eBay-LVMH Fight 'Spins' Out of the Courtroom   eBay-LVMH Fight 'Spins' Out of the Courtroom

This user has validated their user name. by: Bob

Mon Jun 30 19:17:07 2008

As I read the article I think about the ever present First Sale Doctrine.

http://en.wikipedia.org/wiki/First-sale_doctrine
T
he
first-sale doctrine is a limitation on copyright that was recognized by the U.S. Supreme Court in 1908 and subsequently codified in the Copyright Act of 1976, 17 U.S.C. § 109. The doctrine allows the purchaser to transfer (i.e., sell or give away) a particular lawfully made copy of the copyrighted work without permission once it has been obtained. That means that a copyright holder's rights to control the change of ownership of a particular copy end once that copy is sold, as long as no additional copies are made. This doctrine is also referred to as the ''first sale rule'' or ''exhaustion rule''.


Just so I am understanding this ruling....
I go and buy a LV bag/wallet what ever at a LV Authorized Store.
Do I have the right to sell that bag/wallet whatever?
I say yes I do. I bought it I have the right to sell it.
Is LV going to come to my house and say since I am not a authorized dealer I can not sell something they made that I bought from them?

How does this work and where does this little game end?????

eBay-LVMH Fight 'Spins' Out of the Courtroom   eBay-LVMH Fight 'Spins' Out of the Courtroom

by: ebayer

Mon Jun 30 19:38:47 2008

In one of those articles about the lawsuit, it says ebay and it's community, will fight this.

Please make sure my name in NOT on that, I do NOT wish to fight the ruling. I am totally happy, with it.

eBay-LVMH Fight 'Spins' Out of the Courtroom   eBay-LVMH Fight 'Spins' Out of the Courtroom

by: Looped

Mon Jun 30 20:00:10 2008

The sellers and buyers will be the one's flipping this bill. Expect fees to increase to pay off this lawsuit and expect even tighter rules put in place for sellers.

eBay-LVMH Fight 'Spins' Out of the Courtroom   eBay-LVMH Fight 'Spins' Out of the Courtroom

by: angryjim

Mon Jun 30 20:28:15 2008

Yes, eBay really takes counterfeit items seriously, particularly when it sees a way to make a futher dollar from it.  From a letter posted on the Economist:

"I unknowingly purchased a counterfeit vintage Chanel Handbag on ebay, I was able to provide a letter from the Chanel Factory stating that the purse was NOT genuine, after
filing a dispute with paypal,they denied my claim, after I appealed and filed several complaints against paypal, I was granted a refund...... of my $418.94
The catch was that I had to mail the purse back to paypal in it's original condition at my expense instead of the seller, the address I was given by Paypal is

Paypal Returns
12750 Perimeter Drive Suite 154
Dallas TX 75228

This address belongs to Liquidity Services Inc, a reselling company.
I beacme suspicious and posted this on a forum with other ebay members and found that many other individuals were asked to mail their counterfeit items to the same address, a few individuals noticed that their counterfeit item ended up back on ebay through a 3rd party seller such as i sold it, e drop off etc....even though it was fake!

Ebay makes money from the fees it collects via it's listings, paypal and knowingly trafficking counterfeit goods through a sophisticated network of resellers.

I have refused to ship back the purse, since doing so violates the US postal regulations and I don't want to be a party to any further trafficking.
MB in Tampa, FL"

eBay-LVMH Fight 'Spins' Out of the Courtroom   eBay-LVMH Fight 'Spins' Out of the Courtroom

by: DisgruntledPowerSeller

Mon Jun 30 22:29:55 2008

WOW, just WOW!

What are you doing, with this information, AngryJim?

eBay-LVMH Fight 'Spins' Out of the Courtroom   eBay-LVMH Fight 'Spins' Out of the Courtroom

by: patricia

Mon Jun 30 23:11:24 2008

angry jim - if this is true then something needs to be done with that information.

eBay-LVMH Fight 'Spins' Out of the Courtroom   eBay-LVMH Fight 'Spins' Out of the Courtroom

by: angryjim

Mon Jun 30 23:53:47 2008

eBay insists that counterfeit items be sent on to Paypal for chargeback purposes.  

I would like to know how that is legal since it would require a court order for the seller's goods to seized.  What statute allows eBay to act like the presiding judge of a court?  

This particular point was a topic on the eBay boards a few months back.  One particularly acute poster kept challenging the pinks to provide some answers about this practice. Naturally, no answer was ever forthcoming.  

I've known for a while that alledged counterfeit items sent on to Paypal seem to fall into some deep dark void.  The quoted letter (dated June 19 on the Economist website) seems to tell the same story.

eBay-LVMH Fight 'Spins' Out of the Courtroom   eBay-LVMH Fight 'Spins' Out of the Courtroom

by: dimes

Tue Jul 1 00:14:46 2008

It's not a secret.

I posted about this on eBay's Trust & Safety board just the other day and have posted numerous questions of the 'pinks' about how Liquidity Services differentiates between counterfeit items and legitimate goods that are sent to them because they were simply not as described.

Never a response.

eBay-LVMH Fight 'Spins' Out of the Courtroom   eBay-LVMH Fight 'Spins' Out of the Courtroom

by: angryjim

Tue Jul 1 00:17:21 2008

Here's link to the dual Paypal/Liquidators address in Dallas TX - sorry it is such a big URL

http://yellowpages.superpages.com/listings.jsp?SRC=comwp&C=
Liquidity+Services+Inc&T=Dallas&S=TX&STYPE=S&L=Dallas+TX&R=
N&MC=1&OO=1&F=1&CP=Legal+%26+Financial%5EFinancial+Services%
5EAccounting%2C+Auditing%2C+%26+Bookkeeping+Services%
5ELiquidators%5E

Anyone
see anything peculiar with this arrangement?

eBay-LVMH Fight 'Spins' Out of the Courtroom   eBay-LVMH Fight 'Spins' Out of the Courtroom

by: dimes

Tue Jul 1 00:27:03 2008

Angryjim, you might want to try using tinyurl.com to make links shorter.  Works like a charm.

Here's a link to an article on the Business Net website from way back in 2003 that reported:

''According to a recent survey conducted by the company, 54% of surplus buyers source their inventory from online auctions such as those held by Liquidity Services. About 65% of these surplus buyers then use online resale venues such as their websites and eBay to sell items to end users.

Because of its reliability with online resellers, Liquidity Services is ranked as Paypal's #1 bulk source for inventory.''

http://tinyurl.com/6e622u

This has been going on for a long time.

eBay-LVMH Fight 'Spins' Out of the Courtroom   eBay-LVMH Fight 'Spins' Out of the Courtroom

by: RichardC

Tue Jul 1 00:51:28 2008

When the Government seizes Counterfeit items, they destroy them.

Am I understanding this correctly, that Paypal is knowingly giving Returned ''Counterfeit items'' to this liquidation service, and upon sale- Paypal receives a portion of the payment?  Sounds like eBay thru Paypal is condoning the resale of counterfeit items. Perhaps the Ina can get some type of comment from the PR Spinmeisters at eBay. If Ina can't perhaps eBayInkBlog can answer this....Richard surely reads these blogs.

eBay-LVMH Fight 'Spins' Out of the Courtroom   eBay-LVMH Fight 'Spins' Out of the Courtroom

This user has validated their user name. by: Ming the Merciless

Tue Jul 1 00:58:21 2008

Re: return of counterfeit goods

Send an empty box or a box containing some worthless piece of junk to PayPal Liquidators with Delivery Confirmation.

Let's see whether PayPal likes them apples!

eBay-LVMH Fight 'Spins' Out of the Courtroom   eBay-LVMH Fight 'Spins' Out of the Courtroom

by: ClaptonIsGod

Tue Jul 1 01:29:42 2008

If anyone can find out what this place does, it's Ina.

I also think that info, needs to be sent to some of the big papers and other agencies.

Here's a few, to start with, I bet they'd be interested...

https://tips.fbi.gov/

https://wws.louisvui
tton.com/web/html/yourquestions/contact.jsp?langue=en_US&buy=1&

http://www.afp.com/english/afp/?pid=contact

wsj.ltrs@wsj.com
 

eBay-LVMH Fight 'Spins' Out of the Courtroom   eBay-LVMH Fight 'Spins' Out of the Courtroom

This user has validated their user name. by: Bill

Tue Jul 1 02:18:40 2008

Yes liquidity services has been doing this with PayPal/eBay for years. When they sell the lot is sold as knock offs but that does not stop the buyers from turning around and selling it as the real thing.
One thing that I cought from the response from eBay they said that they spend $20 Million a year to fight counterfeit goods on eBay with 2,000 people on a daily basis. That means each and every one of these people only make $10,000 a year? So they are only paying these people $5.00 an hour? Where do they come up with this crap?

Bill

eBay-LVMH Fight 'Spins' Out of the Courtroom   eBay-LVMH Fight 'Spins' Out of the Courtroom

by: Exyank

Tue Jul 1 03:24:08 2008

The thing I love most about this one is this part of eBay's statement on the ruling:

"... 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..."

Australians find that particularly entertaining. It seems eBay is offended by this sort of thing, sort of like mandatory PayPal is uncompetitive commercial practice at the expense of consumer choice and the livelihood of law-abiding sellers...

OOPS! Pot kettle black, just a little bit? Hmmm.....

eBay-LVMH Fight 'Spins' Out of the Courtroom   eBay-LVMH Fight 'Spins' Out of the Courtroom

by: DisgruntledPowerSeller

Tue Jul 1 09:23:32 2008

Looks like Liquidity services inc, got this guy!

http://www.tdpri.com/forum/bad-dog-cafe/72074-paypal-steal
s-telecaster-guitar.html

eBay-LVMH Fight 'Spins' Out of the Courtroom   eBay-LVMH Fight 'Spins' Out of the Courtroom

by: I hate ebay

Tue Jul 1 09:52:28 2008

Is this the same place?

http://www.businesswire.com/portal/site/google/?ndmViewI
d=news_view&newsId=20080618006195&newsLang=en

eBay-LVMH Fight 'Spins' Out of the Courtroom   eBay-LVMH Fight 'Spins' Out of the Courtroom

by: ???????????????

Tue Jul 1 11:04:38 2008

Looks like the FBI, has already been told about this company. Here's message board, that talks about it:

http://forum.purseblog.com/ebay-forum/paypal-wants-the-fake
-chanel-309773.html

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