French Court Fines eBay Over Fake Goods

A French court has ordered eBay to pay a 40m euro fine (£36.1m; $63m) to luxury goods group LVMH for allowing fake copies of its goods to be auctioned on the site.

The case was brought against eBay by six brands belonging to LVMH - Lois Vuitton Malletier, Christian Dior Couture, Dior perfume, Guerlain perfume, Kenzo perfume and Givenchy perfume. The company alleged that even legitimate auctions of their products were illegal due to only specialist dealers being permitted to sell them.

eBay will no longer be allowed to sell the four perfumes in the future. A spokesman for LVMH said that it "protected brands by considering them an important part of French heritage".

eBay have dedicated themselves to fighting back against this ruling, saying "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".

The case goes some way to protecting eBayers from the sale of counterfeits, but is it really justified that they should be barred from listing legitimate goods in an open market?

Credit to SniperX for also submitting this.
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33 Comments

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It's obvious that if the goods are well below retail prices, for example £5 instead of £50, alarm bells must be ringing and you must think they are moody goods.

So eBay should be fined, they are profiting from fraud and deceit.

(leesmithg said @ #14)
It's obvious that if the goods are well below retail prices, for example £5 instead of £50, alarm bells must be ringing and you must think they are moody goods.

So eBay should be fined, they are profiting from fraud and deceit.

How?

You are actually insisting (or is that surmising) that eBay monitors the entire transaction between buyer and seller. While this is relatively simple for a B&M auctionhouse to do (Christie's or Sotheby's in-person auctions, for example), it's practically *impossible* for an online auctionhouse to do (ask either Christie's or Sotheby's about that; both also have completely separate online auction divisions) *unless* you directly involve a national government and also make the bidding transparent *to* that government.

The French have a hate-hate relationship with online auctionhouses, and eBay in particular; they actually tried to have eBay barred from doing business in France. (Unfortunately for the French, they did not count on Christie's, which has a business relationship with eBay, filing a friend-of-the-court brief on eBay's behalf in France; the case was withdrawn.)

If eBay actually knew the goods were shady, then you might have a point (however, just because the goods are sold drastically below retail, does not necessarily mark them as counterfeit or even stolen; you could have a case where a distributor is simply trying to unload unsold inventory). That may very well be the problem facing LVMH; they don't want their authorized distributors using eBay to unload unsold inventory (and due to the very soft economy, not only in North America, but in the EU as well, there is lots of it). If the distributors are forced to eat that unsold inventory, the distributors are literally beholden to LVMH (and that is especially true of non-French distributors).

For shame, LVMH!

unsold inventory of luxury goods? especially perfume? rofl, best one I've heard in a long time

gimme a ring next time you see some cheap unopened, non-stolen, genuine unsold inventory of Channel n°5 on ebay my wife might love that...

rofl

(PGHammer said @ #14.1)


How?

You are actually insisting (or is that surmising) that eBay monitors the entire transaction between buyer and seller. While this is relatively simple for a B&M auctionhouse to do (Christie's or Sotheby's in-person auctions, for example), it's practically *impossible* for an online auctionhouse to do (ask either Christie's or Sotheby's about that; both also have completely separate online auction divisions) *unless* you directly involve a national government and also make the bidding transparent *to* that government.

The French have a hate-hate relationship with online auctionhouses, and eBay in particular; they actually tried to have eBay barred from doing business in France. (Unfortunately for the French, they did not count on Christie's, which has a business relationship with eBay, filing a friend-of-the-court brief on eBay's behalf in France; the case was withdrawn.)

If eBay actually knew the goods were shady, then you might have a point (however, just because the goods are sold drastically below retail, does not necessarily mark them as counterfeit or even stolen; you could have a case where a distributor is simply trying to unload unsold inventory). That may very well be the problem facing LVMH; they don't want their authorized distributors using eBay to unload unsold inventory (and due to the very soft economy, not only in North America, but in the EU as well, there is lots of it). If the distributors are forced to eat that unsold inventory, the distributors are literally beholden to LVMH (and that is especially true of non-French distributors).

For shame, LVMH!


The same reason that in Britain we pay 3 times the price for Jeans that are top brands like Levi's, which are only allowed to be sold cheaply in the USA.

The people that produce the perfumes and clothing only allow it to be sold in the retail outlets.

Not on-line auction sites.

Anyway most of those cheap perfumes contain human urine, so tough if you got some.

(leesmithg said @ #14.3)

The same reason that in Britain we pay 3 times the price for Jeans that are top brands like Levi's, which are only allowed to be sold cheaply in the USA.

The people that produce the perfumes and clothing only allow it to be sold in the retail outlets.

Not on-line auction sites.

Anyway most of those cheap perfumes contain human urine, so tough if you got some.

If the American producer is tying the distributor's hands like that over unsold inventory, I'd be just as upset (and I'm an American).

Oh, the M and H in LVMH stand for Moet and Hennessy, which are known for champagne (Moet) and cognac produced from the same grapes (Hennessy), while Louis Vuitton (the LV) is primarily leather goods (especially luggage/ladies' handbags/briefcases/etc.). None of the three *lead companies* (LVMH does represent other brands) is in the perfume business as a primary line.

And, lastly, it's Rather Interesting that Europeans are quick to scream over *American* companies (you mentioned Levi Strauss) putting the squeeze on EU zone customers via exclusive-by-country contracts with their distributors (both Microsoft and Novell, not to mention Corel, have come in for their share of castigation over such deals with European distributors); however, you are just as quick to *approve* of such contracts when the customers getting squeezed are outside of Europe.

Something to think about.

(Arkos Reed said @ #14.2)
unsold inventory of luxury goods? especially perfume? rofl, best one I've heard in a long time

gimme a ring next time you see some cheap unopened, non-stolen, genuine unsold inventory of Channel n°5 on ebay my wife might love that...

rofl

Luxury goods are easily the one item that doesn't get wholesaled (either via eBay or other means), mostly because of such *tying* contracts between producer and distributor, unless it's via some sort of *private sale*. (Consider the stores of TJX Companies: five interlinked chains that all sell brand-name middle-to-high end goods at deep discounts; four of these chains are based in the US. (Guess where number five is.) While they don't name names in their ads, they don't hide the names of the brands in the stores.) TJX literally makes its living on the woes of middle and high-end retailers (not just Macy's, but Bloomingdale's, Filene's, and even Nordstrom will unload via TJX); however, TJX is the *dirty little secret* that the manufacturers (not the distributors) don't want you knowing about. Private or other closed-doors sales of unsold inventory are well and good for these luxury-goods producers, as they don't get *exposed* to the *riffraff*. But on a site frequented by the proles, such as eBay? (Again, never mind that Christie's, easily the toniest of Europe's auctionhouses, deals with eBay.) It's all about image, not reality.

(I know about TJX Companies because it's a public company (NYSE: TJX); further, I personally have shopped at two of the chains (Marshall's and TJMaxx). While both are known primarily (in their ads) for discounted name-brand ladies' apparel, both chains also have a rather sizeable selection of mens' apparel, toiletries and beauty supplies (for both sexes, so no smirking from the caveman in the corner), and even (don't laugh!) Kirchmayr chocolates!)

However, the woe (especially at the high end) is such that not even discounters such as TJX can pick up the slack. Therefore, the producers are well aware that for once the genuine article can (and in some cases, may well have to) be sold at deep discounts from retail. The deep dark secret is about to be exposed to the noon sun. However, of course, these same luxury-goods producers are being seriously Pharonic (in de-Nile) over it.

Canute, have you noticed your broom has half the bristles missing?

And have you further noticed that it's only low tide?

Ridiculous fine. As if Louis Vuitton doesn't already have enough cash sloshing around!! The greed of these companies knows no bounds.

There are two things:
* Counterfeit items sold on EBay: well, counterfeit items cost the companies money. Everyday, customs guards in Europe
or in Northern America confiscate illegal copies of anything ranging from Rolexs, plush-toys, apparel, not just luxury brands but common brands.
EBay should be able to control what they are selling.
* LVMH is the producer of perfumes and they want to sell only their stuff via authorized retailers. That's like you buy a car: you buy a brand car from an authorized reseller of that brand, no? Same thing here.

Besides, stop the French bashing, it's getting old and boring. Everyone would be calling for the death penalty if there were counterfeits of IPhones or any US made products.

Two things back at you:

1. eBay is not the one doing the selling, they are essentially an auction house. In any other auction venue, if the goods are found to be counterfeit, then you sue the seller, not the auction house itself. eBay never handles or even sees the actual item and has no way of telling if an item is real or fake.

2. You can buy any car you like from any dealer, so long as they have acquired it legally. Used car dealers would be out of business if only an "authorized reseller of that brand" could sell a car.

Oh, and the French seem to have the market cornered in not understanding the nature of eBay. It seems like every year or so they find something new to gripe about (last one I remember was Nazi memorabilia). They act as if they have the right to control the actions of companies in other countries.

And there are counterfeits of iPhones, iPods, and many other American made products on eBay. Our companies know how auctions work and sue the people selling the items, not the auction house.

(roadwarrior said @ #11.1)
..snip..
Our companies know how auctions work and sue the people selling the items, not the auction house.

Exactly. If a shop in a mall was found to be selling illegal counterfeit goods, the police wouldn't arrest the mall owners, they'd arrest the shop owner.

It's stupid decisions like this that make me ashamed of being in the EU (I'm a Brit btw).

(TCLN Ryster said @ #11.2)
It's stupid decisions like this that make me ashamed of being in the EU (I'm a Brit btw).


And how sweet of you that you accept to it

What I don't understand here is... Everybody would feel unconfortable if I say 'I hate black people' or 'I have the jews'. I am sure the moderators whould delete the comment right away.

But it looks like it is perfectly acceptable to say 'I hate the French'.

There is something illogical with this, isn't there.

except it's not the govt on the other side of the lawsuit, but a company trying to protect its brands
afaik they are even forced to do so, according to french law, if they fail to protect their brands/patents by negligence or mishandling, this could bar them from any kind of damage reparation in further cases

"protected brands by considering them an important part of French heritage".

Oops! You mean it protects your company's heritage of profits, oh I see....

man..is that all these european countries know how to do is 'fine' companies for income...LOL...course I think a person ought to be shot...trying to sell anything french.

This is the same country that has outlawed making certain types of wines and cheeses anywhere except in the region it originated from...

that's what they call an AOC : Appellation d'Origine Controllée (help yourself with a google translation or whatever)
These AOCs have been created to protect the names of products which often are older than the US of A and are made according to very specific traditions, with products originating from very specific areas of production, which provides them unique gustative, olfactive and quality characteristics. Not protecting these products with AOCs (which exist in other countries btw) would result in cheap knockoffs, thus dilluting the quality value and reputation of a french/italian/spanish specialty (oh dear look, some cheap Cabernet Sauvignon! let's buy some!........ yuck, damn thing tastes like vinegar! is THAT french wine? - and the fine print would read made in whatever knockoff specialized country/brand which comes to your mind)
I talked about french wine, but the same applies to Netherland's Gouda cheese, Italian Parmigiano Reggiano or whatever. It's where and how they make these things that makes them unique, desirable, thus justifying the need to protect them.

Ground beef is a German invention, but beef paddies on a bun is an american invention.

Actualy, the AOC law doesn't prevent you from MAKING certain kinds of wine and cheese, it outlaws the SALE of certain kinds of wine and cheese under names associated with the region it originated from unless the product itself was made in that same region. So, you can make Burgundy wine with Burgundy grapes and sell it, but you can't call it legally call it Burgundy in France. Because that would make sense. And we can't have anything that makes sense go on in France, or it wouldn't be French.

"The law is an ass." CHARLES DICKENS, Oliver Twist, chapter 51, p. 489

(neufuse said @ #7)
This is the same country that has outlawed making certain types of wines and cheeses anywhere except in the region it originated from...

They're protecting the name, not the making of the product. You can make the exact same product, but with another name. You're thinking of it as if it were like patents when it's more like trademarks.

(dismuter said @ #7.4)

They're protecting the name, not the making of the product. You can make the exact same product, but with another name. You're thinking of it as if it were like patents when it's more like trademarks.

Champagne is done under the name, "Méthode Traditional". There was an attempt to enforce parmesan cheese recently, along with defining what actually constitutes Vodka.

wrong, some of the basic components of these perfumes are so complicated, the formulas and proportions used to attain the fragrances are dutifully patented to prevent counterfeits from being made

Come on google has my email, how do I sue them for listing it!
*** companies, ebays not in the wrong at all, hope they ignore this and just let people keep selling it

is it really justified that they should be barred from listing legitimate goods in an open market?

Another root issue here that needs to be addressed: like sites like Youtube, how is eBay possibly going to be able to police 100% of the content on their site for illegal activity? Should the ball squarely fall upon eBay or Youtube to do such? And is it honestly a feasible thing to do?

I don't see how someone can't resell this stuff... maybe if selling it from France...but if you bought it then later decided to resell it....they should have no say in it unless they are willing to buy it back at a good price
Most things are not meant to be re-sold, the company doesn't get a piece of the multiple purchases. Therefore, they discourage it a lot.

(Kreuger said @ #3)
Most things are not meant to be re-sold, the company doesn't get a piece of the multiple purchases. Therefore, they discourage it a lot.

That's tough titties for the company, though, there's nothing illegal about reselling anything. In fact, that's how most goods are sold these days anyway.

(Kushan said @ #3.1)

That's tough titties for the company, though, there's nothing illegal about reselling anything. In fact, that's how most goods are sold these days anyway.

Yeah I know, I was just saying that's why they have a problem with it.

wow...

I don't see how someone can't resell this stuff... maybe if selling it from France...but if you bought it then later decided to resell it....they should have no say in it unless they are willing to buy it back at a good price

I hate ebay and wish they would go bankrupt, they treat their sellers with total contempt, but I have to side with them on this one.

But then again I would even side with a vi$ta fanboy if it's against the french.