French Court Orders eBay to Pay Fashion House $61 Million

July 1st, 2008 at 12:00 am

eBay Logo

It seems that eBay may have gotten the ire of high end fashion houses for being so popular online. A French court just recently ordered the popular online auction site to pay popular fashion company LVMH Moet Henessy Louis Vuitton SA the amount reaching $61 million for selling counterfeit goods online. This fashion company is the home for such popular high-end brands like Louis Vuitton, Givenchy, Fendi, Emilio Pucci and Marc Jacobs.

The decision stemmed from the popular fashion company suing eBay for condoning the selling of knock-offs and counterfeit goods that may have harmed the company’s business. But on the other side of the coin, eBay has been saying that the suit by the fashion company against them has been an attack on the online business model from which the fashion company may have felt threatened because it eliminates the middleman.

eBay, an online auction website based in San Jose, California has been a target of various suits from different luxury goods companies over the attempts of many of the site’s users to sell counterfeit products. The French court held the online company for "guilty negligence" for not doing enough to prevent conterfeit goods from being sold on its site. The court rules that eBay is responsible for the "illicit sale" of perfumes coming from the LVMH empire that should have been sold only through selected distribution networks approved by the fashion company.

eBay has been doing its best by spending millions of dollars annually trying to clean up counterfeit goods transacted on its site. But the sheer numbers of online users have continually made it difficult for the auction site to patrol and weed out the counterfeit goods sellers. Its main approach has been similar to what Google has been doing with its subsidiary YouTube from taking out copyright-infringing videos- depending on intellectual property owners from alerting the online company of suspicious transaction postings on the site.

In light of the recent ruling made by the French court, the online auction site hopes to appeal the ruling.