Designer Handbags fakes judgement puts discount sites at risk

A French court has ordered eBay to pay 40m euros ($63m) in damages to the owners of luxury designer handbag brands Louis Vuitton, Dior and Givenchy, for allowing online auctions of fake copies of its goods. The brand owning company, LVMH, took the action because it said eBay’s French site had not done enough to stop the sale of counterfeit designer bags and perfumes.

An eBay statement said LVMH was trying to “protect uncompetitive commercial practices at the expense of consumer choice” and added that it would appeal.

The case against eBay in a commercial court in Paris was brought jointly by six designer handbags and fragrance brands belonging to the LVMH group. Louis Vuitton Malletier, the group’s designer handbag and luggage section accused eBay of “negligence” in allowing illegal copies of their goods to be sold in online auctions.

But the case didn not only cover fake copies: four perfume brands – Dior, Guerlain, Kenzo and Givenchy – sued for what they called “illicit sales” of their products. They alleged that even auctions involving their legitimate perfumes were illegal, because only specialist dealers were permitted to sell them. The court barred eBay from selling the designer fragrances in future. This could affect the availability of designer handbags at discount outlets in future as the brands feel buoyed from this action to keep the price of their goods at the recommended level from now on. After the judgement eBay attacked the ruling as an attempt to protect uncompetitive commercial practices at the expense of consumer choice and the livelihood of law-abiding sellers. eBay has vowed to fight the ruling and has asked leave to appeal against the judegement.

According to the judgement, eBay must pay 19.28m euros to Luis Vuitton Malletier, 17.3m to Christian Dior Couture and 3.25m to the perfume brands.

The fine is the second in a month imposed on eBay by French courts. On 4 June, a court in the eastern French city of Troyes found the auction site directly responsible for the sale of fake Hermes bags. It imposed a fine of 20,000 euros jointly on eBay and the woman who offered the bags for sale.
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