News Item
eBay fined by French courts following LVMH injunction
1 December 2009
eBay, the auction website, has been ordered by the French courts to pay LVMH, the French luxury goods group, 1.7m Euros (£1.5m) for failing to prevent the sale of LVMH products on its site.
The ruling follows an injunction issued by the French courts in July last year barring the sale or purchase of any LVMH products on eBay, irrespective of their authenticity. The injunction was part of a tough crackdown on the online marketplace by the French authorities, on top of a €40m fine imposed on eBay for not doing enough to prevent counterfeit goods being sold on its site. It was revealed that over 1,000 LVMH products have appeared on eBay’s site since the injunction was first imposed.
eBay responded to the fine saying that it was not in the interests of consumers to allow the “selective distribution” of goods, and arguing it had in any event complied with last year’s ruling by deploying specialist software to try and prevent French internet users from accessing LVMH products. LMVH brands include Louis Vuitton, Christian Dior, Givenchy and Moët & Chandon.
Pam Withers, Trade Mark Attorney at Marks & Clerk, comments:
“The ruling and the attempts by eBay to comply with the injunction prove just how difficult it is to police brands online. The French courts have also tended to look more favourably on brand owners than most other jurisdictions, which explains the tough stance taken in this decsion. Undeniably, the French authorities are the most unwavering when it comes to championing the luxury goods trade – yet this ruling will not necessarily result in similar decisions elsewhere in Europe.
“Fundamentally, for brand owners, this is a two-fold issue. The main concern is about counterfeiting and whether or not online marketplaces should be compelled to take greater steps to protect brand owners from being abused online. The other involves much greyer areas about how far the rights of those brand owners should extend – such as the selective distribution rights being supported today, to whether or not comparative advertising or bidding on a competitor’s trade mark in a search engine constitutes trade mark infringement.
“The fact that LVMH is looking to stop the resale of even authentic products on eBay is a side issue, but one that demonstrates the willingness of luxury goods makers to take a heavy-handed approach and force a clampdown on sales in order to protect themselves from potential counterfeiting. The real, underlying problem LVMH and other brand owners have with eBay remains the belief that online marketplace are not doing enough to prevent fake goods being channelled through their sites.”
While eBay has fared badly in the French courts, other online sites appear to be winning the battle over how far any abuse of intellectual property can be blamed upon them directly. In September of this year, the Advocate General at the European Court of Justice gave an opinion strongly in Google’s favour in a battle with LVMH over whether paid-for keywords against the name of a competitor constitute trade mark infringement.
However, a study by Marks & Clerk earlier this year revealed that businesses are highly concerned about the protection of their brands online. In the firm’s survey, of 216 businesses, 75 per cent argued that stronger protection was needed to safeguard companies from infringement online, with 61 per cent calling for a tough cybercrime authority to be established to punish counterfeiters. Notably, 55 per cent were in favour of stronger penalties being imposed on online marketplaces such as eBay, in the event of counterfeiting.
Pam Withers concludes:
“The internet is an international channel that requires a much more co-ordinated response, which is ultimately in the interest of brand owners, consumers and online forums alike. Our research clearly points to the need for more holistic thinking. This would increase confidence of brand owners and online consumer sites and should, in so doing, curtail abuses by more effectively and consistently punishing the real offenders.”
For more information, contact your usual Marks & Clerk attorney or Pam Withers at pwithers@marks-clerk.com.