eBay fined $61M in furor over fake goods

Online auction company says it will fight French court ruling

A French court has fined eBay Inc. $61 million for allowing the sale of Louis Vuitton Malletier and Christian Dior Couture counterfeit goods on its Web site, the luxury goods company LVMH said today.

EBay said it will fight the ruling issued today by the Tribunal de Commerce in Paris.

According to the LVMH statement, the French court ruled that eBay was guilty of "gross misconduct and detrimental breach," saying it was negligent when it did not take the necessary steps to prevent the sale of the counterfeit goods.

LVMH said the court also ruled that eBay was guilty of illegally selling perfume manufactured by Christian Dior, Guerlain, Givenchy and Kenzo, which can only be sold through an agreed-upon network of distributors.

The court ordered eBay to pay $25.8 million to Louis Vuitton, $30 million to Christian Dior and $5 million to the perfume companies, the LVMH statement said.

"This verdict represents an important step in the protection of brands and designs against parasitic practices," LVMH said. "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."

In its response to the ruling, eBay said it quickly takes down auctions for counterfeit goods that appear on its site. The company said it spends $20 million annually and has 2,000 employees who work on identifying and removing counterfeit property from its site.

"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," eBay said in the statement. "We believe that this ruling represents a loss not only for us but for consumers and small businesses selling online, therefore we will appeal."

EBay said the ruling was an attempt to restrict consumer choice in France through an anticompetitive business practice.

The court ordered eBay to post the ruling on its French and U.S. sites. EBay said it had not done so and did not know when it would be posted.

Earlier this month, another French court ordered eBay to pay $4,700 to Hermes for selling fake Hermes handbags, according to Forbes.

Copyright © 2008 IDG Communications, Inc.

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