Ebay Thwarted in Paris and Maybe Soon in USA

A key battle between the retail industry and eBay, the biggest online marketplace, appears to be near a flash point. Paris’ court of appeal on July 11, 2008, ordered eBay to stop selling all LVMH Moët Hennessey Louis Vuitton-owned fragrances and cosmetics on the French version of its online auction site, upholding a ruling handed down by Paris’ commercial court on June 30. While eBay's appeal against fines of almost 40 million euros, or $63.2 million, for allegedly selling counterfeit goods and unauthorized beauty products has yet to be heard in court, the auction site had requested an urgent hearing contesting the court's order to stop selling genuine products by LVMH-owned beauty brands or face a daily fine of 50,000 euros, or $79,000. LVMH argues that items by Parfums Christian Dior, Kenzo Parfums, Guerlain and Parfums Givenchy can be sold only in the selective distribution doors chosen by the company. The court also ordered ebay to pay legal fees.

Ebay said it would use all the means at its disposal to comply with the court's order. The number of Dior, Guerlain, Givenchy and Kenzo beauty products for sale on the site still ran into the hundreds as of yesterday."It's obviously a big feat to say the least," a company spokeswoman said. "The team is trying to figure out how to do this, how to delay listings and tell the seller why he is not able to sell."In a statement, eBay reiterated its accusation that LVMH is seeking to protect its commercial interests." Certain companies try to protect commercial anticompetitive practices, while eBay tries to protect the consumer's purchasing power," the company stated. "By allowing [consumers] access to the greatest choice of authentic products at competitive prices, with as a main result, the improvement of our users' purchasing power, we are confident that our appeal will be heard."

On the homefront, the controversy is brewing as well. U.S. District Court Judge Richard Sullivan in Manhattan may rule as soon as today on a lawsuit in which Tiffany & Co. argued that eBay is a distribution network that allows the trading of counterfeit Tiffany merchandise. The auction site has defended itself as an online market that simply links buyers and sellers. Should the luxury jeweler win the case, which was argued during a weeklong trial in November, eBay's business model could be rocked because of the burden of policing a site that had 83.9 million active users and 647 million new listings around the world, both in the first quarter of this year, according to a company report. It could also open the way for similar lawsuits against eBay, which is based in San Jose, Calif. Tiffany has asked the court to mandate that eBay change its processes to eliminate counterfeit silver Tiffany merchandise. Ebay has contended that it can't determine the authenticity of items up for sale because it never takes possession of any of the goods and does everything it can to keep counterfeits off the auction site. Ebay also has argued that policing is the obligation of Tiffany, the trademark owner, because the jewelry company has the ability to identify counterfeits of its products.

Hmmmmm .... what do you think?

source: WWD