eBay 2, Luxury Retailers 1

The Wall Street Journal Law Blog relays news of a Belgian legal ruling that eBay is not liable for sale of counterfeit Lancome perfumes, holding “that eBay is a passive provider of ‘host’ services, as that term is defined in a European Community policy directive, and that it’s therefore entitled to more legal leeway than a brick-and-mortor auctioneer would receive if counterfeit goods were being sold on his premises.” This is the third ruling in the past month in cases brought against eBay over sales of counterfeit luxury goods. A French court ruled against eBay in one of the cases; eBay won the Belgian case and another decided in the U.S. As the Journal says, “circuit splits are nice, but country splits are even better.”

eBay Liable for Counterfeits

A French court ordered eBay to pay Louis Vuitton and other makers of luxury bags €38.6 (variously reported as $60.8 and $63.2 million) in damages for sales of counterfeit handbags on the website, the largest damage award eBay has incurred in connection with its quality-assurance practices.  The court ruled eBay did not employ adequate measures to prevent the sale of fake bags.  eBay announced it will appeal the decision.  The New York Times reports that the decision “is unlikely to have a drastic effect on the way eBay conducts business because it has already made changes to police its site for counterfeit goods.”  eBay noted that it employs over 2,000 people to deal with sales of counterfeit goods and that it cuts of 95% of fraudulent sales before they occur.  Of course with millions of ongoing active sales at any moment, there remains considerable potential for fraud.