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February 12, 2010 4:28 PM

EBay Takes Another Punch in France

Posted by Zach Lowe

It has been fascinating to watch different legal systems handle the question of whether eBay bears responsibility for counterfeit goods bought and sold through its online auctions. France has been one of the toughest venues for eBay--and one of the friendliest for makers of designer goods--and that trend continued Thursday, when a Paris court ordered eBay pay a $275,000 fine to Louis Vuitton as punishment for paying search engines to produce links to eBay items when users typed in common misspellings of the words Louis Vuitton, according to the Wall Street Journal.

Louis Vuitton's parent company, LVMH Moët Hennessy Louis Vuitton SA, had alleged that eBay was aiding in the sale of counterfeit goods by buying the misspelled search terms, since those terms, Louis Vuitton claimed, matched the names of some counterfeit goods. (EBay claimed in turn that the words were common and sometimes innocent misspellings, the WSJ says.) EBay has said it may appeal the decision, and it called the fine "disproportionate" to the alleged offense. 

Most of the other high-profile court battles between eBay and luxury goods makers have turned on the issue of how much eBay must do to combat the sale of counterfeit items. In 2008, a French court ordered eBay to pay LVMH a $63 million fine for failing to aggressively police counterfeit sales. EBay criticized the ruling as a blow for consumers and claimed it spends millions each year to track down sellers of counterfeit goods and have those goods taken off eBay. 

They repeated that argument in a U.S. case brought by Tiffany (and its counsel at Arnold & Porter), which alleged that eBay (represented by Weil, Gotshal & Manges) just doesn't do enough to prevent counterfeit sales. A federal district court ruled for eBay, and Tiffany appealed to the U.S. Court of Appeals for the Second Circuit. A three-judge panel heard the case in July and is yet to issue a ruling. A Belgian court ruled in eBay's favor in 2008 in a similar case brought by the L'Oréal Group, according to our prior reporting

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