Ebay told to pay $61M to fashion brand for fakes

[calculoso]

http://technology.canoe.ca/2008/06/30/6028866-ap.html

PARIS - A French court has ordered EBay Inc. (Nasdaq:EBAY) to pay the equivalent of more than US$61 million to a high-end fashion company because counterfeit goods were sold on the online auction site.

The fashion company, LVMH Moet Hennessy Louis Vuitton SA, is home to such prestigious brands as Louis Vuitton, Givenchy, Fendi, Emilio Pucci and Marc Jacobs, and had complained that it was hurt by the sale of knockoff bags and clothes on EBay.

The latest case in France pits two pillars of their industries - one old, one new - in a country whose courts often hold Internet companies responsible on matters protected elsewhere by freedom of speech. For example, French courts have ordered U.S. auction sites to keep Nazi paraphernalia away from French eyes.

This ruling came down against EBay on two fronts. The court faulted the online company for "guilty negligence," for not doing enough to prevent fake goods from being sold on its site. The court also ruled that EBay was responsible for the "illicit sale" of perfumes from the LVMH empire, which can be sold only through the brands' "selective distribution networks."

Wow. Only in France?

[MelBridgeman]

Wow is right, not sure why Ebay should be help responsible. Now are people knowling being knock off's? If so no sure how that hurts sales, as they buy the knock offs because they dont want to spend hard working money for just the name.

[Winsor_Pilates]

Originally Posted by MelBridgeman

Wow is right, not sure why Ebay should be help responsible. Now are people knowling being knock off's? If so no sure how that hurts sales, as they buy the knock offs because they dont want to spend hard working money for just the name.

If places like Ebay didn't make it easy to acquire knock offs, some of those people would save up and dish it out for the real thing.

Ebay has never taken enough responsiblities for the fakes they allow to be sold, and I'm surprised this didn't happen a long time ago.

[Dan02]

Originally Posted by Winsor_Pilates

Ebay has never taken enough responsiblities for the fakes they allow to be sold, and I'm surprised this didn't happen a long time ago.

Unless something is listed as a knock off though how are they supposed to determine which are fake and which are real?

[MelBridgeman]

Originally Posted by Winsor_Pilates

If places like Ebay didn't make it easy to acquire knock offs, some of those people would save up and dish it out for the real thing.

Ebay has never taken enough responsiblities for the fakes they allow to be sold, and I'm surprised this didn't happen a long time ago.

Ok what should they do?
Also there are websites, like for example honestforum where people will help you determine whether or not a certain clothing item is a fake.

I have a bunch of designer jeans, Diesel, True Religion etc...never once would i ever buy them from the store...always from the internet..at half the cost, and i always have these guys check them out..

[SebC]

Originally Posted by Winsor_Pilates

If places like Ebay didn't make it easy to acquire knock offs, some of those people would save up and dish it out for the real thing.

Yeah, but if these guys were claiming that everyone who bought a fake would have bought the real thing if they didn't buy a fake, forget it. Not sure if they used what I'll call "the MPAA/RIAA approach", but they seem to be pretty frivolous in their lawsuits, so it woudln't surprise me.

In an earlier instance of LVMH trying to protect its brands online, a Paris court in 2005 ordered Google (Nasdaq:GOOG) to pay 200,000 euros (about US$260,000 at the time) to Louis Vuitton for breach of trademark. In that case, Google had to stop displaying advertisements for Louis Vuitton's rivals when Web users typed Vuitton's name into the search engine.

Even bigger wow...

... and ...

Some companies have demanded that EBay forbid sales of even their legitimate products on the site because of alleged trademark infringement.

Entirely ridiculous.

[Winsor_Pilates]

Originally Posted by MelBridgeman

Ok what should they do?

Control their inventory.
I don't see ebay as different from any other retailer. If they can't determine the authenticity of what's being sold, they shouldn't allow it to sell.

[Dan02]

Ebay isn't the seller though. They are a medium that the seller uses, if a shop advertises on TV then it turns out they have a small section in the back fencing stolen goods should the TV channels who ran their ads be held liable?

[Winsor_Pilates]

Originally Posted by SebC

Yeah, but if these guys were claiming that everyone who bought a fake would have bought the real thing if they didn't buy a fake, forget it.

Of course not, but it's still their product/art/design that's being ripped off. Even sales aside, and from a design standpoint, having ripoffs sold of your product is infringment of patents and their hard work.

I don't see it as any differnent from ripping off music, artwork or literature or anything else.

What is there was a site like ebay, that sold fake recordings of famous copyrighted songs, sang by different people. Would an artist be rediculous for suing them when they hear Joe Shmoe singing their song and selling it for profit?

[photon]

Agreed, eBay isn't the retailer.

Did they charge Paypal too since the financial transactions were probably made through Paypal? And many were funded by Mastercard, did they sue Mastercard for not ensuring the merchandise being purchased is legit? How about the Internet providers that allowed the sale in the first place? Dell because they made the monitor...

If selling of something is illegal, law enforcement should be going after those who sell it, not the medium for the transfer of information. They go against eBay because it's easier to attack one entity for a huge sum than it is to attack a bunch of little targets for small sums.

[Ice]

Originally Posted by Dan02

Unless something is listed as a knock off though how are they supposed to determine which are fake and which are real?

Typically, the price and the photos are a good indication, at least for someone familiar with authentic bags. I see fakes all the time on Ebay.

I do not agree with the amount of the settlement. Lets get real here, the people buying a fake Louis Vuitton bag on Ebay for 199.00 weren't going to dish out 1500.00 for the real thing anyway. I do think ebay needs to monitor the listings better. There are fake handbags listed with buy it now for 400.00, the price makes it appear you might be getting the real thing and the auction says "authentic Chanel." Most buyers don't know how to tell a fake by looking at a photo.

Ebay makes plenty of money from that business. It wouldn't hurt to have a designer compliance division monitor listings before they're live. Maybe you're looking at a 24 hour turnaround before you see your listing, but if there are less fakes out there, wouldn't it be better? I'd rather see a court set some fair practice regulations for online auction sites rather than send millions of dollars to high end designers, who are likely more impacted by less spending in general due to the economy than fake bags on Ebay.

[Winsor_Pilates]

Originally Posted by Dan02

Ebay isn't the seller though. They are a medium that the seller uses, if a shop advertises on TV then it turns out they have a small section in the back fencing stolen goods should the TV channels who ran their ads be held liable?

Did the channel know full well that the good were stolen? Because everyone at Ebay and in the civilized world knows fake goods are sold all over Ebay.

If Ebay really had no idea I wouldn't have a problem with it, but they could be doing a lot more to stop this stuff, and they don't because it's good for their business.

They could start with 1 employee paid $10 bucks an hour to search Louis Vuitton all day and remove clearly fake adds and ban those users.

But they wouldn't do this, beause the fake good industry is a huge part of their business. They're far from an innocent middle man.

[photon]

Originally Posted by Winsor_Pilates

I don't see it as any differnent from ripping off music, artwork or literature or anything else.

What is there was a site like ebay, that sold fake recordings of famous copyrighted songs, sang by different people. Would an artist be rediculous for suing them when they hear Joe Shmoe singing their song and selling it for profit?

Of course, but the analogy is flawed; if the site is selling copyrighted material without permission then they are in the wrong. But eBay isn't doing this, they're facilitating of a transaction between the individuals. The seller fakejeans2009 is the one breaking the law and should be the one prosecuted.

[photon]

Originally Posted by Ice

Ebay makes plenty of money from that business. It wouldn't hurt to have a designer compliance division monitor listings before they're live. Maybe you're looking at a 24 hour turnaround before you see your listing, but if there are less fakes out there, wouldn't it be better? I'd rather see a court set some fair practice regulations for online auction sites rather than send millions of dollars to high end designers, who are likely more impacted by less spending in general that fake bags on Ebay.

They already have groups that monitor auctions to weed out the supposed illegal ones, but you'd have to have millions of eyes to monitor millions of auctions; I can't see a reasonable way for eBay to do this when I'm not so sure they should be responsible anyway.

Should the Herald be checking to see if every item in their classifieds is legit? Why is it the Herald's responsibility to ensure people aren't breaking the law?

[Winsor_Pilates]

Originally Posted by photon

Of course, but the analogy is flawed; if the site is selling copyrighted material without permission then they are in the wrong. But eBay isn't doing this, they're facilitating of a transaction between the individuals. The seller fakejeans2009 is the one breaking the law and should be the one prosecuted.

True, but Ebay is a knowing accompliss and profiteer from the sale of fake goods.

How about this anology:

I start a website called "stolencars.com" where I allow people to auction stolen cars to people.
I didn't steal the cars, and I'm not selling them, so am I in the clear?

[photon]

Originally Posted by Winsor_Pilates

If Ebay really had no idea I wouldn't have a problem with it, but they could be doing a lot more to stop this stuff, and they don't because it's good for their business.

They could start with 1 employee paid $10 bucks an hour to search Louis Vuitton all day and remove clearly fake adds and ban those users.

But they wouldn't do this, beause the fake good industry is a huge part of their business. They're far from an innocent middle man.

It's not that they don't have any idea, it's because it's a difficult problem to address. It's not just the cost of having that one employee, you have to train him. And you've got to pay someone to keep up with what's current and what's fake; fakes change all the time. And you've got to keep everyone trained. And you've got to do it for every single brand, since if you do it for LV but not Nike, Nike will sue you.

All to do law enforcement's job for them.

[photon]

Originally Posted by Winsor_Pilates

True, but Ebay is a knowing accompliss and profiteer from the sale of fake goods.

How about this anology:

I start a website called "stolencars.com" where I allow people to auction stolen cars to people.
I didn't steal the cars, and I'm not selling them, so am I in the clear?

You're making the assumption that they are knowing willing accomplices, how can you be sure they are? They do remove auctions like this already, but like I said how do you know for sure which are fakes? Some are obvious, some aren't.

And once you start banning people, you have to manage them. What about the seller who is selling a legit item and just borrowed the photos from a google image search that happen to show a fake? Now can eBay be sued because they're limiting access on false pretenses. Making them responsible one way makes them responsible the other way too.

[Ice]

Originally Posted by photon

They already have groups that monitor auctions to weed out the supposed illegal ones, but you'd have to have millions of eyes to monitor millions of auctions; I can't see a reasonable way for eBay to do this when I'm not so sure they should be responsible anyway.

Should the Herald be checking to see if every item in their classifieds is legit? Why is it the Herald's responsibility to ensure people aren't breaking the law?

I think it could be argued that Ebay hasn't proven to be very dedicated to weed out fakes. If sellers knew their auctions would be scrutinized before they were actually posted for buyers to see, perhaps the people knowingly selling fakes would eventually not bother. In fact, Ebay could collect listing fees whether the auction ever made it live or not.

Many businesses have auditors or compliance officers working 8 hours per day to ensure things are done according to the law. Why couldn't Ebay be as diligent?

[Winsor_Pilates]

Originally Posted by photon

You're making the assumption that they are knowing willing accomplices, how can you be sure they are? They do remove auctions like this already, but like I said how do you know for sure which are fakes? Some are obvious, some aren't.

And once you start banning people, you have to manage them. What about the seller who is selling a legit item and just borrowed the photos from a google image search that happen to show a fake? Now can eBay be sued because they're limiting access on false pretenses. Making them responsible one way makes them responsible the other way too.

Yes, these are issues that they'd have to deal with, but I don't think that's too much to ask of a business as large as them.
IMO, they should have some responsibility to atleast put reasonable efforts into solving these isssues. Every other business has similar responsibilities, so why not ebay?

IMO, they are willing accomplices because it doesn't seem like the put enough effort into preventing it. Perhaps you disagree, but at the end of the day that's for courts to decide.
Clearly this one agrees with me that they havn't done enough and have been to hands off with this issue.

[photon]

They do have people working on this kind of stuff, I just don't think the problem is a) solvable without hiring so many people that it would be too expensive to do and b) their responsibility.

I think the idea of having the auction screened is interesting, but again how many new auctions are listed every day? Millions?

If I were eBay I'd push this onto the rights holders, sellers, and buyers.. make it so rights holders can have back end access to auctions and search them themselves and flag ones that are questionable. Then the seller can reply with proof and the rights holder can agree and lift the flag, or keep the flag. Buyers would be able to see the flag and then know that LV themselves think the auction is fishy.

Even that has holes, what would stop LV from flagging everything? Companies hate the resale market; if they had a choice they would make it so only you can own those jeans and if someone else would try them on they would fall apart.