eBay told: "pay €1.7million" in LVMH dispute

The Guardian has just reported ("Illegal perfume sales cost eBay £1.5m in fines") that a Parisian court has ordered eBay to pay more than £1.5m for breaching an injunction that banned its users from trading in goods made by French luxury conglomerate Louis Vuitton.

Right: vintage 1950s Max Factor Sophisti-Cat perfume

The court has apparently ascertained that the online auction host had not done enough to prevent the trade of goods made by LVMH, which owns brands such as Louis Vuitton, Moet Hennessy, Givenchy and Christian Dior. The article adds:

"The auction website had been banned from letting such sales take place following a 2008 court case [This ruling, translated into English, will appear in the February 2010 issue of the European Trade Mark Reports, unless the IPKat can get its release accelerated] but the court found that there had since been more than 1,300 incidents in which users advertised cosmetics and perfume made by the company.

LVMH said the award was a victory in its fight to retain the right to "selective distribution" - control over which outlets are able to sell its goods.

"This decision constitutes an important step in the fight against unlawful practices," said the company. "Selective distribution ensures the security and quality of products for consumers. It generates numerous jobs and contributes to the ongoing worldwide success of European luxury goods brands." [Selective distribution is one of those areas where the tectonic plates of IP protection and competition policy grind against each other]

In the belief that its high-value brands will be hurt if they can be resold online, LVMH has been waging an ongoing battle against internet retailers such as eBay for several years.

Last year it registered a significant victory in which the auction website was ordered to pay £30m in damages.

That ruling took place after it emerged that fake goods using LVMH's brands were being sold on eBay, but the ruling extended to preventing the sale of any of the company's goods on the site - regardless of whether they were pirated or not.

In a statement, eBay said the fine was "disproportionate" and that it would be appealing the decision in higher courts, since it believes that the injunction constitutes an unfair restriction of trade.

"Today's outcome hurts consumers by preventing them from buying and selling authentic items online," said Alex von Schirmeister, the general manager of eBay in France. "The injunction is an abuse of 'selective distribution'. It effectively enforces restrictive distribution contracts, which is anti-competitive."

The French conglomerate has also taken action against Google, which it says is acting illegally by selling search advertising using the company's trade marks". [Despite some rumours to the contrary, there is still no evidence that the Court of Justice of the European Communities, which is currently considering a number of questions arising out of this dispute, will give its ruling before the end of the year.]

What's not clear to the IPKat is whether the decision represents a triumph for Louis Vuitton because of its outcome or a disappointment for luxury brand owners given the relatively small size of the award in contrast to the turnover in deals involving luxury goods. The Kat is however sure that the saga will not stop at this point: both in terms of profits and principles there's far too much at stake. Merpel says, on behalf of all cats I'm thinking of bringing a class action against all the perfume manufacturers who make perfume out of cats.

See also reports from the BBC, Times Online, Bloomberg

Art for Cats online auction here