LVMH v eBay: it's in the bag!

The latest chapter of the “Brand Owners v Counterfeiters” saga seems again to be playing out in favour of brand owners, with last week’s decision of a Paris District Court holding eBay responsible for facilitating the sale of counterfeit Louis Vuitton products. In a guest post, the IPKat’s friend Venya Wijegoonewardene (Gallant Macmillan LLP) reports on the tail:

Last week a Paris court awarded Louis Vuitton Moet Hennessy (the parent company of the luxury handbag brand Louis Vuitton) €200,000 in damages and €30,000 in costs in their trade mark infringement claim against eBay. The internet giant was ordered to pay these damages to LVMH for “harming the reputation of Louis Vuitton trade marks, the company name and the domain name.” The dispute originated in 2006 when Louis Vuitton, in order to preserve its brands' luxury status, commenced proceedings against eBay for their purchasing of misspelled words similar to the Louis Vuitton mark from search engines such as Yahoo and Google.

Although it is accepted business practice for companies such as eBay to purchase search-related keywords, including misspelled terms, to direct web-traffic to their websites, the French court held that by purchasing misspelled terms such as “Louis Viton” and “Wuiton”, eBay enabled counterfeiters to flog their wares on eBay. eBay defended their position by stating that this was how the search system worked: it automatically purchased the misspelled words as commercial links, redirecting consumers to their website to purchase genuine Louis Vuitton goods.

Although the final award was substantially lower than the initial amount claimed by LVMH (a mere €1.2 million), the court was firm in placing the responsibility of the infringement squarely on the shoulders of eBay. The court also ordered that eBay would additionally have to pay a €1,000 penalty every time search-related keywords that “harmed the reputation of the Louis Vuitton brand” were used in the future.

LVMH is the world’s biggest luxury conglomerate and boasts some of the world’s biggest ‘snob-tags’ [attribution for that phrase goes to Lord Justice Jacob in his closing speech at the IBIL and OFT Seminar on Brand Protection and Competition], including Moet, Dom Perignon and Marc Jacobs. Vuitton’s continued triumph in the French courts will not come as a surprise. Brand owners like LVMH have resorted to the sympathetic French courts in the pursuit of controlling a brand’s image, reputation and status. A spokesperson for LVMH welcomed the move, stating that French ruling protects consumers from becoming a victim due to the “illicit use of trade marks”. However, the extent to which such actions are really in the interest of the consumer has been questioned. These actions may be viewed as efforts by brand owners, such as LVMH, to preserve the elitist ‘snob-status’ of the luxury brand. For example, whether the discerning Louis Vuitton consumer would shop for the signature monogrammed handbag on eBay with the availability of genuine brands on high-end websites such as www.outnet.com is open to doubt.

Yohan Ruso, managing director of eBay France, accused LVMH of wanting to “tarnish the image of eBay” and cited the fine as being “totally disproportionate” [Good for you, eBay – you're also a brand owner and there is no reason why luxury brands should monopolise the use of the “brand status” argument]. According to this report from Reuters, the eBay statement declared that “this issue is being used by certain rights owners as an excuse to retain total control of what people can buy, where they can buy it from and how much they have to pay," Ebay said in a statement.” They stated that the judgment “flies in the face” of a recent Belgian victory in eBay’s favour [do any IPKat readers have a copy of this decision?].

This decision has expectedly tipped the scales in favour of brand-owners. But with eBay ever-ready for the fight, this battle is far from finished".

The IPKat suggests readers once again peruse the 2006 French decision that deemed Google to have infringed Louis Vuitton’s trade marks by selling search-related keywords (reported by the IPKat here). Google was ordered to pay €300,000 in damages for trade mark counterfeiting in that case. This past September, LVMH also secured a $32.4 million judgment in their favour against an ISP in California for contributory trade mark infringement in the selling of counterfeit products (see this AmeriKat post). So perhaps the French courts are not the only favourable forum for luxury brand owners ...