LVMH-eBay=38.9 million euro

July 7, 2008


PARIS — EBay’s legal troubles just got deeper — at least in France.

A landmark decision in a legal battle between luxury goods companies and eBay was handed down by a French court Monday, slapping the online auction site with the highest fine ever awarded against it in Europe.

After a two-year legal process, eBay Inc. and eBay International were ordered to pay LVMH Moët Hennessy Louis Vuitton compensation totaling 38.9 million euros, or $61.3 million at current exchange, for allowing the sale of counterfeit goods and for the unlawful sale of authentic fragrances.

“It’s a fundamental decision for us, and will help us preserve our name, and the brands,” said Pierre Gode, LVMH chief Bernard Arnault’s adviser, after the verdict was announced.

Paris’ Tribunal de Commerce on Monday found eBay guilty of gross misconduct in failing to prevent the sale of fake Louis Vuitton leather goods and Christian Dior eyewear and handbags, and ordered it to pay those businesses 19.3 million euros, or $30.5 million, and 16.4 million euros, or $27.5 million, respectively.

Meanwhile, Parfums Christian Dior, Kenzo Parfums, Guerlain and Parfums Givenchy were awarded 3.2 million euros, or $4.7 million, in a separate claim that argued that such fragrances can be sold only in the selective distribution doors chosen by the brands. EBay was ordered to stop selling the four brands or face a fine of 50,000 euros, or $79,000, a day.

EBay said it would appeal the decision and that it would continue to allow the sale of Christian Dior, Givenchy, Guerlain and Kenzo fragrances, despite the court’s order of “provisional execution,” meaning it should be carried out immediately.

(source: WWD)