Ebay Fined $61M By French Court For Sales of Fake Goods 399
A court in France ordered eBay to pay more than 61 mega-dollars to the parent company (LVMH) of Givenchy, Fendi, Marc Jacobs and Louis Vuitton, because a user sold fake goods on the website. eBay has been sued by other 'luxury goods' vendors (such as Tiffany's (US), Rolex (Germany) and L'Oreal (EU)). Problems stem from some companies demanding that their merchandise (even legal merchandise) not be displayed nor sold as it is a violation of their 'property.' Others have complained that eBay is too slow to take down claims. Apparently eBay was hit with two violations: 1) eBay illegally allowed legitimately purchased and owned products made by LVMH to be resold on its website by 3rd parties not under the control of LVMH, and 2) not doing enough to protect LVMH's brands from illegal sales. eBay has said it will appeal. So eBay is to know what products every company allows to be sold before allowing them to on auction?
(There's also coverage at Yahoo News.)
Update: 07/01 17:15 GMT by T : That's LVMH throughout, rather than LVHM, as originally rendered.
Stupid and dangerous (Score:5, Interesting)
This is not the first time that French courts show a complete misunderstanding of how the Internet works... And this goes even further than net economics.
Most french used cars are still sold via a single newspaper called "La Centrale des Particuliers". Should this newspaper verify that each car is rightfully owned by its seller ? I cannot imagine any judge trying to enforce this...
Hopefully, this judgment shall be broken by the "Cour de Cassation", because it does not make any sense. Maybe the judge was only trying to get some publicity. This happens a lot,
Sales tax revolt (Score:5, Interesting)
Sounds like a perfect excuse for the French to stop paying sales tax. If the item doesn't actually belong to you, why should you be responsible for paying for it?
Oh, and I think LVHM might want to explain to government why they've been hiding at least $61M of their property from the tax authorities.
Re:Even by petty French standards, this is sad (Score:3, Interesting)
There are two pretty legitimate sides of this argument. (1) an individual has a right to sell the stuff that she owns, and (2) a company has a right to protect their "brand".
I don't know what the EBay policy is on selling "fake" items, but if the companies care so much about "defending their brand" they should feel obligated to "re-buy" their products from customers who no longer have a use for such things. That would seem to balance the resale market.
Basically, if Tiffany's, Rolex, and L'Oreal will pay a "market price" to buy back legitimate goods that their customers want to resell, they can claim that EVERYTHING on EBay is fake, broken, or otherwise overpriced.
Re:france is rapidly making itself irrelevant (Score:2, Interesting)
Those international businesses should have employees on hand that speak French if they wish to do business in France. If anything it should be up to the business holding the meeting on what language should be spoken. They may want to speak English or Russian to please the client more, but a law forcing private businesses to speak the national language is just stupid.
If you come into my house I expect you to not smoke and speak English. I don't have to accommodate you and allow smoking and to speak some other language I don't understand.
Playing Devil's Advocate (Score:3, Interesting)
eBay does let a lot of counterfeit and bootlegged products sell and they never seemed too concerned about removing them. I tried an experiment where I reported about 40 obviously bootlegged DVDs, and a few sellers who deal heavily in them. A few days later, not one auction pulled, not one user banned.
Until they get sued, they don't have a fiscal reason to pull an auction of bootlegs.
Re:france is rapidly making itself irrelevant (Score:3, Interesting)
As I remarked elsewhere the rules are being broken left right and center, but they're in place just the same and that makes no sense at all to me.
Especially not when parties would voluntarily use a different language (such as English).
I personally walked out of one meeting a couple of years ago after being told that only French was acceptable because of a government requirement.
Too bad I was the guy representing a well paying customer, yes, I speak French but not good enough to get the finer points in a very intensive business meeting and definitely not when the matter is technological.
Half (or more than half) the technical English words have been forcibly given a French counterpart just to avoid 'pollution' (whatever that may be) of the French culture.
The interesting thing is that this 'island behavior' usually includes the French language somehow, check out Quebec and Belgium for instance.
as opposed to, say, Echelon? (Score:2, Interesting)
The French government and courts have a long history of issuing prejudiced laws and decisions in favor of French companies (especially in cases where the opposition are American or British companies), but this is disturbing even by their standards.
As opposed to how the US does things [google.com]? C'mon.
Re:Even by petty French standards, this is sad (Score:3, Interesting)
The French government and courts have a long history of issuing prejudiced laws and decisions in favor of French companies (especially in cases where the opposition are American or British companies), but this is disturbing even by their standards. While ostensibly about counterfeit goods, this ruling goes FAR beyond that--giving the original producer full control of resell rights for even LEGITIMATE goods.
Of course, there are fewer French companies with an international reach than there are US companies, so this may explain that. When <foreign> company sues a French one it never makes the headlines after all (except here, sometimes).
However this does not explain the number of brain dead decisions by the local (yes, I'm French and live in Paris) courts that have happened lately. Now there *is* a cottage industry of resellers of fake handbags, mostly ordinary, everyday people, that supplement their income through eBay. The big names in this industry have always been nervous with counterfeiting as well as with the second hand market (the latter not making much sense).
For example one of the major luxury brands in Paris will allow Japanese tourists (Japanese are weird with this for some reason) only 3 bags per head in its shop. Those tourists (who of buy the bags that feature the brand most prominently on the outside) will actually recruit passers-by on the side walk to buy more bags for them.
Fakes (fairly poor quality ones for the most) used to be available in Vintimille, a border town on the Italian side. And a very popular destination, easily accessible by train or car. Apparently even the Italians got the message (although I heard the market only moved somewhere else).
Anyway this kind of stuff happens every now and then. This is our equivalent of your creationism. :(
Credit Check! (Score:2, Interesting)
Yes, of course an individual has every right to sell their own merchandise, but when criminals attempt to sell counterfeit items it's also a (good) companies prerogative to thwart common crooks from stealing their property. Ebay should implement a credit check. This wouldn't solve the problem but it sure would help. I don't want to buy fake goods any more than I want to buy stolen goods from an 18 year old who stole jewlery from her grandmother so she could get drunk and high all weekend. Chances are with either situation, their credit is extremly poor.
Why do business in France? (Score:3, Interesting)
Considering how often eBay gets sued in French courts, eBay management might want to consider doing a cost-benefit analysis of doing business in France in the first place. I'm not jumping on the knee-jerk anti-French bandwagon here -- it's their country, and they can run it any damn way they please -- but from a purely practical business standpoint, the barrage of lawsuits in the French market would give me pause, personally, if I was on the eBay board.
Not just France (Score:1, Interesting)
France isn't the only place where companies are overly-aggressive in protecting their brands.
I work for an ISP in the UK, and we have recently been caught in the middle of a fight between one of the web sites we host and a product manufacturer in the US.
Out of the blue, our staff started getting personal and very aggressive calls from the lawyers of said company, demanding that we take the site offline immediately.
The reason? The site included text where the owner stated that he used the company's products and would recommend it.
We contacted the site owner and persuaded him (with some difficulty) to remove references to the product on his site. But that didn't help -- the lawyers continued to hassle us, because the site still contained certain quite generic words, which they claimed the company owned trademarks on in the context of their industry.
Since the site owner was not a registered distributor of said product, the company was therefore within its rights to prevent him using either the product name or any of their registered keywords.
Frankly, some of the keywords are so generic that it would be hard to talk about any product in their market without using one or more of them, but that's what they're claiming.
Personal opinion: The company's claims are stretching credibility, and their actions somewhat bizarre given that they're trying to shut down a site that is recommending them, but the lawyers aren't interested in that; they're interested in how much money they can make from the company by finding obscure site owners to sue. As for the company themselves, it's clear that their primary motivation is to enforce their supply lines and prevent unauthorised distribution. They've decided that's the best way to make money from their product, so they will go out of their way to enforce it using whatever laws they can find to do so. In this case, they're using American laws, but I'm sure they'd have used British or EU laws if they'd been more suited to their aims.
Generally speaking, the laws will have been created for good reasons, but the bottom line here is that whatever laws are in place, companies and their lawyers will find ways to turn them to their advantage.
Re:eBay doesn't care about finding real fakes (Score:5, Interesting)
VERO is also the program through which Ebay has given Scientology carte blanche to illegally infringe on first-sale rights of people with used RTC gear. Until Ebay takes a modicum of responsibility for the rampant and obvious illegal abuse of VERO (or cancels it altogether) I want nothing to do with Ebay.
Unfortunately, everything Ebay's help pages say about canceling your account is a falsehood. I've been asking them to close my account since February and I am still able to log in and I still get their weekly spam messages about my favorite sellers.
Ebay was cool back when it had something resembling competition. Now it's just another bloated, useless pig doing the bare minimum it must to continue collecting monopoly rents.
Maybe this is good (Score:3, Interesting)
I was sold a fake Kingston elite pro SD card. Those are one of the few SD cards with SLC Flash memory, 100.000 write/erase cycles. So, I was pretty adamant I wanted the real "elite pro", but got a forgery, which was visible from the very poor quality of print on the label as well as the packaging. Also, I had a few originals I could compare against. Finally, the cards failed to pass a few tests I threw at them, so I was adamant I wanted my money back. I notified eBay, but they never did a damned thing about this case.
I hope $60+ million will make eBay listen to their buying customers (not only their bigger sellers), when they report a forged item.
And forged memory cards and flash drives are massively present on eBay. If it's from China, Hong Kong or Australia, it's almost certainly a fake.
Quixotic lawsuits (Score:3, Interesting)
You could have sued Ebay too...
Not really. At the time I was making a significant part of my income selling stuff on eBay. Suing them would have been cutting off my nose despite my face. Not to mention that I do not have the money to fight a multi-billion dollar corporation over the loss of a few hundred dollars in listing fees and lost sales. Plus even if I won (which I wouldn't) the damages I could collect would be insufficient to seriously cause eBay to change practices anyway. Only real hope of that would be some sort of a class action lawsuit.
In the end the right solution was just to stop selling on eBay. I used to send close to $100,000 a year in fees to eBay/PayPal. Now they get $0.00 from me so I think that hurts eBay more than any lawsuit I could possibly have been involved in.
Re:Even by petty French standards, this is sad (Score:4, Interesting)
Any companies that the government tries to pull this stunt on should just move elsewhere. I'm sure there would be a public outcry if eBay said "fine, we're not dealing with you jerks anymore". I've heard that the French public are quite good at their protesting - they brought the country to a standstill when the government tried to increase fuel taxes..
Seems VERO upsets all sides. (Score:4, Interesting)
Its funny to see the VERO program criticised for being too strict, as I'm sure given ebays incompetence, it can sometimes be.
My experience with VERO is that it is useless to actually do anything about blatantly stolen property (in other words, people duplicating full versions of games on a CD burner, and openly selling them on ebay). In cases like this, ebay are VERY VERY slow to respond, and take no serious action against the sellers, sometimes removing a listing, rarely banning an account (new account takes a few hours).
For smaller IP holders like me, ebay and google are both unresponsive, disinterested bastards. Try getting pirated content removed from a blogger blog, for example...
Re:arrogant asshole (Score:3, Interesting)
I can see the parents point, though. There is something fundamentally annoying about the "I Am Rich" bling, especially the stuff that really isn't much better than average priced stuff, but only exists as a very expensive brand name. Showing off your wealth (for the sake of showing it off) is at least crass, if not arrogant.
I personally don't have anything against people with more money than me, but I really dislike people who have to constantly make it known that they have more money than me.
Idiotic status symbols are pointless, and obnoxious. Are the wealthy REALLY that insecure feeling, that they must constantly point out that they can throw a grand at a stupid wrist watch with all the functionality and quality of my $50 Timex?
My Dad, on a recent trip to China, bought a Vacheron Constantin knock off (of a $25,000 watch), that has been appraised as genuine. It was $25. This leads me to the conclusion that its value ONLY exists as the brand name, and nothing else. This seems rather silly to me.
The "designers" need to be taken down a notch (Score:5, Interesting)
I'm sure everyone caught it, but for yet more emphasis:
1) eBay illegally allowed legitimately purchased and owned products made by LVMH to be resold on its website by 3rd parties not under the control of LVMH, and 2) not doing enough to protect LVMH's brands from illegal sales
LVMH can tell their retailers how to sell the products, as they have a direct contractual relationship. They CANNOT tell the end-user, or anyone else beyond that first hop, what to do with it, what to charge for it, or which orifice to insert it. There's no licensing agreement, you don't have to sign a 2-page contract in order to buy a stupid shiny watch or pink bag. There's no LVMH auditor that comes to your dressing room and checks your papers every time you spritz on a bit of Eau-de-Poopoo.
Next point: illegal sales (counterfeit items). Ebay does not handle the actual items. Ebay does not have omniscience and superman laser vision. Ebay has no way to even guess that a seller is peddling fakes. In many cases, even the end-user can't tell the fake from the original (which says a lot about how cheap the real one is!). With the intrinsic right of resale, you can't outlaw resale, so the guy selling fakes is indistinguishable from a reseller (well, except for his plentiful stock, delivered every week from Singapore)
The fact that a French court actually upheld this ridicule tells me Ebay should withdraw its services from France, along with all its subsidiaries and sister companies. If France wants to be hostile toward online businesses, then they're more than welcome to do without. Some smaller, skeevier company will fill in the void, until they get burned as well. The French government is a mockery, and everyone has the freedom to stand at their border, point, and laugh.
Re:Even by petty French standards, this is sad (Score:3, Interesting)
Now, on the surface, your argument seems to have merit. However, let me drop one example on you. Take (or rather, purchase) an 8 pack of Reeses Peanut Butter Cups. You know, the pack of individually wrapped candies? Each one states quite clearly on the packaging that they are not for individual sale. You will find that this practice of designating the individual portions of a multi-pack as "Not For Individual Sale" is quite common.
So we find that if you want to resell your candy legally, you can't. Sure, you will argue that there is a huge difference between a car and a peanut butter cup. But if you did, you would be missing the point. If you purchase something that comes with an attached contractual agreement NOT to resell it, or purchase something with an attached contractual agreement not to resell it outside of the producing company's authorized distributors, then indeed the producer has full legal control over resale rights.
You may have a point but you picked a terrible example. If you go into a retail establishment and buy your peanut butter cups, you are free to do whatever you want with them, no matter what it says on the package. If you run a lemonade stand and want to offer those cups as well, you are free to do so, you entered into no contract with either Reeses or the retailer. Reeses would have absolutely no recourse under US law to stop the sale.
I don't really have experience with high-end perfumes or handbags, but I would assume that you are not required to sign a contract, therefore you did not give up your right to sell the item under US law. I don't know about French law but it seems anti-competitive and the EU may have something to say about it.
Re: Control is on "name", not item (Score:3, Interesting)
The subtlety that the French law turns on, I believe who owns the name of the object. It's complete caca, but but is an important distinction. If someone resold LVMH's toilet water as 'toilet water' (no label), then there would be no issue. It's when you use the name on the product.
I'm not sure how else you refer to an item without using its name. But having rules about language -- who may say what (some countries have official bodies to rule on grammar and word usage! ;^/ ). But I think part of the problem is most that Americans don't know how to finesse the French Court system. A plaintiff needs to engage a judge (in France) into *wanting* to help them to provide a solution. It's not strictly about fine points of law.
I suspect French companies are uniformly better at this than US entities/companies. An adversarial system is a poor way at achieving a just, fair or equitable solution. It's one of the worst -- as it hinges on who "argues" better, and has little to do with the merits of either side of the issue. Thus, lawyers in the US are exalted above common sense -- solely because they argue a "stance" more effectively. This isn't "justice", it's a friggin debate game.
Furthermore -- I'm pretty sure that French courts don't have the same idea of "precedence" that US court verdicts carry. That may be changing under pressures from non-local (non-French, usually) plaintiffs. But that pressure has always existed. In a way, its more about who better convince the judge to take their side. Unless US companies start employing local lawyers of great skill *and* social standing, we'll likely continue to lose -- since the French don't respect the US-standard of whoever argues better is 'right'.
It makes compliance difficult -- and the easiest thing to for a US company to do? Don't do business in France. If the French people get to a point of feeling their system needs change, they will change it. But their system is in place to protect its local citizenry, first. International "rights", will almost always be (and maybe should always be) a secondary consideration. Otherwise, you've simply put your country and culture up for sale to the highest bidder (who hires the best arguer(s)).
eBay can appeal and win -- if they finesse the courts properly -- but it may take some time. Meanwhile, I'd suspend operations there or have people selling there agree to some French-approved conditions in order to be able to list products in France. That would hopefully protect one's but enough -- if one asked the French government for help in setting standards, and assuring that the standards are implementable such that the listing company is not held to blame for violations.
L.
Re:Even by petty French standards, this is sad (Score:3, Interesting)
It has been proven time and time again that you do not have to sign a contract to be contractually bound. Do you sign a reciept when you get gas and pay at the pump with your card? Yet you are contractually bound to pay for that gas.
And no, you are not free to do as you choose with something once you purchase it. Just because you THINK we should be able to do whatever we want with what we just bought, does not mean it is so. If you dispense gasoline into a non-approved container (milk jug), and a cop wants to give you a hard time, he can. In fact, there is another product that the purchase of carries with it limitations as to it's use, storage, and transportation.
Here is another one. Fireworks. You can buy them in lots of states where it is illegal to actually set them off. So you can purchase all the fireworks you want, but you can't light them. Will the cops overlook you lighting them (especially on the 4th of july)? Most likely. Does that make it legal? Nope.
Cigarettes. May a minor buy them? Nope. May an adult buy them and give them to a minor? Nope. You may not turn around a resell them legally, without purchasing a license to do so. Sounds like limitations.
Alcohol. May a minor purchase it? Nope. May an adult purchase it and give it to a minor? In some states, in specific places (a parent letting a child drink in their own home), yes. In most places, no. You also may not turn around and resell alcohol without the proper permit or license. Again.. sounds like limitations.
But, I guess that the intelligence of some Slashdot readers is exceptionally low today. I mean, these things are common sense, and you want to argue them? Oh, I know, you will attempt to provide specific reasons for the things I mentioned... but you would not be understanding that THESE ARE PRODUCTS THAT CARRY LIMITATIONS ON USE AND RESALE! Hello! Isn't that the point? You are saying that there are none, I am proving that there are indeed some.
Troll? Nice.... (Score:5, Interesting)
I take it someone with mod points and no knowledge of France had a stick up his butt.
Look. I lived there for nearly 20 years. Some things are great about it, some things suck. But there are a couple of things that are critical to know if you want to have any chance at understanding how the French work:
- The state - and its bureaucracy - is the foundation of the nation.
- It's a country that is split along many lines.
- It's a country with a (self-defined) mission.
- It is conservative, but has a history of progressing through revolutions.
- Art and culture come first.
- Anglo-Saxon style survival of the fittest and invididualism is abhorred.
Pretty much everything follows from that.
Obvious authentication method overlooked? (Score:1, Interesting)
As far as fake control goes I don't see why none of them are talking about RFID... ie:
1) Manufacturers of goods subject to knockoffs insert RFID (probably already the case for some products)... adding RFID cost next to nothing considering these are luxury goods and the presence of such a device can be marketed as a security feature so the cost will easily be recouped
2) eBay requires that sellers of these goods obtain an RFID reader and include the data with the listing (which sits in limbo until step 3)... such a requirement on resellers of luxury goods is hardly onerous compared to the risk of tweaking TOS for all sellers
3) trademark owner verifies RFID scan as legit and listing is let out of limbo or seller is reported as fraudster
4) optionally, trademark owner restricts visibility of listing geographically based on location of seller to maintain some desired global distribution balance (scarcity management is the name of the game with luxury goods).
Cheap/easy/robust... what could possibly go wrong?
Captha 'stupid'... I really must stop posting AC and get an account as these are getting increasing hostile (or I'm getting increasingly stupid)
Re:Blind to the facts (Score:1, Interesting)
I believe you meant to say
Buy a new legitimate Rolex from a foreign seller on eBay and try having it sent into the US.
Sales of used legitimate Rolex watches from a foreign seller are not subject to this trademark restriction.