After a long battle in courts, French luxury giant, Louis Vuitton Moët Hennessy, LVMH, and online auction site, eBay, have finally settled out of court. The two powerhouse companies released a joint statement, stating, “eBay and LVMH today announced a cooperative effort to protect intellectual property rights and combat counterfeits in online commerce. Thanks to the cooperation measures put in place, the companies have settled ongoing litigation.”
This ends a litigation struggle that started in 2006, when LVMH sued eBay for not controlling the prolific knockoffs that appeared for sale on its site. LVMH argued that most of the products sold on the site that bore LVMH brands, such as Louis Vuitton, Christian Dior, Givenchy, Guerlain, and more, were counterfeit products. The luxury conglomerate also claimed that sales of the knockoffs on eBay hurt its brands’ sales, thus damaging the brands and LVMH.
In 2008, French courts ordered eBay to pay $19.28 million euros to Louis Vuitton Malletier, $16.3 million euros to Christian Dior Couture, and $3.25 million euros to four perfume brands (Dior, Kenzo, Givenchy and Guerlain), for damages for the sale of counterfeit goods. This came out to a total of $63 million at the exchange rate of the time.
eBay immediately appealed the ruling claiming that the ruling overstepped the boundaries of what LVMH was claiming and would in fact eventually eliminate legitimate competition in the marketplace. eBay believed that the ruling was more of an “attempt by LVMH to protect uncompetitive commercial practices at the expense of consumer choice and the livelihood of law-abiding sellers that eBay empowers everyday.”
An appeals court then lowered the amount of damages $2.55 million. eBay still didn’t agree with this ruling, stating they planned to appeal and they believe[d] that the higher courts will overturn this ruling and ensure that e-commerce companies such as eBay will continue to provide a platform for buyers and sellers to trade authentic goods,” said Alex von Schirmeister, general manager of eBay in France.
It seems that the two companies have finally come to an agreement over the legal battle; however, no details of the settlement have been made public.
The settlement seems to signify that the industry is understanding the importance of controlling and disabling the sale of counterfeit goods. While it is important that a brand fights for and protects its intellectual property rights, retailers who are entrusted with the sale of a brand’s goods must also protect that brand’s intellectual property rights, and it seems that these two companies have come to an understanding that will protect the intellectual property rights of the brands under LVMH’s helm.