The commercial court in Paris, France has found eBay guilty of misconduct by upholding claims by Louis Vuitton Malletier and Christian Dior Couture about sales of counterfeits. The court ruled that, by allowing the sale of counterfeit goods on its website to the detriment of Louis Vuitton Malletier and Christian Dior Couture, eBay was guilty of gross misconduct and of detrimental breach as, through accountable negligence, eBay had not taken the necessary measures to prevent the sale of the counterfeit goods on its site.
The court has also ruled that, in allowing the sale of perfumes carrying the brands, Christian Dior, Guerlain, Givenchy and Kenzo, products which can only be sold through the network of distributors agreed to by the companies which own these brands, eBay was guilty of practicing unlawful sales. The court also added that a report of the decision must be published in three French or international newspapers. Finally, eBay must report the verdict on both its French and English sites.
To compensate for all damages, the court ordered eBay to pay 16.4 million euros (nearly $26 million U.S. dollars) to Louis Vuitton Malletier, 19.28 million euros (more than $30 million USD) to Christian Dior, and 3.192 million euros (about $5 million USD) to the perfume brands. For the first time in France, the verdict clearly states the principle under which auction sites that operate on the web have to ensure that their activities do not permit unlawful dealings.
The court dismissed as without foundation the argument used by eBay to exonerate itself that its clients are solely responsible for their illegal undertakings when transacting. eBay is not a host but a broker.
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