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OT: eBay to pay $61 million damges for counterfeit goods

It'd be nice if PSA could sue eBay for the same...

Louis Vuitton Fights Back
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Comments

  • Last time I checked, ebay doesn't sell any goods. The counterfeiter is the only guilty party and going after ebay is just taking the easy way out. Screw the French.
  • billwaltonsbeardbillwaltonsbeard Posts: 3,748 ✭✭✭✭


    << <i>Last time I checked, ebay doesn't sell any goods. The counterfeiter is the only guilty party and going after ebay is just taking the easy way out. Screw the French. >>



    Good point.

    Ebay are still a bunch of crooks though. jk, no Im not
  • storm888storm888 Posts: 11,701 ✭✭✭
    While EURO laws are different than those in the US, EBAY
    is likely only a few prelim-suits away from being declared
    guilty of "counterfeiting" in a US Federal Court.

    Once the "just a venue" defense is finally revealed to be
    fraudulently made, EBAY is toast on the counterfeiting claims.

    With dozens of suits being filed on various issues DAILY,
    one is eventually bound to pierce the phoney "venue only"
    veil. Forfeiture statutes - similar to those held against
    landlords who house drug dealers - will kick in and the
    RICO-enterprise will be crushed.

    Hopefully, EBAY will be disgourged of the BILLIONS they
    have made by quietly conspiring with counterfeiters and
    other criminals. Once the civil stuff wins, the perp-walks
    will not be far behind.


    Folks Who Bite Get Bitten. Folks Who Don't Bite Get Eaten.
  • storm888storm888 Posts: 11,701 ✭✭✭
    BusinessWeek has always been an EBAY lackey.
    Even they see storm clouds gathering, today.

    ..........

    Technology July 1, 2008, 12:01AM EST

    EBay Gets Buffeted in Europe

    The auction site could face millions in extra costs to track down counterfeit goods if a French court's LVMH decision stands

    by Catherine Holahan and Carol Matlack

    Doing business may get a lot harder for eBay (EBAY). A Parisian court has ordered the e-commerce giant to pay $61 million to luxury goods manufacturer LVMH (LVMH.PA), the firm behind the Louis Vuitton and Christian Dior brands, for failing to prevent the sale of counterfeit goods on eBay's French site. The decision, handed down June 30, is the third in the past two years from a European court rejecting eBay's argument that it shouldn't be held responsible for users selling illegal knockoffs. "This decision represents an important step in protecting brands and products against parasitic practices," LVMH said in a statement.

    If the decision stands, it's likely to have far-reaching consequences for eBay's bottom line, forcing the company to spend millions of dollars more policing its site, and undermine eBay's effort to transform itself from an online flea market into a place for in-season, brand-name merchandise. LVMH's victory could also set a precedent that makes it easier for other brands to remove counterfeit items from eBay. "I am sure there are many discussions going on right now in the general counsels' offices of luxury brands," says Michael Huget, head of the intellectual-property group at law firm Butzel Long. "In a heartbeat, this [ruling] would be in my complaint."

    Tiffany & Co. (TIF) sued eBay in a U.S. court in 2004, arguing the company must do more to keep faux merchandise off the site. Lawyers for Tiffany are likely weighing whether the European decision can have any bearing on their case, legal experts say.

    "Totally Ridiculous" Decisions?

    EBay says it will appeal the French court's decision, which challenges a core tenet of its business—namely, that sellers and buyers who use eBay are ultimately responsible for the transactions. "We are going to fight this decision because it is totally ridiculous," says Alexandre Menais, the attorney in charge of eBay's partnerships with rights owners. In the past, eBay has argued it should be treated similarly to other sites, such as Google's (GOOG) YouTube, that let users upload content. In the U.S., such sites are not legally bound to proactively screen for and remove illegally uploaded content, such as copyrighted material—though they must take it down once alerted to its presence by the rights holder.

    Menais is particularly peeved by an injunction preventing the sale of any LVMH perfume on eBay's European sites. EBay does not plan to remove any products until its appeal is heard, said Menais, even though it faces a €50,000 fine, about $78,000, for each day it does not comply. The company believes the French court's decision unfairly blocks the legitimate sale of perfumes, which it says could be offered on the site from resellers as well as people posting unwanted gifts or used merchandise. Other luxury brands could use the decision to bolster efforts to get even legitimate but discounted products removed from eBay, Menais says.

    The decisions in the LVMH case, and in earlier rulings (BusinessWeek.com, 6/6/08) favoring Hermès and Rolex, are based on the idea that eBay should be held responsible for illegal activity through its site because it directly profits from the sale, through fees charged when items are listed and sold. A legal expert draws a parallel with Napster, which in 2001 shut down after a court ordered it to prevent file-sharing through its site. "This case has a distinct analogy to the case that brought down Napster in the United States," says Thomas Hemnes, a Boston-based intellectual-property lawyer. "You can't escape the conclusion that they are not merely a passive host."

    Restrictions Apply

    The prospect of more lawsuits is dangerous for eBay, which could see its costs for policing the site and fending off lawsuits rise. "They'll have greater costs and fewer sales, there's no way to escape that," says Hemnes. The decisions also undermine eBay's efforts to court higher-end, brand-name merchandise. The company signed a partnership in May with Buy.com (BusinessWeek.com, 6/3/08) to bring more of the online retailer's brand-name electronic merchandise and other items to its site.

    In recent years it has also aggressively expanded its Verified Rights Owners (VeRO) Program, which provides tools enabling brands to search the site for counterfeit merchandise and request immediate removal. EBay has 18,000 companies involved in the program, including Apple (AAPL), Coach (COH), and Oakley. In November, eBay placed restrictions on sellers of items that are often counterfeited, including limiting the number of items that could be sold and requiring the item to be auctioned for seven days. Items could, however, be purchased outright with the "buy it now" option, effectively ending the auction early. Since applying the new restrictions, 2.2 million counterfeit listings were removed across all eBay sites and 50,000 sellers were suspended, according to the company.

    But the lawsuit by Tiffany, which is a VeRO member, demonstrates that not all participants believe eBay is doing enough to combat fraud. And the June 30 French court decision could very well force eBay to do a lot more.

    Holahan is a writer for BusinessWeek.com in New York. Matlack is BusinessWeek's Paris bureau chief.

    30

    Folks Who Bite Get Bitten. Folks Who Don't Bite Get Eaten.
  • LV though has been the extreme though. They have also filed suits against legitimate sellers who are selling legitimate LV items for copyright infringement. These got shot down due to first sale doctrine rulings.

    Basically LV was trying to say it was illegal for anyone other than an authorized dealer to sell an item of theirs. This according to them includes people who buy it from a LV retailer and just want to sell it. Its like Ferrari trying is to sue a man for buying one and turning it into a limo, under first sale doctrine if the item is legally purchased the copyright owner has no claim against what the owner does with it.
  • storm888storm888 Posts: 11,701 ✭✭✭
    LV has softened some in the US on the first-sale doctrine; laws in
    Europe are simply different than they are here. The cases are now
    usually pled to suit the jurisdictions.

    As a seven-year+ seller of LV, I have had good and bad experiences
    with them. Since I KNOW that 90%+ of their items I review on EBAY
    are FAKE, it is not possible that EBAY is ignorant of what has been
    going on.

    On average, I suffer 2 or 3 VeRO takedowns each week. NONE of
    them are valid, and eventually most are reinstated. The VeRO TDs
    are woefully inadequate to police the problem.

    MANY VeRO reps are now contract agents and have virtually ZERO
    training in how to identify their clients' merch. They shoot with a
    shotgun, because they are thus able to get rid of ALOT of the fakes.
    Many fakes slide through, and MANY AUTHENTIC items are VeROd.

    At least half of the tips to VeRO reps come from "selling competitors."
    Abuse by broom-riding EBAY sellers is rampant; their fraudulent complaints
    are almost always taken as gospel by the lazy VeRO reps. Many of these
    corrupt complainants are the biggest sellers of counterfeits on EBAY.

    If CLCT was still in entrepreneurial mode, they could NOW become
    major players in delivering the final solution.
    Folks Who Bite Get Bitten. Folks Who Don't Bite Get Eaten.
  • jrinckjrinck Posts: 1,321 ✭✭
    I think Ebay has a responsibility to ensure that its site isn't being used to break the law.

    If I rent a house out to drug dealers, and the cops bust the place, I am going to be liable in some way if I knew, or should have known, that the house was being used for illicit purposes.

    And if Ebay wants to claim that it's too big to be able to police its own business, then that's just it, they're TOO BIG and need to either staff appropriately, or scale down to the point where they can get ahold of things.
  • TabeTabe Posts: 5,920 ✭✭✭✭✭
    Here's the problem for Ebay:

    1) They advertise themselves as a store - just look at their TV ads. They don't say you're buying from Mom in California, you're buying from EBAY.

    2) They KNOWINGLY use counterfeit products in their advertising. Fake sports jerseys are a BIG problem on Ebay. Over Christmas, they sent out a catalog that advertised "authentic" Peyton Manning jerseys on Ebay as having an average sale price of $37. Impossible. Wholesale on legit jerseys of Manning is over $100 for an authentic - and Ebay KNOWS this. So they turn a blind eye to fakes and then tout the low prices that the fakes bring.

    Sorry, can't have it both ways - you can't claim that you're just a venue while knowingly advertising fakes.

    Tabe
  • They lost there venue only status when they started telling sellers what types of payments they can and cannot use. The new changes move them further away from Venue only.
  • storm888storm888 Posts: 11,701 ✭✭✭


    << <i>They lost there venue only status when they started telling sellers what types of payments they can and cannot use. The new changes move them further away from Venue only. >>




    ///////////////////////////////////

    Now all we need is for ONE American court to agree.

    The French already did. In the Hermes case, two weeks ago, the court branded EBAY as "counterfeiters."

    Different set of laws, but the US is often slower to catch on.
    Folks Who Bite Get Bitten. Folks Who Don't Bite Get Eaten.
  • storm888storm888 Posts: 11,701 ✭✭✭
    Holy-Cow.

    EBAY totally misstated the process in the auctionbytes story.

    The claim that BOTH buyer/seller are "paid" is FALSE. PayPal
    "confiscates" the item...................NOW it seems that they
    resell it to consumers.

    (MANY such confiscated items are actually genuine.)

    //////////////////////////////////////////
    /////////////////////////////////////////

    From EBAY SC.......


    AMAZING! This could very well be why eBay refuses to pro-actively eliminate the selling of counterfit items on its site.


    Read the article below, then take a look at this website, http://forum.purseblog.com/ebay-forum/paypal-wants-the-fake-chanel-309773.html.


    Where Do eBay Fakes Go to Die?

    http://www.auctionbytes.com/cab/abn/y08/m07/i02/s01

    Why does PayPal ask buyers to send counterfeit merchandise purchased on eBay to a warehouse in Texas belonging to a liquidator? That's the question some eBay members are asking, and some are questioning whether PayPal is directing the liquidator to resell counterfeit items rather than destroying them.

    "The Purse Forum," an online discussion board calling itself a "community for handbag lovers and shoulder fashion fetishists," has an active discussion in which users speculate Liquidity Services is reselling counterfeits on their site on PayPal's behalf. The person who started the thread about PayPal's request for her to send a fake Chanel handbag (in its original condition) to Liquidity Service's address in Texas later wrote to say she had filed a complaint with the FBI over the matter.

    One buyer who wrote to AuctionBytes had similar concerns. "I became suspicious as to why (PayPal) would want the bags in original condition. Why wouldn't they want me to cut the handles in half or put a big black X on the outside with permanent marker?" she asked.

    In response to an inquiry about these claims, Liquidity Services spokesperson Julie Davis told AuctionBytes, "If we receive goods from PayPal that have evidence of or are suspected to be counterfeit, they are destroyed. Liquidation.com would not knowingly sell counterfeit goods in our marketplace."

    PayPal explained why it was working with Liquidity Services and how the "Significantly Not as Described" (SNAD) claims process works. Spokesperson Michael Oldenburg said PayPal works with the liquidation firm in a very limited number of cases in Buyer Protection claims where the buyer has filed a Significantly Not as Described claim, and the buyer and seller cannot work it out. "We usually encourage the buyer to return the merchandise to the seller," Oldenburg said.

    In cases where they buyer doesn't want to return the merchandise to the seller, or the seller doesn't want the merchandise back, PayPal compensates both parties, he said. In those cases, PayPal asks the buyer to send the merchandise to Liquidity Services.

    Liquidity Services does not act as an authenticator, Oldenburg said, and what happens to the item in Texas then depends on the type of SNAD claim. If there is an accusation that the item was counterfeit, PayPal says it directs Liquidity Services to destroy the item. Otherwise, Liquidity Services liquidates the item on its own marketplace. "That helps us recover some of our losses because, as I mentioned before, we've already paid out both the buyer and the seller."

    However, claims are handled differently if the buyer initiates a chargeback with their credit card company.

    "PayPal agents work with sellers, and we advocate on their behalf," Oldenburg said. If the seller can prove the item is authentic, they can give that proof to PayPal who will give it to the credit card company. But if the credit card company sides with the buyer, PayPal complies and withdraws the money from the seller's account.

    However, Oldenburg said, sellers in that case can request that PayPal return the item to them if the buyer sends the item to Liquidity Services. "If the situation is a credit card chargeback, the credit card company works with the buyer to have him or her return the merchandise either directly to the seller or to PayPal via Liquidity Services. The buyer is usually required by his or her credit card company to provide proof that the item has been returned." The exception is if the claim is for a counterfeit item, he said.

    "We always encourage people to use the online dispute resolution center," Oldenburg said, adding that PayPal tries to facilitate a dialog between the buyer and the seller so they can come to a mutual resolution.

    //////////////////////////////////


    YIKES!!!!!!!!!!!!!!

    They even take PayPal as payment for the "counterfeit" stuff.

    YIKES!!!!!!!!!!!!!!!!!!
    Folks Who Bite Get Bitten. Folks Who Don't Bite Get Eaten.
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