eBay wins L’Oréal counterfeiting case in Belgium

August 12, 2008, 11:30 PM UTC
Fortune

eBAY (EBAY) has now improved its record to 2-3 in its court battles over the crucial e-commerce question that is now being litigated around the world: Does the Internet auction-site  facilitate the sale of counterfeit goods by failing to more actively police its site?

In a case brought by L’Oréal  Group, the Belgian Tribunal de Commerce today exonerated eBay of any wrongdoing, reaching essentially the same result as a U.S. judge reached last month in New York in a case brought by Tiffany & Co. (TIF).

On the other hand, eBay has lost other recent cases raising similar issues in Germany (in a case brought by Rolex) and France (in cases brought by LVMH and Hermès).

eBay agrees to take down suspicious listings once they are identified by brandowners, but brandowners claim that such efforts are far too little, far too late to actually stanch counterfeit sales.

The Belgian ruling, which specifically involves Lancôme perfumes, finds that eBay is a passive provider of “host” services, as that term is defined in a European Community policy directive, and that it is therefore entitled to more legal leeway than a brick-and-mortar auctioneer would receive if counterfeit goods were being sold on his premises. In contrast, the German and French courts had found that the “host” service exception did not protect eBay because of the active role eBay plays in making sales happen and the fact that it takes a commission on every sale. (The U.S. court applied U.S. law, of course, and did not analyze the case in the same way.)

I do not yet have an English-language copy of the Belgian ruling, but the French-language decision is here. [Here’s the English language translation. — RHP, 9-17-08]

In a statement, eBay says: “This is the second successful court ruling in a row for eBay, both supporting our view that controlling prices and distribution reduces consumer choice. The litigation of counterfeits against eBay has been exposed as merely a stalking horse. eBay provides a vibrant and trusted marketplace that gives European consumers a good deal. We work to tackle the menace of counterfeit through action and co-operation with rights owners.” (The “stalking horse” reference refers to eBay’s contention that luxury good dealers are worried less about fighting counterfeiting than about preventing discounting and circumvention of their networks of licensed exclusive distributorships by discounters.)

L’Oréal’s statement: “Whilst acknowledging the decision taken today by the Commercial Court of Brussels, L’Oréal would like to express its utmost surprise at the result of this decision, which dismissed the action from Lancôme, a subsidiary of the group, against eBay, for the sale of counterfeits on eBay platform. L’Oréal believes the court to be mistaken in its decision to minimise the role of eBay in the sale of products on its platform. L’Oréal believes that this judgement by the court digresses from the interpretation of the eCommerce Directive provided in recent months by the European Commission. Today’s interpretation also contradicts that of other European courts, in particular, the Commercial court of Paris in a recent case against eBay brought by other luxury brands. L’Oréal intends to appeal this decision.”

Since L’Oréal has also filed four other suits against eBay in other courts across the European Community, the battle rages on.