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Brand Owners need to Police Their Portfolios More Vigilantly

‘90% of designer goods on eBay are fake’, French court is told in LVMH case

Legal experts today warned that brand owners need to protect their portfolios following a ruling on Monday in a French Court. The Court found against eBay in a dispute with LVMH, the luxury brands group whose portfolio includes TAG Heuer, Louis Vuitton, Kenzo Parfums and Donna Karen.

LVMH alleged that items for sale on eBay included fake Christian Dior, Guerlain, Givenchy and Kenzo perfumes. eBay argued that it spends $20m annually and employs 2,000 people to police the sale of counterfeit goods to no avail. LVMH was awarded £30.6m.

LVMH argued before the Court that 90% of designer goods sold on eBay are fakes. eBay has said that it will appeal the ruling.

Paul Carlyle, heading the media and technology group at Shepherd and Wedderburn LLP said:

‘This is a slightly surprising decision. French courts have not traditionally been seen as sympathetic to the needs of brand owners. Previous decisions have been more orientated toward the impact on the consumer.

This decision provides brand owners with an incentive to review the way in which they enforce the intellectual property protection which their brands enjoy. Counterfeiters take a free ride on the advertising and marketing spend of luxury brands and have a direct, demonstrable impact on profits. In a tighter economic climate where luxury brand purchases are ever less impulsive, the temptation for the consumer to buy a cheap imitation is high.

This ruling has the potential to fundamentally alter the way that online auction sites do business. With the finding in one EU member state that eBay’s Verified Rights Owner programme is inadequate, it is more likely that courts in other jurisdictions may make similar findings.

There is a very real possibility that other luxury brand owners will initiate claims either in their home jurisdiction or in France following this ruling. Brand managers who think that counterfeit versions of their brands are sold on online auction sites should, at the very least, take advice from their Group General Counsel.’

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Brand Owners need to Police Their Portfolios More Vigilantly