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Luxury brands around the world were no doubt ecstatic over Louis Vuitton’s $63 million win this past Monday in France. A Paris court ordered eBay to pay damages to LVMH (a Paris-based conglomerate owning luxury brands Louis Vuitton, Dior, and Givenchy, among others) for facilitating the sale of counterfeit products. California-based eBay claimed to have spent $20 million annually to prevent counterfeit products from being sold on its web pages, but after discovering that 90% of the Dior and Louis Vuitton brand goods sold on the site were counterfeit, LVMH decided that eBay’s efforts were insufficient.
While the ruling applied French national law, it has far-reaching implications. The case is likely to be studied by luxury goods brands with similar cases pending such as Tiffany’s & Co., which claims to lose $30 billion annually due to counterfeit and unauthorized sales of its products.
eBay asserts that it will appeal the decision, suggesting that LVMH’s real intention is to micromanage product distribution and prices, not combat piracy. It also argues that this decision will end up harming law-abiding consumers.
eBay has a valid point. If online auctioneers and outlets decide that the cost of rooting out the counterfeit products is too high for the return, they may cease auctioning and selling luxury goods altogether. This would lead to fewer sales outlets for law-abiding citizens who wish to sell their used luxury goods, therefore leading to fewer products available for consumers. Hopefully, we can find a middle ground where luxury brands are protected and online auction sites are able to carry all legitimate goods.
– Carrie Frondorf
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