August 14, 2008, 12:00 AM

eBay wins another court battle over sales of allegedly counterfeit goods

A Belgian court has ruled in eBay’s favor in a lawsuit brought by cosmetics manufacturer L’Oreal, which argued eBay was responsible for phony products auctioned off on eBay.

Katie Evans

Managing Editor, International Research

After losing two similar cases in European courts in June, eBay has prevailed in a lawsuit by cosmetics manufacturer L’Oréal, which argued eBay was responsible for phony products auctioned off on eBay. L’Oréal was surprised by the decision and plans to appeal, a spokesperson says.

“L’Oréal believes the court to be mistaken in its decision to minimize the role of eBay in the sale of products on its platform,” the spokesperson says.

EBay has argued that it’s been targeted by luxury goods manufacturers that want to prevent resale of their products. In commenting on the decision in the L’Oréal case, an eBay spokeswoman said, “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 distraction. eBay provides a vibrant and trusted marketplace that gives consumers a good deal. We work to tackle the menace of counterfeit through action and co-operation with rights owners.”

In another case involving a luxury goods manufacturer and eBay, a federal court judge in New York last month ruled in eBay’s favor in a case brought by jewelry manufacturer Tiffany and Co. over the sale of counterfeit Tiffany items on eBay. The judge in that case pointed to the efforts eBay has made to prevent sales of phony items with famous brand names, including its Verified Rights Owner program that Tiffany and 14,000 other trademark owners use to report to eBay counterfeit items being offered for sale. Tiffany is No. 88 in the Internet Retailer Top 500 Guide.

Legal experts said that decision could free other online retailers from the burden of authenticating items offered for sale on their sites. At the same time, it would while still require them to act if informed that a trademarked item was counterfeit.

In its suit, L’Oréal requested that certain postings be automatically prohibited, such as someone offering more than three perfume items in the previous month. The Belgian court approved eBay’s practice of verifying complaints before removing items. In some cases items identified by L’Oréal as counterfeit were in fact legitimate, according to eBay. There are many ways for legitimate sellers to honestly acquire branded products, such as when retailers or distributors liquidate excess inventory, the eBay spokeswoman says. “These sellers provide consumers with more choices and competitive prices,” she says.

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