May 22, 2009, 12:00 AM

A U.K. court says eBay is not responsible for fakes on its marketplace

Today’s decision marks the second time this month eBay has prevailed over luxury goods manufacturer L’Oréal in a European court.

Katie Evans

Managing Editor, International Research

A British judge ruled today that eBay Inc. is not responsible for counterfeit goods sold on its marketplace. It was the second time in a month that eBay had prevailed over luxury goods manufacturer L’Oréal on this issue, the earlier ruling in a French court.

The British High Court judge noted in his decision that several luxury goods makers in Europe were suing eBay over similar issues, and said he planned to ask the European Court of Justice to clarify certain questions, such as whether eBay is liable if an eBay seller uses a manufacturer’s trademarked brand name to promote sale of a counterfeit item.

EBay has contended that the lawsuits by luxury goods manufacturers like Louis Vuitton, Christian Dior and L’Oréal are aimed at broader sale of their products that could bring down prices on luxury goods.

French courts last year ruled against eBay in two similar lawsuits, ordering eBay to pay more than $60 million in compensation to such luxury goods makers as Louis Vuitton and Christian Dior. However, in an important case on the subject in the U.S., eBay last year was not held liable for phony Tiffany goods offered on eBay. In several of the recent decisions, courts have taken note of eBay’s efforts to prevent the sale of counterfeit goods.

The British court decision handed down today noted that investigators had searched the eBay U.K. site in late 2006 for Lancome, a brand of L’Oréal, and purchased 287 products. Of those, 14 were found to be counterfeit, and another 188 either not intended for sale in Europe or not intended for sale anywhere.

EBay hailed today’s High Court decision. "This is an important judgment because it ensures that consumers can continue to buy genuine products at competitive prices on eBay,” says Richard Ambrose, head of trust and safety for the U.K. unit of eBay. “As such, it is a victory for consumers and the thousands of entrepreneurs who sell legitimate goods on eBay every day. When companies try to prevent genuine items being sold through the Internet they demonstrate that they are out of step with consumers, how they use the Internet to shop and, at this time when every penny counts, the importance of shopping around to get the best price.”

In its statement, L’Oréal welcomed the judge’s decision to refer some of the legal issues to the European Court of Justice, and his assertions that eBay could do more to prevent trademark infringement.

L’Oréal still has a similar case pending against eBay in Germany and is appealing last year’s decision by a Belgian court in favor of eBay.

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