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EBay Wins Suit Against L’Oréal

French court rules site trades fairly.

PARIS — The Paris High Court ruled Wednesday that eBay is not accountable for the sale of counterfeit L’Oréal beauty products on its French Web site in a case brought against the online auctioneer by the beauty giant.

This story first appeared in the May 14, 2009 issue of WWD.  Subscribe Today.

The French court ruled eBay has implemented means to fight counterfeit products on its online platform, thereby fulfilling its obligation of fair dealing.

The court proposed eBay and L’Oréal find an amicable settlement via legal mediation.

It is eBay’s first court victory in France.

“The decision of the High Court in Paris is a victory for eBay and for consumers,” stated Alexander von Schirmeister, managing director of eBay France. “We are delighted that eBay’s meaningful efforts to fight counterfeits online have been recognized by the court as has its platform status.”

Meanwhile, L’Oréal, which had been asking for damages of 3.5 million euros, or $4.8 million at current exchange, stated the case is still pending. “Overall, L’Oréal is satisfied with the outcome of the decision taken by the court of justice in Paris on May 13, 2009, concerning the case it brought against eBay, which refers both parties to a judicial mediation. Therefore, the case is still pending and another hearing is set for May 25, 2009,” the firm said.

On that date, L’Oréal and eBay are to meet again in the French court to come to an agreement about methodology to combat the sale of counterfeit goods.

L’Oréal initiated legal proceedings against eBay in several countries in 2007. In 2008, a Belgian court found in favor of eBay, reasoning that the site is an online host, which stocks information by users and is not responsible for the veracity of that information. A ruling in a case brought in the U.K. courts is expected to be handed down as early as next Wednesday.

EBay lawyers have become regular courtside fixtures on both sides of the Atlantic as the Internet auction site has locked horns not only with L’Oréal but also with luxury groups, including Tiffany & Co., LVMH Moët Hennessy Louis Vuitton and Hermès International.

The Internet company has had mixed results to date. In June 2008 a French court ordered eBay to pay LVMH compensation of 38.9 million euros, or $61.3 million, for allowing the sale of counterfeit products and the unlawful sales of authentic fragrances belonging to its stable of brands. In the same month, the Web site was ordered to pay Hermès a fine of 20,000 euros, or $31,058, for failing to monitor the authenticity of goods sold on its site.

However, in July, in a case that pitted eBay against Tiffany, a U.S. court ruled eBay does not have the legal responsibility to prevent the sale of counterfeit goods. The jewelry retailer’s lawyers have since presented written arguments to an appeals court asking for a reversal of the ruling.