By and  on July 17, 2014

While LVMH Moët Hennessy Louis Vuitton and eBay were vague about details of Thursday’s settlement in their legal battle over the sale of counterfeit luxury goods on eBay, the increasingly common problem in the digital arena is one that is plaguing scores of companies and Web sites.

In a joint statement, LVMH and eBay said they have engaged in “a cooperative effort to protect intellectual property rights and combat counterfeits in online commerce,” adding that, “thanks to the cooperation measures put in place, the companies have settled ongoing litigation.”

“Thanks to our joint efforts, consumers will enjoy a safer digital environment globally,” Michael Jacobson, senior vice president and general counsel at eBay, and Pierre Godé, vice president at LVMH, said briefly in the same statement, without elaborating.

Terms of the out-of-court settlement were not revealed, nor were any new anticounterfeiting initiatives. Thursday’s development ends an eight-year battle, with gains and losses on both sides. In 2008, a French court ordered eBay to pay a compensation of 38.9 million euros, or $52.7 million at current exchange, to LVMH, the highest fine ever awarded against it in Europe for allowing the sale of counterfeit goods and for the unlawful sales of authentic fragrances between 2001 and 2006. A series of minor court cases followed, until a French appeals court decided to reduce the original amount of 38.9 million euros to 5.7 million euros, or $7.7 million, in 2010.

Then, in 2012, another court ruled that although the lower court had been right to decide eBay’s liability on its French and British Web sites, it did not have jurisdiction over eBay’s U.S. site.

Asked about the significance of the companies’ “cooperative effort” for LVMH, a spokeswoman for the French luxury giant told WWD that the new agreement “will ensure a very concrete decrease of the number of counterfeits visible and present on all eBay platforms across the world” and ensure “the protection of selective distribution on all the eBay platforms worldwide.”

The settlement is significant as it is valid globally and not just on eBay’s French and British Web sites, while it also refers to all LVMH brands and its products, including Louis Vuitton and Christian Dior along with Guerlain, Givenchy and Kenzo perfumes, which operate under the LVMH umbrella.

EBay declined further comment.

While not privy to any of the specifics of the LVMH-eBay deal, Bob Barchiesi, president of the International AntiCounterfeiting Coalition, said the ongoing problem of selling counterfeit goods is only getting worse across a myriad of platforms. “It mirrors the public’s appetite to shop online. I think it will just continue to grow exponentially as online sales continue to replace brick-and-mortar sales. Obviously, there is a rife marketplace for counterfeit goods. And shoppers can’t physically inspect the goods as you can on Canal Street. It’s also easy to imitate and copy Web sites.”

Brands and luxury labels can always complain to eBay about any intellectual property infringement through its Verified Rights Owner program, he said.

Some online shoppers willingly purchase counterfeit goods, but many more do so unknowingly, often choosing the cheaper-priced item, unaware that the goods are inauthentic even though they look the same, Barchiesi said. In the past two years, through its Rogue Block initiative, the IACC has worked with credit card companies, Western Union and other transaction services to dismantle payment operators on sites selling counterfeit goods. In that time, 3,600 to 3,700 payment service providers affecting “hundreds of thousands” of Web sites have been shut down thanks in part to law enforcement agencies, the U.S. Department of Homeland Security, French Customs, the Royal Canadian Mounted Police and others, Barchiesi said.

Noting that he recently returned from meeting with representatives of the Ministry of Public Service in Shanghai, Barchiesi said teaming up with law enforcement agencies in China is a priority. Last summer, the IACC signed a deal with Taobao, a business within Alibaba Group, to fight online counterfeiting sales. Emphasizing the need to put up online roadblocks suitable for different platforms rather than one policy for everyone, Barchiesi said that tactic is taken by Taobao, Alibaba and AirExpress.

Just as each country has its own host of issues, so do the Web sites. “All of these platforms have their own issues. Amazon has its issues,” Barchiesi said.

Valerie Salembier, president and chief executive officer of the Authentics Foundation, said luxury companies have a responsibility to tell consumers “how to spot a fake. But they won’t do that because they don’t want their names associated with counterfeit goods.

“All of these companies are spending million and millions of dollars on private investigators and global investigators,” she said.

Noting that 133 commuters lost their lives in the 2004 Madrid train bombings that were funded, in part, by sales of counterfeit DVDs and CDs, Salembier said consumers need to be informed of such links. “If you speak to consumers about what buying a counterfeit item supports — child labor, the drug trade, money laundering and terrorism — they would be horrified,” she said.

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