In a ruling that could have wider ramifications for online retailers, a French court has found eBay liable for harming the reputation of luxury goods supplier Louis Vuitton.
The decision, rendered by the Paris District Court on February 11, established that the trademarks, company name and domain name of the luxury brand had been harmed.
Louis Vuitton, whose products include fine jewellery and watches, took legal action to stop eBay from using keywords related to the company’s name to attract customers to its website – despite the fact that Ebay sells genuine Louis Vuitton products.
According to Reuters.com, a certain number of mis-spelt words similar to Louis Vuitton often appeared in search engines, and the system allowed it to automatically pay search engines such as Yahoo and Google to have them used as key words, directing users to eBay.
Part of the ruling was an order that the online auction giant stop using key words on its website that harmed the reputation of the Louis Vuitton brand, a decision which could affect the marketing strategies of many online retailers.
The luxury retailer issued a media release in response to the court ruling: "Louis Vuitton welcomes this decision, which confirms established case law that aims to protect the consumer from the illicit use of company trademarks," said Louis Vuitton global intellectual property director Nathalie Moullé-Berteaux in the release.
The court ordered eBay to pay Louis Vuitton Malletier 200,000 euros (around $302,441) in damages, as well as 30,000 euros ($45,366) in legal costs. In addition, the court said it would impose penalties amounting to 1,000 euros ($1,512) per future violation.
It also demanded eBay pay 1,000 euros in penalties everytime it used search engine key words that "harmed the reputation of the Louis Vuitton brand". eBay recognised the facts of the case but said it reflected the workings of a search system it uses.
"We are extremely disappointed by this decision," Yohan Ruso, head of Ebay France told Reuters. "We recognise the facts but we think the sanction is disproportionate."
eBay argued that the words were commercial links used in search engines to redirect consumers to eBay to buy genuine Louis Vuitton goods.
"This issue is being used by certain rights owners as an excuse to retain total control of what people can buy, where they can buy it from and how much they have to pay," eBay said in a statement.
The online retailer said it had not yet decided whether it would appeal against the decision.
In June of 2008, Louis Vuitton's parent company, LVMH, won its own counterfeit case against eBay. A French court ruled that the online auction giant did not do enough to prevent the sale of counterfeit goods on its site, and ordered eBay to pay LVMH 40 million euros ($60 million).