French court fines eBay for sale of counterfeit handbags

Ordered to pay for sins of its users

A French court has ordered eBay to pay a hefty 20,000 euros to luxury goods designer Hermes for the online auction house's role in the sale of three counterfeit handbags.

Wednesday's ruling was the first time a French judge has found eBay directly responsible for a fraudulent sale by one of its customers. eBay has long agreed to remove listings found to be illegal, but it has steadfastly contended that the liability for those listings rests solely with the seller. A finding to the contrary, should it become widespread, could prove harmful to eBay's revenue model.

"By selling Hermes bags and branded accessories on the ebay.fr site, and by failing to act within their powers to prevent reprehensible use of the site [eBay and the lister] committed acts of counterfeiting and imitation of French brand names ... to the detriment of Hermes International," the ruling read, according to this article from AFP.

In a statement, eBay reiterated its stance against counterfeiting and said its Verified Rights Owner (VeRO) Program is designed to make it easy for intellectual property owners to report abuses. Wednesday's "court ruling relates to past issues of seller verification, the statement continued. "The court acknowledged that eBay has closed these loopholes referencing the anti-counterfeiting measures spearheaded by the VeRO scheme which brings rights owners and eBay together to tackle the menace of counterfeit goods."

eBay was ordered to pay the damages jointly with the woman who put the bags up for sale. eBay was also ordered to post the ruling on its French homepage for three months.

For a company founded on the principle that "people are basically good," eBay should takes a lot of flack for the misbehavior of its users. Louis Vuitton and Dior Couture have also pursued legal action in Paris commercial court, seeking 20 million euros and 17 million euros in damages respectively. They accuse eBay of complicity for listings of counterfeit items by allowing buyers and sellers to transact unfettered.

eBay also faces legal action from the auction industry and L'Oreal related to sales of counterfeited goods. ®