Would you buy a Louis Vuitton bag that is described, as many of those listed by online auctioneer Ebay are, as “100% per cent authentic”? Leave aside the question of whether a bag can be 83 per cent authentic – the simple fact the sellers are desperate to reassure suggests that there are a lot of counterfeits about. The problem has led a French court to award damages against Ebay but there is a delicate balance to be struck: the internet cannot be a lawless haven for fraudsters, but nor can site operators be held solely liable for the actions of their users.

The Tribunal de Commerce ordered Ebay to pay €35m to luxury goods maker LVMH for failing to do enough to block sales of counterfeit goods; in a separate ruling, it also ordered the website to pay €3.19m, and block sales of genuine LVMH perfumes, because they breach agreements that the perfumes be distributed only by selected outlets.

In the first case there is a clear need to balance the rights of both sides – and clear parallels with other arguments about illegal activity on the internet. Ebay provides a system through which fraudsters can sell fake bags, just as internet service providers provide a pipe down which consumers can download copied music, and message boards provide a forum for all manner of harassment and criminality.

An important difference in this case is that Ebay profits directly, through its listing fee, when a counterfeit is sold on its site. Just as when a bank is used to launder money, however, the question is how far Ebay is responsible for that criminality, and the answer must surely be to the extent that it took reasonable measures to prevent it. Ebay must do more, but to exclude all counterfeits easily is impossible, and would deny users the legitimate service that Ebay provides.

Ebay should also act for its own benefit, even though sales of counterfeit goods may boost profits in the short-term, and even without the legal threat. Customers duped into buying counterfeit goods are unlikely to make further purchases on the site, while counterfeiters crowd out Ebay’s original customers: people trying to offload second-hand goods. There is little point in listing a used Louis Vuitton bag if it will have to compete with a swarm of brand-new fakes.

The other side of the case – that genuine goods sold on Ebay violate exclusive distribution agreements – is weaker: LVMH should look to its own supply chain if goods are leaking out and on to Ebay. There should be no restriction on third parties that want to trade in its goods – and Ebay is simply a tool for those independent traders.