Fashion labels sue Ebay over sales of fakes

The luxury goods industry’s determination to stamp out counterfeiting has led to Louis Vuitton and Christian Dior Couture suing Ebay, the online auctioneer, for €37m ($47m, £25m).

It emerged on Wednesday that the two fashion labels began a civil complaint in Paris over the summer in the belief that the products sold on Ebay bearing their names were fakes in the vast majority of cases.

It is the second time that Ebay has been targeted in the courts by a luxury goods group worried about counterfeit sales, viewed as being one of the sector’s greatest threats.

The company was already being sued in the US by Tiffany, the jeweller.

Louis Vuitton, part of France’s LVMH, is understood to be demanding €20m in damages and interest allegedly related to sales of counterfeit goods on Ebay between 2001 and 2005.

Christian Dior Couture - part of Christian Dior, which is also controlled by LVMH head Bernard Arnault - is claiming €17m.

Ebay’s French arm said it had already mounted an aggressive campaign against fakes put up for sale by its members. “All sales of counterfeit products on Ebay are totally illegal,” it said.

Under a monitoring system called Vero - short for “verified rights owner” - it encourages trademark owners to notify it of fakes that need to be removed from the site. However, it admits it cannot screen all transactions carried out by its myriad members.

LVMH is understood to want improvements to Ebay’s monitoring system, which it believes puts an unfair policing obligation on brand owners rather than the auction site itself.

Ebay is also coming under pressure on the issue of counterfeiting from Unifab, a French association for trademark holders, which said on Wednesday that the online auctioneer had agreed to discuss the matter.

LVMH has already successfully sued Google, the search engine operator, in France over allegations that it had provided links to sites that sold counterfeit versions of Louis Vuitton products.

Google was fined €200,000 - a sum that was increased to €300,000 when the US company lost its appeal in June.

As well as hunting down rogue sellers online, luxury goods brands are also trying to decide how best to use the internet for legitimate sales.

Accustomed to close control over distribution, the industry was initially cautious about the web, with its more freewheeling style, but online stores are becoming more common among fashion houses and accessory makers.