On June 4, a French court ruled against eBay in a case brought against it by French ultra-chic luxury retailer Hermès over the sale of three Hermès bags, including two fakes, for a total of 3,000 euros ($4,715.50).
It's not so much the size of the fine that's likely to be keeping eBay executives awake at night: 20,000 euros ($31,439.30) is relatively small change for a company the market values at $38.5 billion. Rather, it's the precedent that the ruling by the court in Troyes sets, as it could apply to cases that might cost eBay a lot more and force it to rethink its entire selling strategy.
In France, Christian Dior and LVMH Moët Hennessy Louis Vuitton have pending cases against eBay over counterfeit goods, worth 17 million euros ($26.7 million) and 20 million euros ($31.4 million), respectively, while in the U.S., Tiffany's case against the company completed its hearing stage last December.
Hermès is the first successful case against eBay in France, and the second time an online intermediary has been found liable in relation to counterfeit charges, says Georgie Collins, an intellectual property lawyer at London-based business law firm LG.
Europe is taking a tough look at the responsibilities of online vendors across the board. Last year in Germany, Rolex successfully sued eBay over a breach of its intellectual property rights, using the European Enforcement Directive of 2004, which harmonized intellectual property rights across Europe. The European Commission's e-commerce directive, which looks at the liability of intermediaries, is also under review.
The International Anti Counterfeiting Coalition estimates that counterfeiting has skyrocketed over the past two decades into a $600 billion industry. In her book on the history of luxury, Deluxe: How Luxury Lost Its Luster, Newsweek journalist Dana Thomas argues that the multibillion-dollar luxury goods industry has been particularly vulnerable. The democratization of the industry in the early 1990s brought luxury goods within the reach of the world's middle classes, in no small part fueled by China's emergence as a low-cost manufacturing center.
But along with the low-cost goods has come a raft of counterfeits. "The convergence of the two, big demand and big supply," Thomas argues, has had a "cataclysmic" effect on the luxury business.
1 comment:
I for one am very happy for Hermes. I own several Hermes bags (one from Grammys old closet!) and really want to feel the prestige of the brand and its quality when I am wearing it. I am always a little squeamish to see the young girls with chipped nails, bad teeth and grammer with a knock off slung over their shoulders. It doesnt exactly inspire as Kelly or Birkin. In fact, it makes one want to run for storage!
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