eBay Victorious Over Rolex in Latest Counterfeiting Lawsuit

February 27, 2009 11:25 AM
by Anne Szustek
Online auction giant eBay won a lawsuit in Germany in a case brought by Rolex Group about counterfeit watches sold by third parties on the auction site.

eBay Wins German Lawsuit

A court in the German city of Dusseldorf on Tuesday ruled in favor of eBay on the grounds that the company had removed from its site auctions of counterfeit watches.

Court spokesperson Ulrich Egger told Bloomberg, “EBay now uses a filter program to detect offerings that blatantly violate trademark rights. … Ebay doesn’t have to review each item before it gets posted on its site, because it would jeopardize the whole business model.”

Rolex has already sued eBay over the alleged sale of counterfeit watches in 2001. That decision was partly overturned in 2007 by a Dusseldorf court, stipulating the auction site must take due diligence to curb the sale of fake goods.

eBay won a similar court case last July filed by jewelry company Tiffany. U.S. District Court Judge Richard Sullivan wrote in his decision, “Tiffany must ultimately bear the burden of protecting its trademark.”

That ruling, coupled with the verdict in the Rolex suit, provides a bit of solace for third-party online auctioneers, as it establishes that Web-based enterprises do not hold sole responsibility for patrolling how trademarks are used on their sites.

“If the Web companies shoulder too much of the burden, their ability to wring a profit from the sales or the advertising that appears alongside the commerce could be compromised,” wrote BusinessWeek.
The rulings seem to directly contradict the European courts that found eBay liable earlier last summer for sales of fake Hermès and Louis Vuitton goods.

Fashion conglomerate LVMH, which owns high-end labels Louis Vuitton, Dior and others, found that some 90 percent of Dior and Louis Vuitton goods auctioned on eBay were fakes. The court awarded $63 million to LVMH for what it deemed eBay’s “culpable negligence,” and required eBay to pay nearly $20 million in additional damages for unauthorized sale of the brand's perfumes.

Less than a month earlier, French fashion house Hermès, known for such signature items as the pricey Birkin bag, won $30,000 in damages from eBay and sellers over auctions of two counterfeit Hermès bags. That court cited eBay for “failing to act within their powers to prevent reprehensible use of the site.”

Fashion fakes constitute a $600 billion worldwide industry—one that’s been linked to illegal activities much more tangible than infringement on intellectual property laws, including child labor and the financing of narcotics trafficking and terrorism. New York City Police Commissioner Ray Kelly alluded that fashion counterfeiting rings helped fund the 2004 Madrid train bombings.

Background: Designer labels’ struggles against counterfeiting

Opinion & Analysis: “Judge to Tiffany: Police Your Own Brand”

Video: “Fakes are Never in Fashion”

Reference: Guides to fashion and online selling


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