The French luxury goods conglomerate LVMH Moët Hennessy Louis Vuitton S.A. (LVMH) recently settled its long-running court battle with eBay, Inc. over the online auction website’s alleged distribution of counterfeit luxury goods. Although financial terms were not disclosed, the two companies announced that they would collaborate in implementing measures aimed at protecting intellectual property rights and preventing the sale of counterfeit goods online. “Thanks to our joint efforts, consumers will enjoy a safer digital environment globally,” the companies said in a joint statement.
LVMH, whose prestigious brands include Christian Dior, Givenchy, and Fendi, sued eBay in a French court in 2008, arguing that as much as 90 percent of the designer items sold on eBay’s auction website were counterfeit. The court initially ruled in LVMH’s favor and ordered eBay to pay LVMH nearly € 40 million, although this sum was ultimately reduced to € 5.7 million on appeal. In 2012, a French appellate court ruled that a lower court lacked jurisdiction over eBay’s US website, but otherwise upheld the ruling as applied to eBay’s French and British sites.
Counterfeiting presents a serious challenge to makers of consumer products — particularly in the fashion industry, where luxury brands like LVMH can lose millions in potential sales when unsuspecting buyers come across counterfeit goods offered for sale on e-commerce websites. Companies implement various strategies to combat counterfeiters, including registering their marks with worldwide customs authorities, incorporating anti-counterfeiting labels into their products, and engaging in targeted litigation strategies and public relations campaigns. LVMH’s settlement is another successful outcome in this regard, and its collaboration with eBay could provide a viable model for other fashion companies seeking to bolster their online enforcement strategies.