image: Givenchy

image: Givenchy

LVMH and eBay have settled their long-running court battle over the sale of counterfeit luxury goods on the U.S. company’s online auction website. A joint statement from the two companies says this of the settlement: “eBay and LVMH today announced a cooperative effort to protect intellectual property rights and combat counterfeits in online commerce. Thanks to the cooperation measures put in place, the companies have settled ongoing litigation.”

For those of you unfamiliar with this particular fight against counterfeits (it was, after all, being argued in France), we’ve provided the highlights. In 2006, several of LVMH’s brands, including Givenchy, Louis Vuitton, and Dior, brought suit against eBay in an effort to thwart the sale of counterfeit goods. The French luxury goods giant alleged in the suit that of the 300,000 Dior-branded items and 150,000 Vuitton bags offered on eBay at the time, 90% were fakes.  It was further argued that eBay knew that most of these goods were counterfeits and that it had a duty to monitor the goods that were being sold on its online marketplace. A French court agreed in 2008 and awarded €38.6 million in damages (around $61 million) on the finding that eBay had done too little to stop the sale of counterfeit goods.

Not surprisingly, eBay appealed the ruling, hoping an appeals court would agree that it is a brand owner’s ultimate responsibility, not eBay’s, to police for counterfeits. No such luck, though. Even though the judgment amount was reduced, it was still determined on appeal that eBay had a responsibility when it came to the sale of counterfeit goods from its website. In 2012, it was determined that the lower court did not have jurisdiction over eBay’s U.S. website – and thus the ruling would not apply to it – but that the decision did apply to the auction site’s French and British sites.

Which brings us to the very recent settlement.

That the two parties have reached some sort of agreement that apparently includes a “cooperative effort to protect intellectual property rights and combat counterfeits” is really not the most encouraging part of this whole battle. What we are really excited about is that a court found that a company like eBay can be held responsible for the goods that are sold on its online marketplace.

The proliferation of counterfeit goods being sold online is cause for concern for many reasons. To a company, there is obviously some damage to its bottom line. This is an annoyance for giants like LV, but to newer designers, this can mean the end of the brand. Probably a bigger concern, at least to big brands like the ones involved in this lawsuit, is the dilution of a brand’s intellectual property because it is seen as less exclusive to consumers. And speaking of consumers, we should be worried about this issue, too, because counterfeit goods often involve sweatshops and they can be made with hazardous materials.

Clearly we at TFL are censorious of counterfeits and all that they stand for. Read most of our articles and you can find at least overtones to that effect. But, as much as we wish it were, that is not enough. In the end, it’ s up to brands to police their marks and, perhaps more importantly, up to courts and lawmakers to offer more protection to designers.

So far, this has not happened in the U.S. You may recall a similar case brought by Tiffany against eBay in the United States District Court for the Southern District of New York. Similar to LVMH, Tiffany alleged that counterfeit goods were being sold on eBay and the luxury jewelry retailer was hoping that a court would hold eBay accountable. The district court ruled in favor of eBay, though, holding that it was Tiffany’s responsibility to police for counterfeit items. This decision was affirmed on appeal.

The previous rulings in France mean that, in at least some countries, online marketplaces are responsible for the goods that are being sold, which is really not an outrageous concept. Here’s hoping the U.S. will come around eventually.

JENNIFER WILLIAMS is a recent law school graduate who writes about fashion, the legal avenues available for protecting it, and the ways in which the laws are falling short. She is currently awaiting admission to the NY State Bar. For more from Jennifer, follow her on Twitter.