Look, we all know it’s illegal to make a knock-off of a luxury handbag. Everyone walking down Canal Street, just minutes away, knows with absolute certainty that counterfeit goods are illegal. Fashion Lawyer has covered the counterfeit topic for a long time. Other blogs also cover the topic of counterfeits.
Well, the heady days of safe online havens for counterfeiters may be over, as eBay was slammed yesterday with a $63 million award payable to Louis Vuitton and others for allowing individuals to auction fake luxury goods on its website. But the real question that popped up for Fashion lawyer yesterday was, what about the other grounds on which the French court punished eBay? What about “grey market” goods?
Grey market goods are authentic products that are sold outside their normal chain of distribution . An example would be an authentic Louis Vuitton “speedy bag” which is purchased by an individual at a Louis Vutitton retail store while on vacation in the U.S.. Let’s say that the person takes that “speedy bag” and sells it online, on a site like eBay, to a purchaser in a place like London. Because of the difference in exchange rates and market conditions, the purchaser in London is able to secure the handbag at a lower cost than buying it new from the Louis Vuitton store.
The “speedy bag” in the previous example is a “grey market good, beacuse it was sold under its market value, outside of the Louis Vuitton store or its pre-approved distributors (stroes like Neiman Marcus).
Great for the consumer, right? They get the real deal envy-worth handbag at a lower price. But is it legal?
That all depends on your location!! Clearly the Tribunal de Commerce in Paris thinks eBay’s laissez-faire ideals by the are not legal. The French court fined eBay for allowing sellers to auction genuine designer perfumes outside of the bricks and mortar of the offended brands’ selected distributors.
Ebay’s response is equivalent to flipping the finger. Not only is eBay appealing the decision (which is totally fair and legal, and should be done by eBay to exhaust the legal system for its remedies), but the company is ignoring the court’s mandate that eBay remove all pending auctions of “grey market” designer perfumes. Ebay refuses to respond to the court’s demand.
Affected perfume brands still up for sale by the online auctioneer are: Parfums Christian Dior, Kenzo Parfums, Guerlain and Parfums Givenchy.
We shall see how this yet unresolved conflict between eBay and the kings of scent pans out, but in the meantime, there is still a question about the legality of selling grey market goods.
Grey market goods have a long-standing legal history both in the U.S. and abroad. Legal scholars have devoted countless hours researching the complex topic. There are rich laws in the U.S., European Union and other areas that address the issue. Over the next few weeks, Fashion Lawyer plans to bring this topic into the forefront and to examine the issue on the backdrop of the landmark eBay case (and the other offspring cases which are bound to domino out of this huge Louis Vuitton victory).
Questions? Comments? As always comments are welcome and appreciated!
3 responses so far ↓
1 Esther // Jul 1, 2008 at 1:38 pm
The real question - is Ebay the responsible party? I would say the French courts should have gone after the individual sellers. Ebay has little control on what people will post to sell. In that way, the DMCA should have precedence as long as they remove the offending material. Either that or Ebay cease operations in France. Something not necessarily to the benefit of either party.
In any event, I don’t understand the difference between “gray market goods” and knockoffs. There is too much “gray” area to determine who’s idea is the true original and who is the imitator. In this case, France is too expansive in their decision.
2 Virginia Lumpkin // Jul 1, 2008 at 2:15 pm
Esther-
“Grey market” goods are items which are authentic product which are re-sold outside of the normal channels of retail, usually at a lower price than a retailer offers comparable goods.
Counterfeit or “knock off” goods are items which are copies of an original, protected product. A “knock off” Chanel bag would be a bag that bears protected Chanel trademarks (like the “double C” clasp), but is not made in Chanel’s manufacturing facilities. Ratherm the fake bag is made by counterfeiters hoping to capitalize on Chanel’s traditional of excellence and luxury.
3 A Competitor’s Response to the Ebay Lawsuit: an Interview with Michael Sheldon, Founder and CEO of Portero.com // Jul 2, 2008 at 7:42 pm
[…] and online auctions are here to stay; there is no question about that fact. Ignoring and appealing the French court’s ruling aside, eBay will more than likely face new challenges to its sale of luxury goods online- whether the […]
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