eBay ordered to pay €1.7 million fine for breaching injunction

In Parfums Christian Dior v eBay International(November 30 2009), the Paris Commercial Court has ordered eBay International and eBay Inc (collectively eBay) to pay a fine of €1.7 million for failing to take sufficient and appropriate measures to comply with an injunction issued on June 30 2008.
In late 2006 four companies of the LVMH Group - Parfums Christian Dior, Kenzo Parfums, Parfums Givenchy and Guerlain - filed suit against eBay in the Commercial Court seeking to stop the sale of perfumes and cosmetic products manufactured by them, or represented as being manufactured by them, on eBay's auction platforms.
On June 30 2008 eBay was condemned to pay almost €40 million to the plaintiffs. According to the court, eBay had violated the plaintiffs' selective distribution networks, as it was under the obligation to ensure that activities on its auction platforms were not illegal. The court concluded that eBay's actions:
  • compromised the coherence of the plaintiffs' distribution networks; and
  • could damage the reputation of the plaintiffs' products and trademarks.
The court thus ordered that eBay stop:
  • the sale of products manufactured by the plaintiffs, or represented as being manufactured by them, on its auction platforms; and
  • the use of the plaintiffs' trademarks by eBay sellers (in particular in the description of the products).
Each of these orders was subject to a fine of €50,000 per day for failure to comply with them (for further details please see "eBay ordered to pay almost €40 million in damages to LVMH").
Subsequently, the plaintiffs considered that eBay had not taken sufficient measures to comply with the court's orders and brought the present action before the Commercial Court.
The court held that eBay had failed to comply with the injunctions and imposed a fine of €1.7 million. The court found that since the June 30 2008 ruling, there had been over 1,300 incidences in which sellers had advertised cosmetics or perfumes manufactured by the plaintiffs or represented as being manufactured by them. The fact that eBay had hired 87 people to monitor the problem was found to be insufficient.
This case demonstrates the extent to which LVMH is prepared to combat the sale of its products on eBay's auction platforms. Following its June 30 2008 victory, LVMH also successfully sued eBay over the non-authorized use of its trademarks as keywords to trigger sponsored links (for further details please see "eBay's use of LVMH's marks as keywords is infringing, says court"). The decision in the present case is thus the third ruling in favour of LVMH in France.
Franck Soutoul and Jean-Philippe Bresson, INLEX IP EXPERTISE, Paris

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