Interesting article on counterfeits, LVMH, and eBay

  1. Basically, whatever the outcome is of tomorrow's case with Tiffany&Co. may affect the outcome of LVMH's case against eBay. Moreover, they talked about people trying to sell legitimately on eBay but were denied because some people maliciously flag them. They used an example of someone selling an authentic Louis Vuitton bag in Paris who got his auction flagged by someone in Texas.

    Read the entire article here:

    Tiffany vs eBay By Syl Tang from the Financial Times Published: September 22 2007 03:00
    Yesterday, Tiffany & Co finally had their day in court. In 2004 the jeweller sued the monolithic auction site eBay for trademark violation; specifically for knowingly failing to prevent the mass trafficking of counterfeit goods through its website. The case has been winding its way through the US district court system and will finally, after three long years of paperwork, be heard in the southern district of New York in front of Judge Richard J Sullivan.

    Companies concerned about counterfeiting, among them Gucci, Prada and LVMH, have been watching closely. Dana Thomas, author of Deluxe (Allen Lane), a study of the luxury market, says: 'Luxury companies created this problem when they created demand within a market that can't afford their goods to begin with. The real issue is that eBay is a democratic sales outlet, like a garage sale, and nothing should be banned. What is the difference between eBay and a consignment shop? Just the 50 per cent fee you pay to the store.'

    In the court complaint filed by Tiffany and Co on July 13 2004, the company seeks to restrain eBay from assisting in the sale of any Tiffany and Co goods 'except for genuine merchandise that in its entirety has been made, sponsored or approved by plaintiffs. This raises the question of whether Tiffany will want to approve goods presented to them by eBay.

    Purchasing online has always been fraught with issues of authenticity. Type the word 'fake' into the discussion boards on eBay and the results are full of would-be buyers asking about authentication of everything from Hermès scarves to Tiffany key chains and complaining about items already purchased.

    None of this is lost on eBay, of course. According to the company's spokesperson Catherine England, 'We started VeRO [an anti-counterfeiting and trademarks protection programme] in 1998 and we had only begun the company in 1995. Given the sheer volume of more than 100m items listed at any given time, with 6.1m new items listed each day . . . it's not always possible to be an expert in every item that could be listed, but we partner with 18,000 rights owners through VeRO.'

    'We're not a retailer; we're a conduit' says England. Transactions happen directly between buyers and sellers. At no time does eBay ever take possession of the items sold, nor do we intermediate transaction. Goods go directly from seller to buyer, and payment goes directly from buyer to seller.

    Yet the crux of the Tiffany claim is that eBay is enab-ling, knowingly, the movement of thousands of dollars of illegal goods, thereby making eBay the trafficker of the illegal goods themselves. Indeed, Tiffany and Co vice-president Linda Buckley says that on occasion eBay has done even more. 'eBay is more than a conduit' claims Buckley. 'eBay also trains its sellers in advertising and promotional techniques and as the [official legal] Complaint shows, in the past it advertised Tiffany goods on its home page and directed potential buyers to other Tiffany sites'

    Not all luxury companies share Tiffany's stance on authentication. Hermès, for example, doesn't authenticate in their stores. But if luxury companies themselves do not authenticate, should it become eBay's burden to do so?

    eBay has taken steps to tackle such complaints. Since January, says England, they have made additional checks in the luxury category, such as limits on cross-border sales and on volume of items per day and verifying seller's financial information. 'We've seen a 60 per cent decrease of reports to VeRO from rights owners' she notes.

    But it may be too late. Competition has sprung up. An authentication service called MyPoupette will make money doing what Louis Vuitton will not: put a stamp of approval on LV goods sold on eBay. and resell nothing but authenticated luxury goods. Michael Sheldon, chief executive of Portero, says: 'eBay is . . . facilitating a bunch of sellers they can't control. It's so easy to put a photo of a real item and then sell a fake item. The eBay marketplace doesn't work for luxury goods.'

    Financially, eBay is not hurting: on July 18, it reported a 50 per cent increase in net income (over the same time period in 2006) with second-quarter profits at $376m and revenues at $1.83bn.
  2. Interesting article..thanks for posting.
  3. Very interesting. Thanks for posting.
  4. didn't know this was happening, thanks!
  5. Very interesting article... Thanks for posting! :tup:
  6. I find it hilarious that the CEO of Portero is so dismissive of eBay since that is totally where they got their start--as a drop off location for the bored rich housewives that surround their Armonk, NY site. Talk about biting the hand that allowed you to feed. What a jerk.

    (disclaimer, I live there too LOL but at least I'm not bored; I sell my OWN stuff, thankyavermuch)
  7. Great articles which have made very good reading:tup:
  8. The good news for fans of the companies and their products is that the companies can be counted on to do what they feel is in their best interests!

    My speculation is that Tiffany and eBay will be able to work something out that will be beneficial to both!
  9. thanks for posting interesting article
  10. Very interesting. Thanks for posting. Looking forward to the outcome of this.
  11. A very good, interesting read. thanks for posting.
  12. Good read. Thanks for posting!