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Report: French court orders eBay to pay LVMH

September 21, 2009

Paris--A Paris tribunal has found that online auction site eBay Inc. violated LVMH Moet Hennessy Louis Vuitton SA trademarks in keyword searches, Reuters reports.

According to the report, the tribunal ordered eBay to pay LVMH 80,000 euros (about $117,600) in fines.

While eBay claims the fine is far less than the 4 million euros in damages LVMH originally requested, Reuters reports that eBay still faces a rash of pending litigation accusing it of selling counterfeit merchandise, meaning the company could face far steeper fines.

A host of perfume and cosmetics brands under the LVHM umbrella--including Christian Dior, Kenzo, Givenchy and Guerlain--filed suit against San Jose, Calif.-based Ebay, claiming the company illegally used their brands in keyword searches powered by Google Inc.

Unlike other lawsuits filed against eBay, including one by jewelry industry stalwart Tiffany and Co., the LVMH case did not involve accusing eBay of peddling counterfeit goods.

The case instead targeted the practice of buying and selling ad words that feature a brand name.

"The tribunal has ruled that eBay, in using in its advertisements the keywords of some of LVMH's brands, has committed acts of counterfeiting through reproduction or imitation," LVMH Group Director Pierre Gode said in a statement, Reuters reports.

But Mary Huser, deputy general counsel for eBay, said the legal question in the case was, "Is it trademark infringement to buy and sell ad words?"

In addition to the 80,000 euros fine, the Tribunal said it would fine Ebay 1,000 euros (about $1,468) for each future infringement.

According to Reuters, eBay said in a statement that the decision by the Paris tribunal "flies in the face of" a recent victory by eBay in a case in Belgian appeals court involving Polo Ralph Lauren Corp.

EBay said it is waiting on the European Court of Justice to rule on ad words--related issues in two Google cases currently before the court.

According to Reuters, the cases involve accusations that Google's online ad system promotes trademark infringement and, eBay claims, if the top court rules in Google's favor, eBay could go back to lower European courts to argue rulings against the company in keyword-related cases.
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