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EBay dealt blow on fake Rolexes by German court

July 27, 2007

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In an appeal decision handed down by the German Federal Supreme Court, eBay Inc. was ordered to take preventative measures against the sale of counterfeit goods. Montres Rolex SA was actually seeking an injunction preventing the sale of Rolex-branded watches by the online auctioneer in addition to damages. Until this appeal, eBay had won successive court rounds in the six-year-old lawsuit alleging unfair competition.

According to the Federal Supreme Court’s Web site, the appeal decision was handed down in April. However, eBay’s recent quarterly regulatory filing with the U.S. Securities and Exchange Commission states it was decided in June.

The court’s ruling established that a low starting price, less than 800 euros, is sufficient evidence that a Rolex watch is a fake. However, eBay may be liable “upon first notice of infringement.” The company worries that the ruling could lead to more litigation in Germany, eBay’s second largest auction market. In the French courts, Louis Vuitton Malletier, a unit of LVMH, and Christian Dior Couture, a unit of Christian Dior are currently seeking 35 million euros in two lawsuits against the online auction company.
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