EBay dealt blow on fake Rolexes by German court
SAN FRANCISCO (Reuters) - EBay Inc disclosed on Friday that Germany's top court ruled several months ago that the world's largest online auctioneer must do more to halt the sale of counterfeit goods on its site.
The ruling by the German Federal Supreme Court came in an appeal by plaintiffs Montres Rolex SA and affiliates in a six- year-old dispute over the sale of counterfeit Rolex watches on eBay's German site, according to an eBay financial filing.
EBay had won successive court rounds leading up to the appeal before the country's top court. The suit alleges unfair competition. Rolex was seeking an order enjoining the sale of Rolex-branded watches on eBay and damages from eBay.
"The court's decision found that eBay must take reasonable measures to prevent recurrence once it is informed of clearly identified infringement," eBay said in a quarterly regulatory filing with the U.S. Securities and Exchange Commission.
"EBay may in certain circumstances be liable upon first notice of infringement," the filing added.
The Federal Supreme Court, based in Karlsruhe, referred the case back to the Higher Regional Court of Duesseldorf, which had rejected Rolex's appeal in an earlier decision in 2004, according to eBay.
At issue is whether a low starting price in an eBay auction -- the court decision cited a new price of less than 800 euros -- is sufficient evidence to show that Rolexes were fake.
EBay warned that court ruling could lead to further cases against it in Germany, the company's second largest auction market after the United States.
"We expect that this ruling will likely result in increased litigation against us in Germany, although we do not currently believe that it will require a significant change in our business practices," the eBay filing said.
EBay's filing said the decision was handed down in June. But the Federal Supreme Court's site shows the court handed down its decision on April 19th. The decision, in German, can be found at: tinyurl.com/24wqx6/.
Separately, eBay said it continues to fight two lawsuits in French courts brought by luxury goods makers Louis Vuitton Malletier, a unit of LVMH, and Christian Dior Couture, a unit of Christian Dior.
The suits allege eBay broke French law by allowing sellers to post listings for counterfeit goods and allowing them to buy advertising keywords that drove buyers to listing for the counterfeit goods when buyers search for the brands.
The plaintiffs seek 35 million euros in damages.
Another suit filed last year by Parfums Christian Dior, Kenzo Parfums, Parfums Givenchy and Guerlain Societe in Paris alleges eBay sites have interfered with the perfume makers exclusive distribution network, eBay said. The plaintiffs seek 9 million euros and an injunction against further sales.
"We believe that we have meritorious defenses to these suits and intend to defend ourselves vigorously," eBay said.
Other luxury brand owners have filed suits against eBay, or threatened to do so, the San Jose, California-based company said.
EBay shares were off 21 cents at $32.82 in afternoon trading on Nasdaq.
