The big battle of the brands

The sale of counterfeit goods has gone online, say luxury brands

David Reid looks at how the net has thrown the battle over counterfeit goods into stark relief.

Legal action has been taken against eBay in Europe and the US by makers of luxury goods who claim it has aided the sale of counterfeit goods.

There is little doubt that auction sites such as eBay have revolutionised the market in second-hand goods by putting buyers in direct contact with sellers.

But, say the makers of luxury goods, alongside that has gone the growth of the net as the channel of choice for fake products.

Marc Antoine Jamet, chairman of the French anti-counterfeiting group Union des Fabricants and former secretary general at LVMH, said in the past people bought fake goods that were caricatures rather than copies and there was a limited market.

He said the internet, however, has allowed counterfeiting to become "globalised, more diverse and industrialised on a massive scale".

However, the internet is just one of the contributors to a market that is estimated to be worth $600bn every year.

Sales of counterfeit goods have grown by more than 10,000% globally in the past two decades, according to the International Anti-Counterfeiting Coalition (IACC).

Legal action

Fake Worcester Sauces on display in Paris's Counterfeit Museum

Luxury brands Hermes and LVMH (Moet Hennessy Louis Vuitton) have taken legal action against eBay for hosting the sale of what they claim are counterfeit goods and taking a slice of the proceeds.

"The problem is that eBay doesn't do any controls. It is the first distribution system in the world that refuses to check what it's selling, but says the brand has to do this for them. Imagine a big store where the owner says 'I don't know what I sell'," said Mr Jamet.

While eBay admits it does not always know the items it sells it says it does work to police what happens on its sites.

Since 2003-2004 we have seen an explosion in the circulation of counterfeit goods on the internet Elisabeth Ponsolle des Portes, Comité Colbert

It has introduced a scheme called VeRO (Verified Rights Owners) to enable these to inform eBay of any listings that infringe their rights.

Alexandre Menais, from eBay Europe, said it has spent a lot of money fighting the counterfeit goods trade.

"We have 2,000 people in our company who are dedicated to fighting fraud and counterfeiting," he said. "We have 80,000 trademarks and rights owners who cooperate with us.

"But what we want to make sure is that counterfeiting should not be an alibi to protect a traditional and old fashioned way to sell and promote a product," he added.

EBay has accused the French luxury goods firms of old world protectionism against new economy dynamism.

This argument was successful for eBay in the US where it was fighting legal action brought by jewellery shop Tiffany's.

The ruling made in mid-July threw out Tiffany's claims of trademark infringement and said it fell to those who own trademarks to police them. Tiffany is expected to appeal.

Fighting on

By contrast eBay has lost similar cases in France, and has verdicts pending in other cases.

eBay could be forced to check its listed products are not fakes

"If these decisions are confirmed then eBay will be obliged to confirm before each ad is posted on the site that the product isn't counterfeit," said technology journalist Antoine Champagne.

"This means a big technological change for eBay, but it also means they will have to people overseeing that each product is not a fake," he said.

In late June and early July French courts ordered eBay to pay LVMH 38.6m euros and a more modest 20,000 euros to Hermes in compensation for the sale of counterfeit goods carried out via the site.

EBay has appealing against the French decisions and says it will fight to the legal end.

The online auction site has also mounted a campaign in Brussels against the luxury goods manufacturers' selective distribution networks that it says are killing e-commerce.

Meanwhile, eBay France continues to do a roaring trade in luxury goods.