eBay is criticizing a French court's ruling that orders the company to pay a $2.55 million fine to European conglomerate LVMH.
The auction giant and its European unit were fined 1.7 million euros on Monday by the Commercial Court of Paris, which ruled that the company violated a 2008 court order by not preventing the sale of legitimate LVMH perfumes and cosmetics. LVMH's brands include Christian Dior, Guerlain, and Givenchy perfumes.
In June 2008, the Commercial Court fined eBay $61 million in a lawsuit filed by the conglomerate, which is officially known as LVMH Moet Hennessy Louis Vuitton. LVMH had asserted that eBay had not done enough to stamp out the sale of fake LVMH goods on its site. The court went a step further, ruling that eBay-traded LVMH products--even authentic ones--were not being sold by an authorized reseller. As a result, eBay was ordered to remove all listings of these products.
eBay criticized the ruling then, saying it was an attempt by LVMH to "protect uncompetitive commercial practices." eBay likewise condemned the new ruling.
"Today's outcome hurts consumers by preventing them from buying and selling authentic items online," Alex von Schirmeister, general manager of eBay in France, said in a statement. "The injunction is an abuse of 'selective distribution.' It effectively enforces restrictive distribution contracts, which is anti-competitive."
Despite its objections, eBay argued that it has complied with the 2008 court order. The company said it has used state-of-the-art filtering software to check millions of listings each day, making thousands of authentic LVMH products invisible or inaccessible to French eBay users.
eBay also discounted the proof brought against it, claiming that LVMH offered details on only 1,341 listings out of 200 million posted on the auction site each day. eBay believes those listings were deliberately posted by people to sneak past the filters. In 1,091 of the listings targeted by LVMH, the seller did not accurately describe the item, using misspelled brand names, no brand names at all, or only pictures to describe the product.
As a result, eBay asserts that both the fine and ruling are unjustified. The fine itself is disproportionate given that eBay complied with the injunction," said von Schirmeister. "It is out of step with our legal victories in France, U.K., Germany, Belgium and the U.S."
eBay plans to appeal the new ruling and two other cases tied to LVMH. "We believe that the higher courts will overturn this ruling and ensure that e-commerce companies such as eBay will continue to provide a platform for buyers and sellers to trade authentic goods," said von Schirmeister.
eBay has been in and out of U.S. and European courtrooms for years, sued by companies trying to clamp down on the sale of fake versions of their legitimate products. It's faced courtroom battles with several European powerhouses, winning cases against L'Oreal and Tiffany, but losing suits filed by LVMH.
Former eBay CEO Meg Whitman is expected to officially declare her candidacy for governor of California on Tuesday.
Meg Whitman
(Credit: eBay)Whitman, who has never served an elected public office, will announce her bid for the Republican nomination in 2010 during a speech in Fullerton, Calif. She will reportedly campaign on a platform of cutting state spending by $15 billion and reducing the state's workforce by 17 percent.
Whitman, 53, will become a leading Republican candidate to succeed outgoing Gov. Arnold Schwarzenegger, who will retire because of term limits.
Whitman stepped down as CEO of eBay in March 2008, a decade after she transformed the company from a tiny auction site to an Internet icon. During her tenure, the company's split-adjusted share price leaped from just over $1 to a 2004 peak of almost $60, before plummeting to a recent price of under $14.
In the past year, the billionaire Internet executive has taken a more high-profile role in the Republican Party. Whitman served as an adviser to Republican Sen. John McCain's presidential campaign and endorsed him during a speech at the party's convention in St. Paul, Minn., last year.
Possible primary rivals include State Insurance Commissioner Steve Poizner, a former Silicon Valley exec who founded SnapTrack, a cell phone locating company, and sold it to Qualcomm for $1 billion in January 2000. Another GOP rival is expected to be Tom Campbell, a former U.S. congressman and dean of the business school at University of California at Berkeley.
Likely contenders for the Democratic nomination include Attorney General Jerry Brown, who was already governor 30 years ago, U.S. Sen. Dianne Feinstein, San Francisco Mayor Gavin Newsom, and Los Angeles Mayor Antonio Villaraigosa.
Mike Volpi's battle with his former employer Joost is now headed to court.
Joost announced on Friday that it has filed a lawsuit against Volpi, alleging that the former CEO used trade secrets and other confidential information in a bid to acquire a majority share in Skype from eBay.
The lawsuit comes just days after Joost relieved Volpi of his duties as chairman and a member of the board, saying that it was investigating his actions while he was chairman.
The fracas has its roots in the complicated relationship between online video provider Joost and VoIP provider Skype.
Joost was launched in 2006 by Janus Friis and Niklas Zennstrom, who also co-founded Skype. Volpi met and befriended the pair after serving on Skype's board of directors.
Once considered a contender for CEO at his former company Cisco, Volpi was tapped by Friis and Zennstrom to become CEO of Joost in June of 2007.
After a two-year stint, Volpi left Joost this past July to take a position as a partner at the venture capital firm Index Ventures. This same firm was part of a group that made a deal to buy a 65 percent share of Skype from eBay.
The question of Skype ownership between eBay and Friis and Zennstrom has been a dicey one. Though they sold Skype to eBay in 2006, Friis and Zennstrom kept certain rights via a company they formed called Joltid, and claim they still own the core technology and source code behind Skype. A licensing issue between the two companies triggered a suit that's set to hit a U.K. courtroom next summer. And a separate copyright suit was filed by Joltid this week in Northern California alleging Joltid's technology is being infringed on by Skype users "in the United States at least 100,000 times each day."
Joost's lawsuit filed against both Volpi and Index Ventures alleges that Volpi accessed and used confidential information while at Joost to help his group's bid for Skype. It alleges breach of fiduciary duty against Volpi and Index Ventures, aiding and abetting breach of fiduciary duty against Index, interference with prospective business advantage, misappropriation of trade secrets, breach of contract against Index, breach of confidence, and civil conspiracy.
Joost is looking for an injunction requiring Volpi and Index Ventures to return all confidential documents and files that were allegedly taken from Joost. The suit also is seeking to prevent both defendants from using the alleged misappropriated trade secrets.
Among the specific claims in the suit:
"This action arises out of the acts of a faithless fiduciary, who has taken advantage of the trust and confidence placed in him to steal confidential, highly proprietary information relating to an extremely popular Internet-based technology...Using that misappropriated information and in utter disregard for his fiduciary obligations, Volpi, acting in concert with other participants, put together a successful bid for Skype that has shocked the investment community."
"Numerous sophisticated strategic bidders (including, among others, Google and Microsoft) who initially expressed an interest in Skype could not get comfortable proceeding with formal bids. The reluctance of these sophisticated parties is hardly surprising given that intellectual property that is essential to Skype's business currently hangs under a cloud of litigation. Yet somehow the successful bidder, led by Volpi, was able to get comfortable with the enormous risks of proceeding with a Skype transaction. That comfort level could have been obtained only with knowledge of and an intent to use confidential information that had been misappropriated by Volpi..."
A phone call placed to Index Ventures for comment was not immediately returned.
Joost was launched more than two years as another portal for online videos but has struggled to gain a foothold in the market against competitors such as YouTube and Hulu.
Note: CBS, which owns CNET News, is investor in Joost.
Update at 8:40 a.m. PDT: Reaction from L'Oreal has been added.
eBay has won another lawsuit over the sale of counterfeit goods on its site.
A U.K. court ruled Friday that eBay cannot be held accountable for the sale of fake cosmetics on its auction site, as L'Oreal alleged in its lawsuit filed in March.
The cosmetics giant has long criticized eBay for not doing enough to halt the hawking of phony products that bear the L'Oreal name. But eBay has insisted it merely provides the trading space for its users and has no direct involvement in the items bought and sold.
"This is an important judgment because it ensures that consumers can continue to buy genuine products at competitive prices on eBay," Richard Ambrose, head of trust and safety for eBay in the U.K., said in a statement. "Furthermore, following legal victories for eBay in the U.K., U.S., France, and Belgium we reiterate again that cooperation and dialogue is what is needed, not litigation. Only by working together can we collectively address the issues that concern eBay, rights owners and consumers."
L'Oreal put a positive spin on the ruling, saying that despite the verdict, the court agreed with its view that eBay can do more to stop trademark infringement. L'Oreal suggested 10 measures that eBay could adopt, such as filtering listings before they're posted, requiring listing sellers to disclose their names and addresses, and applying sanctions more rigorously.
eBay has maintained that the number of bogus items traded on its site is minimal, reporting that of the 2.7 billion listings it hosted globally in 2008, only 0.15 percent of them were identified as potentially counterfeit. The company says it works with more than 31,000 brand owners to ensure that only genuine products are offered for sale.
Still, eBay has been caught in a revolving door of lawsuits in the past few years by L'Oreal and other companies over the sale of counterfeit goods.
Last year, eBay won a suit against jewelry powerhouse Tiffany but lost a suit filed by LVMH, parent company of Louis Vuitton and Dior. Last week, a French court ruled for eBay in its L'Oreal suit, while another L'Oreal case filed in Spain is still awaiting a verdict.
Online auction company eBay has emerged a winner in its latest lawsuit over counterfeit goods.
A French court ruled in favor of eBay in a suit filed by L'Oreal, eBay said on Wednesday. The cosmetics giant sought $4.8 million in damages, accusing eBay of allowing counterfeit goods to be traded on its site. The judge, Elisabeth Belfort, said eBay couldn't be held accountable for sales of fake products on its site. The ruling added that through its anticounterfeiting measures, eBay has "fulfilled its obligations of loyalty to other operators on the market."
eBay has said it spends more than $20 million a year to combat the problem of fake goods and will remove a listing if a company questions its authenticity. But L'Oreal said it thinks eBay could do more to stop the sale of counterfeit items.
"This is a clear legal victory for eBay and important victory for French consumers," said Mary Huser, general counsel for eBay. "We are delighted that eBay's meaningful efforts to fight counterfeits online have been recognized by the court, as has our status as an Internet-hosting provider," she said. "We welcome the invitation to resolve the outstanding matters in an amicable way as we have always believed that cooperation is the best way to fight counterfeits."
This latest lawsuit comes on the heels of similar cases brought against eBay. L'Oreal has the been most persistent, filing several related suits over the past two years. Last year, jewelry designer Tiffany and fashion powerhouse LVMH, parent of Louis Vuitton and Dior, both brought action against eBay over the sale of fake versions of their products. eBay won the Tiffany case but lost the fight with LVMH over counterfeit handbags. The court fined eBay 40 million euros, or about $63 million.
The Software and Information Industry Association, an industry trade group, has also been eyeing legal action against eBay over sellers who push phony software.
eBay has removed tickets for the upcoming presidential inauguration from its Web sites in an effort to help curb scams.
Tickets to the January 20 event have been listed on eBay and sites like StubHub, an eBay subsidiary, for tens of thousands of dollars. The home page of InauguralTickets.com reads, "Our prices reflect the difficulty in obtaining hard-to-find, quality tickets."
eBay decided to halt the ticket sales on Thursday after meeting this week with the Joint Congressional Committee on Inaugural Ceremonies, the Los Angeles Times reported.
"Any Web site or ticket broker claiming that they have inaugural tickets is simply not telling the truth," Howard Gantman, staff director for the committee, said in a statement on the committee's site.
House and Senate members for the 111th Congress are distributing tickets for free, but the tickets will not even be available at congressional offices until the week before the inauguration. About 240,000 tickets will be available for the inauguration, which takes place at the U.S. Capitol.
Sen. Dianne Feinstein (D-Calif.), chair of the inaugural committee, said she will be introducing legislation before the year is up to make selling inaugural tickets a misdemeanor, according to the Times.
WASHINGTON--Government needs better engagement with the private sector to develop a stronger homeland security strategy for emergency response, government and industry representatives said Wednesday--and may even turn to companies like eBay for inspiration on how to respond to domestic emergencies, suggested a representative for John McCain.
The remarks were made during a panel discussion Wednesday focused on a report by the nonpartisan, not-for-profit Reform Institute. The report suggests the federal government create a homeland security policy that focuses not only on offensive measures to protect the country, but also reactive measures to keep the country resilient in the face of an emergency.
The report (PDF), released Wednesday, specifically said industry and government need to create contingency plans to address threats of disruption to the supply chain--such as hazardous shipping containers brought into U.S. ports--that could have wide ranging consequences for the nation, economic and otherwise.
Among other things, a McCain administration may take an "eBay approach" to maintaining an open supply chain in the event of an emergency, said Lee Carosi Dunn, counsel to Senator John McCain, the Republican presidential nominee.
That would mean "providing the technology for localities to bid out at competitive rates for the supplies they need" during natural or man-made disasters, Dunn explained. After Hurricane Katrina, for example, many organizations were interested in providing much-needed resources--like ice--to the affected areas, but poor organization and communications hampered the transfer of those supplies.
Taking an "eBay approach," Dunn said, was one way to possibly keep the supply chain open more effectively, with financing for the bidding coming from both the affected localities and federal funding.
"It's an example of private sector ideas that could be utilized in government programs," she said.
Dunn noted that former eBay chief executive Meg Whitman is a co-chair for McCain's presidential campaign and that the candidate greatly admires the company.
As president, McCain would also place a great emphasis on cybersecurity, Dunn said, especially in the wake of the cyberattacks against Georgia from Russia. The candidate has also taken initiative in the area of communications interoperability, the campaign surrogate said, and has been a longtime advocate for setting aside spectrum for first responders, as well as providing them with more funding.
McCain's offensive strategy for homeland security will not help foster greater resiliency in the United States, countered P.J. Crowley, a senior fellow and director of homeland security at American Progress who serves as a volunteer advisor for Democratic candidate Barack Obama.
"Senator McCain's answer is to leave 140,000 troops in Iraq," he said. "The longer this strategy goes on, that necessarily means there are fewer resources available for other things."
Only 9 percent of government funds spent on national security go towards defensive operations, he said, while 80 to 85 percent are spent on offense.
"At some fashion you want to make sure the government has resilient systems," Crowley said. "Ultimately, resources matter."
Crowley said the foremost responsibility for the next president will be to ensure government departments undergo a smooth transition from the current administration to next. For many departments, including DHS, this will be the first full administrative transition.
The transition, he said, will prove a chance to "step back and take a strategic look at where we need to go."
"DHS is doing a lot of good things, but certain things have been uneven," he said. "One of the challenges is to make sure DHS continues to mature."
Updated at 2:10 PM PDT with analysis from attorney Heather McDonald.
Tiffany & Co. announced on Monday that it is appealing a recent federal court decision that said eBay is not responsible for policing counterfeit listings on its auction site.
In July, U.S. District Judge Richard Sullivan ruled that eBay could not be forced by trademark law to examine individual auction listings. "The law is clear," he wrote. "It is the trademark owner's burden to police its mark."
"We believe that legal errors were made in this decision, and we have every reason to believe that the circuit court will look at them afresh and hopefully agree with us," Tiffany attorney James Swire, a partner at the law firm Arnold & Porter, said in an interview.
"If one were a flea market operator and you become aware that counterfeiting is going on with the individual sellers at the flea market, you have a duty to investigate it," Swire said. "Why is eBay any different from that analogy?"
Tiffany filed suit against eBay in 2004 after it notified the auction site that 73 percent of a random sample of supposed Tiffany listings were, in fact, counterfeit. Tiffany primarily asked eBay to ban sellers who listed five or more objects of Tiffany jewelry under the logic that so many pieces were likely to be counterfeit. When that request was rebuffed, along with another request to ban all silver Tiffany jewelry listed on the site, Tiffany then filed suit.
"The effect of this is that eBay can continue to profit at the expense of consumers and trademark holders," Patrick Dorsey, general counsel to Tiffany, said in a press release. "Once eBay has reason to know that a specific brand like Tiffany & Co. is being widely counterfeited and sold, eBay should be compelled to investigate and take action to protect its customers and stop the illegal conduct."
eBay spokesperson Catherine England said on Monday: "Tiffany's decision to carry this litigation on after the District Court's decision doesn't do anything to combat counterfeiting. The best way to stop counterfeiting is ongoing collaboration between companies, government agencies and law enforcement."
The appeal comes on the heels of word that the Software and Information Industry Association may sue eBay over software counterfeits.
The auction site was also recently ordered by a French court to pay nearly $61 million in damages to LVMH Moet Hennessy Louis Vuitton to compensate for fraudulent listings. The German Federal Supreme Court also recently handed down a ruling against eBay in an appeal from Montres Rolex SA, requiring the auction site to take preventative measures against the sale of counterfeits.
The foreign cases may affect eBay's operations as much as the Tiffany case, according to Heather McDonald, an attorney with Baker Hostetler who specializes in intellectual property enforcement.
"In the event that the foreign courts uphold those rulings, eBay's going to have to change the way it does business," McDonald said. Given that eBay operates on one technological platform globally, she said, it should be a natural step for eBay to extend greater oversight both abroad and in the U.S.
"If they have the ability to prevent counterfeiting in France and Germany, then clearly they have the ability to prevent it in the United States," McDonald said. "The question is, why won't they?"
Furthermore, other auctions sites may have to take note of all of the litigation facing eBay. "There are other online sites that have to realize that they've got to up their game and do at least what eBay is doing if they want to insulate themselves from liability," McDonald said.
eBay has measures in place already to help curb counterfeit listings, such as a search engine that seeks out words in listings such as "replica" or "knock-off." It also has a program to enable trademark owners to report and remove infringing listings.
"There's no question that eBay has taken a lot steps to take its marketplace clean of counterfeiting, but there are literally thousands of counterfeited items for sale every day" on the site, McDonald said. "If those auctions actually conclude, eBay reaps a financial profit from that sale of a counterfeit item. If you're gong to profit from it, don't you already have some responsibility there?"
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