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One of America’s leading intellectual property lawyers predicted yesterday that the ruling against eBay this week would trigger a series of lawsuits from designers seeking to block the sale of fake goods on the internet.
On Monday a French court ordered eBay to pay €38.6 million (£31 million) to LVMH, the designer company that owns Louis Vuitton. The haute couture group had sued eBay for allowing counterfeit handbags and clothes to be sold on its website. EBay, an online retailer, said that it would appeal against the ruling.
Robert Alpert, a litigation partner with Ladas & Parry, the intellectual property law firm in New York, said: “I expect this ruling to encourage a number of other designers to sue eBay as well.” EBay has already been sued by companies such as Rolex, the watchmaker, Tiffany, the jeweller, and L’Oréal, the cosmetics and perfume house, for selling counterfeit goods.
However, Aaron Kessler, technology analyst for Piper Jaffray, told The Times: “The real impact is two-fold. First, if the ruling is upheld, eBay may have to spend more on monitoring its listings. In the past they have relied on the marketplace being self-policing. Second, and this is a bigger issue, is that it will raise concerns among its customers about what is real and what is fake on the site. These are issues of trust and faith in the business.”
Mr Kessler is expecting the internet auctioneer to produce sales for 2008 of $9 billion, up from $7.7 billion last year. He is also forecasting earnings per share in 2008 of $1.71, compared with $1.53 last time. He does not expect the fine to impact on the group’s numbers.
LVMH argued this week that its business was hurt by the sale of fake handbags and clothes on eBay, and accused internet users of “the most hated, parasitic practices”. EBay said that it removed counterfeits from its site and added that LVMH was trying to “protect uncompetitive commercial practices”.
EBay is also contending with the US slowdown and the fact that it overpaid for Skype, the free computer-to-computer phone service. Its shares have slid from $40.60 in October to $27.09 yesterday.
As part of the group’s attempt to extract value from Skype, the company appointed Scott Durchslag, a former Motorola executive, as chief operating officer. The management change comes after months of executive upheaval — in March, Meg Whitman, chief executive, left the company she had led for a decade to co-chair John McCain’s US presidential campaign. She has been replaced by her own choice of successor — John Donahoe — whom she hired in 2005 to run the company’s main e-commerce division.
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