eBay has been ordered to pay €39.83 million compensation to LVMH, the French luxury goods group, for allowing fake versions of its products to be sold on the online auction website.

The decision by a judge in Paris comes a month after eBay lost a similar case against Hermes, another luxury brand, and was ordered to pay €20,000.

In today’s case, LVMH demanded €50 million in damages after claiming that eBay’s French business had not done enough to prevent users selling counterfeit items including Louis Vuitton-branded handbags, perfumes and sunglasses.

LVMH told the court that in 2006, 90 per cent of the LVMH-branded goods for sale on eBay were fakes.

eBay, the world’s largest online auctioneer, was ordered to pay €19.28 million to LVMH and €17.3 million to subsidiary Christian Dior Couture for damage to their brands.

In addition, eBay was ordered to pay €3.25 million to four perfume brands: Christian Dior, Kenzo, Givenchy and Guerlain or unauthorised sales.

eBay, which is planning to appeal against the decision, said it swiftly removes counterfeit items from its website.

"But today’s ruling is not about our fight against counterfeits; today’s ruling is about an attempt by LVMH to protect uncompetitive commercial practices at the expense of consumer choice and the livelihood of law-abiding sellers that eBay empowers everyday. We will fight this ruling on their behalf," eBay said.

eBay, which said $60 billion dollars of goods were sold on its site in 2007, is defending a similar case on counterfeit goods brought by Tiffany & Co, the jeweller, in New York.

Graham Robinson, managing director of Farncombe International, which investigates counterfeiting, said today’s decision was a significant win for the luxury goods industry.

Mr Robinson said that judicial opinion appeared to be shifting in favour of brand owners and the ruling was a positive example of courts forcing online auction houses to take more responsibility for items sold.

But Robin Fry, head of Intellectual Property at law firm Beachcroft, said today's ruling and others impose too much pressure on those running online marketplaces.

"Newspapers don't have to pay these fines for sales through their classified columns, so why should an online version be any different?

"Provided that brand owners can obtain names and addresses, they should be satisfied in pursuing the sellers themselves rather than the company that just built the shop window," Mr Fry said.

David Wilkinson, head of intellectual property at law firm Stevens & Bolton, said: "The case serves as a stark warning to online auctioneers that they cannot turn a blind eye to the trade in counterfeits and expect to get away with it.

"The French Courts have historically taken a very tough line against online infringements, particularly where large overseas companies are said to be at fault. It remains to be seen whether the UK Courts will take a similar approach."

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