Remember the French lawsuit that Louis Vuitton won against eBay earlier this month? A French court said eBay was responsible for policing their auctions for counterfeit items—at least that was the official language. It also, unfortunately, helped solidify LVMH’s tight control over who sells its luxury merchandise. This week a judge in New York ruled the opposite direction against Tiffany & Co., telling them, “Tiffany must ultimately bear the burden of protecting its trademark.” It’s a win for eBay. Is it for the consumer?

The New York Times says eBay should still police for counterfeits if it wants to win back customers:

eBay would generate enormous goodwill if it instituted a policy of proactively fighting fraud on the site, instead of forcing companies to point out individual items, day after day, which it then takes down.

That’s true, but eBay would also win goodwill if it didn’t allow luxury companies to bully individuals who are obviously reselling their used luxury goods—it’s pretty obvious that when a company like LVMH goes after a person selling a single used, slightly damaged luxury case, they’re not really concerned with stomping out counterfeiting rings.

This hard-to-read press release from something called the “Luxury Institute” (an institute for luxury? I want to work there!) calls the ruling an “egregious injustice to the consumer” because it removes any protection from the customer—a valid claim (despite the source) that resonates with anyone who’s been scammed on eBay. The Luxury Insititute suggests alternate luxury auction sites like Portero.com.

BusinessWeek quotes an e-commerce advocate who says the ruling also helps keep the marketplace more open, by taking some of the power away from companies like LVMH and Tiffany:

Many of the smaller vendors that make a living selling through eBay were also relieved at the verdict. Had the U.S. judge echoed the opinions of European courts, major brands that did not want their merchandise to be resold on a discount site would have had a strong weapon to keep resellers from advertising their brand names online, even when dealing with genuine articles. “This was never about controlling counterfeits. It was really about how consumers could buy and sell Tiffany’s products and maintaining margins,” says Steve DelBianco, executive director of NetChoice, a coalition that advocates for e-commerce. “If you aren’t born with a Tiffany silver spoon in your mouth, you can buy one on eBay.”

What do you think? Should eBay be required to police luxury brands more closely, and would that help shoppers in the long run? Or are companies like Tiffany and LVMH using the counterfeit issue to solidify control over online sales of their merchandise?

“Judge to Tiffany: Police Your Own Brand” [BusinessWeek]
(Photo: jillclardy)

Want more consumer news? Visit our parent organization, Consumer Reports, for the latest on scams, recalls, and other consumer issues.