In our experience, it usually takes a really long time for plaintiffs to accept that a potentially rich vein of litigation has run dry, especially when courts have given them reason for hope. That's why we were surprised when eBay deputy GC Mary Huser told us Wednesday that litigation over the auction site's efforts to block the sale of luxury counterfeits is on a fast track to obsolescence.
You'll recall a pair of rulings last summer that made the issue seem red-hot. First a French commercial court ruled that eBay owed $63 million in damages to LVMH (maker of Louis Vuitton goods, among other luxury labels) for failing to adequately police its site for fakes. Then, two weeks later, Manhattan federal district court judge Richard Sullivan came to the opposite conclusion. Ruling after a bench trial on allegations brought by Tiffany & Co., Sullivan found that eBay couldn't be held responsible for protecting Tiffany's trademark, and that when eBay had knowledge of fakes being advertised and sold on the site, it took appropriate action. (Weil, Gotshal & Manges represent eBay in the New York case.)
On Wednesday, French civil court judge Elisabeth Belfort agreed with Judge Sullivan's assessment. Judge Belfort ruled against L'Oreal, which sought to hold eBay responsible for the sale of fake L'Oreal cosmetics on the site. (Here's Belfort's ruling, but caveat emptor: It's in French.) Thomas Rouhett of Lovells won the case for eBay.
We asked Huser why the L'Oreal case came out differently than last summer's LVMH case. She explained that the two were litigated in different courts. L'Oreal was heard in civil court, by a trained judge; LVMH was decided in commercial court, by business people who aren't professional jurists. EBay, she said, hopes the LVMH ruling will be reversed by a French appellate court, which will consider the pending appeal de novo.
Huser told us that right now there are no policing cases against eBay pending in the U.S., aside from Tiffany's appeal of Judge Sullivan's ruling. And the litigation appears to be winding down in Europe as well, she said, though there are a couple undecided L'Oreal cases in various courts. "Courts recognize the hosting immunity protection," Huser said. "And they also recognize eBay's constructive efforts to combat counterfeits on our site." Recently, she told us, luxury sellers have been quicker to work with eBay than to sue. "The effort has been to work with rights owners," she said.
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.
