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Can eBay reverse Court loss to LVMH?

Several weeks ago, I wrote about the LVMH case against eBay in France, where "the Commercial Court of Paris [was] granted a sweeping injunction sought by LVMH Moët Hennessy Louis Vuitton (LVMUY) that would not only require eBay to block all sales of counterfeit Louis Vuitton Malletier and Christian Dior Couture products on its site -- a feat eBay has claimed is not technologically feasible -- but also to block all sales of genuine LVMH perfumes being sold there by unauthorized distributors.", as reported by Roger Parloff, writing at Fortune.

My post was about the legal hurdles there were in finding a third party who could both serve as a gatekeeper and protect the seller's privacy.

Roger Parloff notes that there is another angle to this case:

Joseph Berghammer, an intellectual property practitioner in Chicago, says that if the LVMH case were just about counterfeiting, he thinks it would settle.

There are ways to safeguard Internet commerce, he says -- for instance, through the use of third-party services that verify the authenticity of products being offered for sale -- that both eBay and luxury good sellers might be willing to live with.

But to the extent that Louis Vuitton is insisting on restricting sales to traditional, authorized distribution channels, says Berghammer, "then there will be no settlement."

I am not sure about this. This strategic problem strikes me as similar to the problem of providing AIDS drugs to poor countries who cannot afford to pay for them.

The drug companies worried that the countries would become resellers and cut into their profit margin. It turned out to be false. Reselling was not a problem, and the drug companies were able to maintain their profit margin.

I suspect this is the same concern that the luxury brand manufacturers are concerned about.

So, it would be better for them to devise a tracking system to figure just how prevalent the problem is before assuming that they can protect their distribution channel by banning all the grey channels.

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Full post as published by Misleading Advertising Law on July 09, 2008 (boomark / email).