Rolex Loses 8-Year Court Case Against eBay

The Swiss luxury watchmaker Rolex has lost an eight-year legal battle in Germany against eBay, the online auctioneer, over fake Rolex watches allegedly sold by third parties on eBay’s Web site, report a number of business press outlets, including Bloomberg News.

Meanwhile, eBay’s stock shares at the end of February fell to a seven-year low, in part due to some concerns by buyers and market traders about the authenticity of items sold on the international auction site, said analysts.

The Feb. 24 German court ruling said eBay had removed counterfeit watches, was actively monitoring for flagrant trademark violations posted on it, and that Rolex couldn’t show that additional fake Rolexes were offered on eBay, after Rolex learned of the alleged sales, reported business media. A court spokesman was quoted in those reports as saying that eBay didn’t have to review every item posted on its site, “because it would jeopardize the whole business model.”

Rolex Group originally sued eBay in Germany in 2001, but in 2007, the German high court for civil issues overturned that decision and sent the case back to the lower court. While eBay couldn’t be held liable for damages, it said then, it had to police its Web site for counterfeits, now that it knew of the problem.

Rolex isn’t the only prestige brand that has challenged eBay over alleged sales of counterfeit goods on its site by third parties. In 2008, eBay lost court cases in France to LVMH Moet Hennessy Louis Vuitton SA and Hermes International. The French courts awarded $63 million to LVMH and required eBay to pay about $20 million in added damages. Hermes won $30,000 in damages for the sale of two counterfeit Hermès bags.

However, eBay won cases brought against it by cosmetics giant L’Oreal in Belgium and Tiffany & Co. in New York (where a federal judge said Tiffany bore the burden of protecting its trademark).

Ebay faces another pending court case in London, also by L’Oreal, on allegations of allowing sales of counterfeit goods on its site.

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