A bottle of perfume could end cross border EU trade
by Chris Dawson
eBay and LVMH are due a hearing in the French Commercial Courts on Monday as to whether eBay has complied with a 2008 injunction to block sales of genuine bottles of perfume made by Christian Dior, Kenzo, Givenchy and Guerlain. At stake is a fine of up to €50,000 for each and every day one of the banned products has been available for French eBay users to purchase. The hearing will not affect the outcome of eBay’s appeals which are due to take place on 27th and 28th May 2010, but is simply to determine if eBay has complied with the injunction. But that’s not what’s important….
…what’s important is that French eBay users who own a bottle of perfume don’t have the right to sell it. French users are blocked from buying perfume from any eBay site world wide, not just from eBay France. French consumers are being discriminated against and have lost the freedom to purchase perfumes from other EU countries. For the French the EU Single Market no longer exists.
You might think “So what! – Why shouldn’t brands be able to limit where their products are bought and sold?“, however it’s not just online businesses that this affects. On eBay UK over the last year consumers listed 10 times as many bottles of perfume as businesses. This affects products that you personally own in your own home. Restricting resale of products means when you buy something someone else still retains rights to it – items that you own and paid for are not yours to dispose of when you no longer need them.
So back to Monday’s hearing – Whilst eBay have respected the injunction and done their utmost to comply, it’s the thin end of the wedge for users. If the selective distribution ban of legitimate product isn’t overturned in May 2010, it will give legitimacy and precedent for other brand owners to do likewise. It will lead to higher prices for consumers and ultimately result in businesses owning stock which one day they discover they can no longer sell.
This case also undermines the aims of an open EU Single Market with freedom to trade across borders. EU legislation needs updating to ensure that all EU citizens can purchase products freely within the Single Market. If selective distribution exists and anti-competitive practices are allowed to flourish then EU cross border trade will be stifled and that will put the Internet back 10 years.
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Clarity on this area of the law is desperately needed, and we’d welcome judgement on this case and from the European Court on the L’Oreal case questions (covering a similar area).
When people speak to us looking to list their second-hand goods on eBay they are amazed that any restrictions could be in place at all on their right to sell genuine goods. In their minds they bought them and they are theirs to dispose of as they see fit.
Everyone is aware of the issue of fakes and we weed out any that are consigned to us and stop working for sellers who ask us to sell them. Before running Stuff U Sell, my previous job was serving Brand and IP Rights Owners and their lawyers with Online IP protection services. I have reasonable knowledge of the law and take compliance of this area extremely seriously but even I’m amazed at the complexity of the rules now, and the variation in application within the EU, let alone other countries.
There is always a balance to be struck between brand owners who wish to charge more for their exclusive products and consumers who pay for them.
The European Court should clarify in law where this lies and the national courts harmonise their views around it. Then let the voters decide whether they need a change in the law.
At the moment consumers and small businesses risk getting damaged (law suits, VeRO strikes, eBay account suspensions) as a result of a lack of clarity in how far the Brand Owners are allowed to go in protecting their IP rights.
This issue is much bigger than a bottle of scent.
no law to say you need to buy an overpriced hypedup ,falsely exclusive, expensive item in the first place
Did this not all come about because of the number of fake products being sold?
Was the ban in anyway related to the sale of fake products on eBay?
Fake products is a totally different story – There are actually three cases due to be appealed in May 2010 but this one is is about restricting the sale of genuine products to French eBay users with no suggestion by LVMH that the products they want blocked from sale aren’t genuine.
If you live in France and want to sell an unwanted unopened brand new bottle of perfume you’re simply not allowed to sell what you’ve bought and paid for in a retail outlet – that can’t be right!
No it’s doesn’t seem right, if you are selling it as an “unwanted gift” and giving the sale it’s right context.
But I thought this had originally all come about and the original basis was that there were a large number of fakes being sold and also that products were being sold out of context.
PS: Does a product remain “brand new” if it has already been sold through a retail outlet?
Muddying the waters with counterfeits is a great way for brands to plead their case for selective distribution (restricting where and in what manner their products can be sold).
L’Oréal tried this with Lancôme products – L’Oréal hand selected 15 items to produce as evidence in court and they all turned out to be genuine products! Their argument too was that they wanted “to protect the quality of the distribution of its products via its selective distribution networks and service to consumers”.
I dunno about the “brand new” thing – Does that mean all the Christmas presents I’ve received over the years were 2nd hand because someone else bought them and then gave them to me as gifts?
The question is do these companies effectively lease their products retaining rights when the “owner” no longer requires them or are they sold and once sold the new owner has rights to dispose of as they see fit?
Is it the egg/chicken scenario? I’m imagine that if counterfeits and products being misrepresented were not or had never been so widely available on eBay then these case would never have arisen. Would you agree on that?
If someone gives me a gift for me at Christmas I am not that bothered about it’s status but …. I would say that it has been bought from a retailer, as brand new, for me, as a gift.
PS Don’t like the idea of receiving someone elses unwanted gifts though
It’s a lot more complex than pure gifts though. What about when a retailer goes bust, the receivers liquidate the assets. A trader bids and buys “brand new” goods from the receivers at auction and then wants to sell those perfectly legitimate goods.
You have to ask, if the brand owner didn’t retain title in those goods when they were first sold to the now defunct retailer, why they should now be able to determine where and how they are resold by the current owner.
dont a lot of computer related products have a restriction on who and where you can sell them ?
@Jimbo – I would NOT agree on that. Several of these brands have quite openly stated they don’t want their products sold on eBay. It dilutes the exclusive/luxury image they have, and of course it dilutes the price. Who’s going to pay £40 for a moisturiser in a shop if you can buy one for £10 on eBay? If it’s being sold for £10, you’ve damaged the exclusive image. Read some of the stuff the cosmetics brands have put out, about needing to control distribution in order to quality control the product.
Chris then the goods should be sold as “liquidated stock” because that’s what it is.
Sue that a brand owner wants to protect it’s brand and investment seems totally reasonable. If eBay hadn’t been full of fakes, goods intended for an alternative market, items being sold when the shelf life had expired and goods generally being miss-sold, would the brand owners have a case?
That’s what I’m saying – they think they have a case over and above the “fake items” argument.
And they’re still selling off their overstocks and ends of line to clearance outlets. They want the best of both worlds: the cash, AND no visible “clearance” market.
I think “visable” is the key word here. I’m sure they’d be happy enough with items being sold on market stalls or clearance shops, just not on the net where it’s so publically visable.
Jimbo the thing is some brands don’t want the goods resold regardless of whether that’s as “new”, “used” or “liquidated”. LVMH want to ensure that French buyers pop into an over priced Parisian boutique to pay top dollar for their scent.
It’s a slippery slope and where one brand goes others will follow and the restrictive practices will become more widely spread. The EU was supposed to be a Single Market but the regulations were written 10 years ago before Internet trading really took off.
Interestingly EU “regulations” aren’t like laws – they expire every 10 years and need to be renewed which is why the whole selective distribution argument has raised its head so much of late – the rules are being re-written and both retailers, consumers and brand owners are fighting for their own interests.
North – on computer products it’s software that’s normally at issue, and especially OEM software. But to be fair that’s because it’s generally a “license to use” and not a physical product that’s sold.
I personally have no issue with brands controlling how their goods reach the market. If Tiffany only want to sell there goods through there own shops and concessions so be it. If I want to buy Tiffany I know what I need to do & I can purchase the product with 100% confidence.
I think it’s very unlikely that we are going to be facing a restriction on selling second hand goods in the UK but I guess it is possible that some channels will be closed. I’m also of the opinion that some products are not suitable for resale outside of there original context eg date sensitive items when date is not shown at point of sale, crash helmets.
What’s the deal on reselling Crisps from one of those Jumbo bags?
The problem is Jimbo that while you may think it “unlikely that we are going to be facing a restriction on selling second hand goods in the UK” we’re actually in the EU. EU regulations already control commerce in the UK, EU legal cases shape EU law and EU companies are lobbying to shape EU Regulations which will determine the shape of online business for the next 10 years.
One precedent in France could quite well influence a host of other companies to act likewise and not just on luxury brands – sellers of everyday products could quite well (and already do!) face similar selective distribution restrictions.
I understand that but I think that you are being rather an alarmist here
. Do you honestly think that the EU is going to bring in broad legislation prohibiting the re-sale of second hand goods? Is it now illegal to sell any second hand LVMH product in France?
If there had never been fake & unauthorized sales on eBay then there would never have been a case or am I missing something?
I have told my wife that her LV bag I was gonna buy her is now off the wishlist… seriously though, its about time that The French stop screwing up what is a very good and profitable EU trading arrangement.
eBay’s 750,000 signatures show the strength of feeling. I have confidence in the eBay management in UK and EU to really fight this and achieve the result we all desire.
Do you mean that you would like to see eBay continue as an “anything goes” market place without eBay having to take any responsibility for what is available on the site or how it is sold – That is the elephant in the room
.
Would be interesting to see pages of legal terms with a bottle of perfume in the future.