This morning, Bloomberg news announced the following:

  • “EBay Inc., the world’s largest Internet auctioneer, was ordered to pay LVMH Moet Hennessy Louis Vuitton SA 40 million euros ($63 million) over claims it didn’t do enough to stop the sale of counterfeit goods. LVMH, the world’s largest luxury-goods maker, claimed in the Paris lawsuit that EBay has a heightened responsibility to prevent fraud. The ruling also places limits on the online sales of LVMH perfumes.”

What does this mean for the rest of us playing around in New Media?

You are responsible for what your customers do on your site.

Ebay likely contended that by the open nature of its “international garage sale”, it could not possibly contend with every buyer and seller- every transaction that happened, to guard against knock-off merchandise traded as the real thing.  As an almost perfect marketplace, Ebay definitely always comes with the “Caveat Emptor” clause- Let The Buyer Beware- the buyers definitely have to understand, in setting prices they will pay, that is it likely the goods they are getting are not authentic- that’s part of the risk involved.   But regardless, Ebay lost its case for not doing enough to limit the traffic in counterfeit goods, and lost to the tune of $40 million euros- about $63 million dollars.

Clearly, this means things like Craigslist have to begin to take a closer look at the transactions on their site.  For the likes of Facebook, MySpace, Twitter, and more, this may also mean that you could be held liable for things that happen on your site, even if you are not directly involved in the transaction.   I would be particularly concerned that the terms of service be updated with clauses waiving any and all liability for any transactions, personal or financial, facilitated through the site.  Any site connecting people to other people. goods or services is now potentially liable as a thrid party beneficiary to an illegal or immoral transaction, and I would be a bit nervous about the downstream implications of this ruling.