Legal Skirmishes

One division over at LVMH that must be growing fast is the legal department. Yet again, the French conglomerate has brought a landmark case against an internet giant. Having already tussled with eBay and other online retailers, LVMH claimed partial victory in a long-standing battle against Google. Although the European Court of Justice found that Google’s search engine advertising system, AdWords, does not infringe on trademark rights by allowing rival advertisers to buy keywords that correspond to its registered trademark brands, keyword advertisers must now declare where their goods originate. What’s more, Google can be held liable if there is evidence that it failed to act expeditiously when a trademark infringement does occur.

The case is a major precedent not only because competitors have been profiting but also because grey market and counterfeit products sometimes appear in sponsored search results. The timing is interesting because it coincides with Google’s battle with the Chinese government after it refused to comply with the state’s censorship regime. If Google does shutter its search engine business in China, that would leave the Chinese market leader Baidu wide open to absorb Google’s share. Some analysts worry that this would give luxury brands even less protection from the sale of counterfeit goods over the internet in China. In other news, the Peruvian government’s antitrust regulator has warned local affiliates of Orient Express Hotels that it could be fined $10 million unless they change practices to allow train competitors better access to resorts in Machu Picchu. And in Japan, a Tokyo court dismissed a Prada employee’s accusation that the firm had discriminated against her because of her appearance and that it had asked her to dismiss other employees who were too fat, old or ugly. Prada Japan maintained that the termination was for altogether different and legitimate reasons. The high-profile case was the latest in a string of similar allegations by employees of other luxury fashion brands across several countries.

Sources:
CNN – 23 Mar 10
WWD – 23 Mar 10
New York Times – 21 Mar 10
The Daily Telegraph – 20 Mar 10
Reuters – 16 Mar 10
AFP in Yahoo – 15 Mar 10