Retail Arbitrage May No Longer Be Legal in Europe
So what does this mean for U.S. based sellers of luxury goods on eBay, Amazon and other online platforms? While retail-arbitrage sellers posting items for sale on eBay's or Amazon's U.S. websites probably won't be caught up by the EU ruling, sellers posting items on platforms that target customers in EU countries (such as www.amazon.de or www.ebay.fr) probably will, especially if the goods originated from a retail store, wholesale outlet or website based in the EU.
The case leaves open several important questions, such as the following:
--Are EU-based retailers compelled to block third-party internet sales of luxury goods that occur without their knowledge or consent (as is typically the case in retail-arbitrage scenarios)?
--Can internet sales be blocked if the goods originate from someplace other than a European-based retail store or website and, accordingly, there has been no breach of the manufacturer contract?
--Will the U.K. follow the EU ruling after Brexit?
--If the contract between a luxury-goods manufacturer and a retailer is governed by U.S. law, is that enough to avoid the Coty ruling?
One thing's for certain: After this case, virtually every EU-based luxury-goods manufacturer will be including "no third-party internet sales" clauses in their contracts with retailers and distributors, including those based in the U.S. Will U.S. courts refuse to enforce them under the Kirtsaeng doctrine?
We'll see ...
Cliff Ennico (email@example.com) is a syndicated columnist, author and former host of the PBS television series "Money Hunt." This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state. To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our webpage at www.creators.com.