EBay Inc. was ordered by a French court to pay nearly $63 million to luxury-goods maker LVMH, which produces Louis Vuitton- and Dior-labeled products.
The French company, whose full name is LVMH Moet Hennessy Louis Vuitton, had claimed in a lawsuit that the Internet auctioneer had not done enough to stop the sale of counterfeit goods.
The ruling also banned EBay from selling perfumes by the company.
"It's a groundbreaking decision that will help protect creativity," said Pierre Gode, a member of LVMH's supervisory board and advisor to Chairman Bernard Arnault.
EBay, the world's largest Internet auctioneer, said in a statement that it would appeal.
"Today's ruling is about an attempt by LVMH to protect uncompetitive commercial practices at the expense of consumer choice and the livelihood of law-abiding sellers that EBay empowers every day. We will fight this ruling on their behalf."
LVMH, the world's largest luxury-goods maker, said it found in 2006 that 90% of the Louis Vuitton and Dior-labeled perfumes, watches and handbags on EBay were fakes.
Online sales of counterfeit clothes, bags and jewelry cost the makers of original products about $30 billion a year, Tiffany & Co. and other retailers claimed in a separate U.S. lawsuit.
In addition to the payment, the court ordered EBay to post the ruling on all its websites in English and French for three weeks and to pay for its publication in three French or international publications of LVMH's choice.
EBay spends about $20 million annually to identify counterfeit goods and remove them from its site, and has 2,000 employees worldwide involved in the task, the auctioneer said.
The court ruled that EBay wasn't qualified to sell LVMH perfumes, which should be distributed only through selected retailers with trained staff members.