A French court has ordered eBay to pay €38.6 million in damages to LVMH, the French luxury goods company, for failing to do enough to stamp out counterfeit sales. The on-line auction giant eBay has said it will appeal the ruling, but its odds of success are minimal.

This is the second time that LVMH Moët Hennessy Louis Vuitton, a manufacturer of high-end leather goods, perfumes and other fashion and luxury products, has successfully challenged eBay in the French court. LVMH argued that 90% of its Louis Vuitton bags and Dior perfumes sold on eBay are counterfeits.

"It's a groundbreaking decision that will help protect creativity," Pierre Godé, a member of LVMH's supervisory board and an adviser to the chairman, Bernard Arnault, was quoted as saying by Bloomberg News. "It's an important precedent."

EBay defended its practices, issuing a statement after the ruling that, "When counterfeits appear on our site we take them down swiftly, and today's ruling is not about our fight against counterfeiting," eBay said from Paris. "It's about an attempt by LMVH 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."

EBay has faced a number of legal challenges in France, where luxury goods companies fiercely protect their brands. In June, another French court fined eBay €20,000, (US$31,600) in a suit brought by Hermès International in Paris, ruling that eBay had not properly vetted sales of counterfeit Hermès' products.

That court concluded that eBay should be requiring sellers to post more product information to guarantee authenticity.

France is not the only battleground eBay has faced in suits against counterfeit sales: the U.S. jeweler Tiffany & Co. is also suing eBay in the United States. Adecision is still pending in that case.

Internet advertisers have also been brought into the battles for luxury brand protection. LVMH has also won several cases against Google for allowing advertising by counterfeiters whose ads appear when the names of LVMH brands are searched.