This week a French court ruled in favor of Louis Vuitton (NYSE Euronext: LVMH) and sister company Dior Couture in their case against eBay (NASDAQ: EBAY). The online auction giant is being fined $63.2 million in damages due to sales of counterfeit goods on their site. Louis Vuitton argues that eBay isn't doing enough to prevent the sale of counterfeit products on its website. Some would claim that eBay is a middle man in these transactions and can't be held accountable for every item that goes through their online marketplace, but that's not entirely fair. eBay profits from every sale on their site, including the counterfeit ones, so it's understandable that Louis Vuitton isn't too happy about it and the courts agree they should be compensated.

But eBay hasn't been turning a blind eye the entire time either. They recently disclosed that they spend over $20 million each year trying to prevent counterfeit merchandise from being sold. So what is enough and how should eBay handle this ruling? Their options are pretty straight forward. They could pump more money into preventing these counterfeit sales and bolster their reputation with couture designers or they could do nothing, pay the fine and keep pocketing the money.

Let's see what happens if eBay ignores the problem, pays the posh designers and continues to do business as usual. Numbers will be helpful here. The $63.2 million fine covers purchases on eBay.com over the last 5 years, but to make things interesting let's pretend that this charge was just for the last four quarters. Over this period eBay's average quarterly gross profit has been $1.55 billion. Take that $63.2 on a one year, quarterly basis and it's only about 1% of eBay's quarterly profits, or in other words a tap on the wrist.

So even when you make this fine look five times worse than it really is it isn't much of an incentive to pump more money into anti-counterfeit operations. And the markets don't seem to think this news is of much concern for eBay; their stock jumped 1.5% the day after the ruling. If you're bearish on eBay, this probably isn't the right news to act on. Besides, there are plenty of better reasons to move away from this stock.