eBay: “More sinn'd against than sinning”?
Posted by Rosemary Brkopac on Mon, Apr 19, 2010
Brand owners and eBay shared many a court date throughout the Aughts. In Europe, the online platform was besieged by lawsuits in France, Germany, the UK, Spain and Belgium by luxury brand owners l'Oreal, LVMH, Hermes and Rolex, while on this side of the pond a high profile case launched by Tiffany in 2004 played out in the U.S. At the end of the decade the outcomes of the cases were mixed. In France in 2008 eBay lost two cases; one to Hermes and the other to LVMH. The French courts decided in favour of the rights owners, with eBay order to pay Hermes 20,000 euros while LVMH received 38.6 million euros. eBay was found to be liable for infringement as the auction house was identified as a broker rather than a host of counterfeit goods. A contradictory ruling was made in May, 2009 in the L'Oreal vs eBay case, also launched in France, where eBay was recognized as a host, rather than a broker, and along with that status was entitled to certain exemptions. L'Oreal was found not to have proven infringement by eBay's promotional activities relating to its sale of advertising space. In the L'Oreal Belgium case the Court of Commerce decided eBay had no obligation to monitor its site for counterfeits, while the Rolex decision in Germany echoed the sentiment stating eBay was not the seller of counterfeit goods, and only had the obligation to remove them once notified. The saving grace for eBay is that they do remove auctions of counterfeit goods once notified.
Tiffany ended the decade waiting out a decision of their appeal of a 2008 lower court ruling against them. They had alleged direct trademark infringement, contributory infringement, false advertising, unfair competition and direct and contributory dilution on the part of eBay. The decision was four years in the making, and the District Judge Richard Sullivan said "The court is not unsympathetic to Tiffany and other rights holders who have invested enormous resources in developing their brands, only to see them illicitly and efficiently exploited by others on the 
Internet, nevertheless, the law is clear: it is the trademark owner's burden to police its mark." Tiffany appealed the decision, but a few days ago, any hopes they had of a hail mary breakthrough were dashed as the 2nd U.S. Circuit Court of Appeals agreed with the prior lower court ruling clearing eBay on the trademark infringement allegations.
So, with disparate decisions on the books, is eBay a saint, providing a much needed service to the public with 100 million listing appearing at any one time, or are they a sinner, a willing participant in the sale of counterfeit goods and responsible for tarnishing the image of iconic brands around the globe? In my role at BrandProtect I've had the opportunity to work with eBay and their VERO program for a few years. We continually sweep the site with a view to removing unlawful listings selling replicas of our clients' products as well as listing that use unauthorized copies of their copyrighted images.
Amongst the redeeming qualities I think eBay has are they:
Communicate rules of conduct
eBay has a user agreement that each user must read and accept prior to using the service. The agreement requires users refrain from violating laws, including those concerning third party rights. eBay imposes sanctions such as cancellation of listings and account suspensions in cases where users may have violated these rights. There is a section concerning intellectual property rights that includes information on what users may list and sell
Are compliant with their policies - they close down the culpable -quicky!
eBAY's commitment is that 70-80% of listings are removed within 12 hours and 75% of them removed within 4 hours. My experience has been that once notified, the auction house makes every effort to remove these infringing items quickly.
Are cordial, clear and concise in their communications
Enough said!
As of this writing what IS certain is that Tiffany and eBay will be heading back to court yet again. The appeals court is returning Tiffany's lawsuit to the trial court for further action on a false-advertising claim. On the infringement issue, however, Tiffany Chief Executive Officer Michael J. Kowalski said in a statement "eBay knew that counterfeit merchandise was being sold on its site -- and eBay took no effective steps to stop it. eBay deliberately misled consumers for profit, and unfortunately the court has justified its actions." Tiffany said it may appeal this decision to the U.S. Supreme court. So it looks like this decade may look very much like the last, with trademark owners continuing to battle it out with eBAY.