The Wall Street Journal reported today that a Federal judge ruled that online e-commerce sites--in this case, eBay USA--are NOT responsible for trademark infringement by its sellers, as long as it removes listings brought to its attention. (eBay lost a
similar lawsuit in Europe recently where the courts ruled that eBay IS
responsible for fraudulent sellers listing counterfeits on its e-commerce sites.) The fine: $63.7M. payable to LVMH Moet Hennessy Louis Vuitton SA and other elite brand name manufacturers.
Although Tiffany is appealing the case, the courts have effectively ruled that eBay is similar to Internet Service Providers (ISP's) that allow customers to profit from selling fake items online. eBay is essentially an "Internet portal."
Unlike a newspaper or magazine that could be sued along with an
advertiser selling products breaking trademark law, eBay and other
Internet e-commerce sellers are different, according to the courts.
I think eBay is crazy thinking it won this case. Despite the listing fees retained by eBay from canceled listings, does eBay truly want buyers believing counterfeit brand goods are not monitored? For God sakes, eBay has the technology to flag suspect listings based on brand, keywords and other listing content.
What if I decide to list a $1M fake De beer's diamond on eBay? Are eBay and the courts claiming that eBay shares no responsibility in a flagrant abuse of the trademark laws? I realize eBay can't review every listing it accepts, but to hide behind the mantle of innocence, when eBay can scan keywords for likely fraud, is a bad business practice and hurts everyone in eCommerce.
The Federal court judge ruled it's the responsibility of Tiffany and other trademark holders to identify online trademark infringement and report it to eBay--that the burden falls on the holder of the trademark. This is utter nonsense when a technology company, colllecting high listing and final value fees from sellers, claims otherwise.
Rob Chesnut, Senior VP and Legal Counsel at eBay said, per the Journal, " 'This ruling appropriately established that protecting trademarks is the primary burden of rights owners--not market places like eBay...' "
I think not, Mr. Chesnut. I think you and eBay are trying to hide the truth about the millions of eBay listings that are suspect. Everyone is aware of the exacting replicas of high-end merchandise you're allowing for sale on eBay. And even your feeble attempts to control the onslaught is rewarded by retaining millions of dollars in listing fees when sellers are caught.
Here's my proposal, Mr. Chesnut. Whether it's Tiffany, Nike, Debeers or other well-known brands. Insert the following paragraph at the top of every brand listing:
"Buyers, you should be aware that some products listed on eBay are replicas of the originals. Therefore, we encourage you to review the seller's ratings and customer feedback before purchasing. While eBay attempts to remove fraudulent listings, it's impossible to identify all listings that may represent forgery or replicas. Thank you for your cooperation."
eBay should use its technology to slow the growth--not enhance it--of fake merchandise pawned off to unsuspecting buyers. If not, eBay and other eCommerce marketplaces will rightfully feel the wrath of the courts and, if not the courts, a massive change in the trademark law by Congress. Then, Mr. Chesnut, eBay and legtimate eCommerce sellers will really end up in quicksand, as all online sellers are forced to notify buyers of potential fraud.
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