Minding online store a case of 'Not my job' for eBay, legal foes

A legal battle over sales of counterfeit luxury goods on eBay could have far-reaching implications for trademark owners — or for eBay itself.

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On the other hand, eBay said the ruling in the U.S. case confirms what it has maintained all along: that its efforts to stop counterfeit sales have been reasonable. According to Sharpe, eBay removed 2.2 million potentially counterfeit listings worldwide last year alone. It also suspended about 50,000 sellers who were found to be offering fake goods and took steps to make it harder to post such items, she said.

One of the ways that eBay tries to stop the sale of counterfeit goods is through its Verified Rights Owner Program, or VeRO, which provides software tools to help companies look for fake goods on its site. More than 18,000 businesses take part in VeRO, eBay said; if a company determines that a seller is peddling counterfeit merchandise, it notifies eBay, which immediately takes down the auction.

McDonald said businesses that want to invest in a technical solution to the monitoring problem can write algorithms that automatically scan eBay for listings with their brand names, then dump the information into spreadsheets so workers can determine whether the products are counterfeit.

Ethan Horwitz, an intellectual property attorney at King & Spalding LLP in Atlanta, said trademark owners also can buy packaged software from vendors such as MarkMonitor Inc. and OpSec Security Group PLC that combs the Web and finds uses of their brand names. Or, they can hire services firms to do the online sleuthing for them, he said.

Over a period of about 18 months, the Software & Information Industry Association spent hundreds of thousands of dollars to develop a tool to help it check for counterfeit or pirated software on eBay's site — money that the SIIA said should have come out of eBay's pockets.

The SIIA last month threatened to sue eBay over the issue. Like Tiffany, the trade group contended that eBay is making money from the sale of counterfeit and pirated goods and thus should bear the financial burden of stopping such sales.

"At some point, the trademark and copyright owner has done as much as possible," said Keith Kupferschmid, the SIIA's vice president of intellectual property policy and enforcement. "There's so much piracy on the site that eBay really needs to do something [more] about it."

But the ruling in the U.S. case instead reinforced the position that trademark owners have to bear most of the expense of monitoring third-party Web sites.

"[Tiffany] complained, and the court basically said, 'Tough,'" said Eric Goldman, assistant professor and director of the High Tech Law Institute at the Santa Clara University School of Law.

Sullivan's position is that eBay has to be the enforcer but not the detective, noted Horwitz. That puts the burden on trademark owners to do their own investigating of items listed on the eBay site, he said.

At least in the U.S. And at least for now — until the appeals process decides who really should be minding the online auction store.

This version of the story originally appeared in Computerworld's print edition.

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Copyright © 2008 IDG Communications, Inc.

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