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Wed July 16 2008 10:53:55

eFencing Legislation Targets eBay

By: Ina Steiner

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eBay and retailers are about to duke it out over legislation introduced into the US House of Representatives yesterday. House Resolution 6491, the Organized Retail Crime Act of 2008, was introduced on Tuesday and was referred to the House Committee on the Judiciary. It would make organized retail crime a federal offense and would make marketplaces like eBay more accountable for stolen goods listed on their sites.

The National Retail Federation's press release about H.R. 6491 referenced this week's ruling in the Tiffany-eBay counterfeiting case. In that case, US District Judge Richard J. Sullivan said the heart of the dispute was not whether counterfeit Tiffany jewelry should flourish on eBay, but rather, who should bear the burden of policing Tiffany's trademarks in Internet commerce. The Court said:

Policymakers may yet decide that the law as it stands is inadequate to protect rights owners in light of the increasing scope of Internet commerce and the concomitant rise in potential trademark infringement.

Nevertheless, under the law as it currently stands, it does not matter whether eBay or Tiffany could more efficiently bear the burden of policing the eBay website for Tiffany counterfeits - an open question left unresolved by this trial. Instead, the issue is whether eBay continued to provide its website to sellers when eBay knew or had reason to know that those sellers were using the website to traffic in counterfeit Tiffany jewelry. The Court finds that when eBay possessed the requisite knowledge, it took appropriate steps to remove listings and suspend service. Under these circumstances, the Court declines to impose liability for contributory trademark infringement.

While the Tiffany case deals with eBay's liability over counterfeit goods on the site, the proposed legislation deals with eBay's liability over stolen goods listed on the site.

But what is significant for both cases is that Judge Sullivan concluded that eBay is analogous to a flea market, "like those in Hard Rock Café and Fonavisa, and that it is inappropriate to compare eBay to an online classified ad service."

eBay's success in defending itself against lawsuits has been its insistence that it is a "venue only," something that might not stand up in court in the future.

eBay has made a lot of people angry - retailers, manufacturers, law enforcement, to name a few. Its chosen approach to policing its site may very well be catching up with them. Unfortunately, the honest, hard-working small businesses who depend on eBay are the ones caught in the middle.

 




Comments (15) | Permalink

Readers Comments

eFencing Legislation Targets eBay   eFencing Legislation Targets eBay

by: AC_in_Mich

Wed Jul 16 13:36:54 2008

I actually think eBay got lucky on this court case.  Reading http://www.benedict.com/Digital/Internet/Fonovisa/Fonovisa.aspx  
I can easily see where eBay could have been found liable.  As the closing sentence of the article states "...providing the site and facilities for known infringing activity may be sufficient to establish contributory liability."

eFencing Legislation Targets eBay   eFencing Legislation Targets eBay

by: RicRoe

Wed Jul 16 14:45:08 2008

eBay will find the 'we're only a venue' defense harder and harder to succeed with in the future.

eBay likely won this case because Tiffany elects not to participate in eBay's VeRO sham of a program.

VeRO places the policing upon the owner of copyrights, basically making them responsible to police eBay on the hunt for counterfiet goods.

In France, the courts ruled this was not good enough and that eBay must do more to assure counterfeit goods are not sold through the site.

eBays perpetual claims of being only a venue are completely false, as a true venue does not become so involved in each and every step of all transactions.

In this regard eBay stopped being a venue years ago, as they are now involved in virtually every facet of transacting on the site.

eBay fails to be merely a venue based on the fact that they:

1) Set standards for listing policies and collect fees for placement.

2) Set standards for what merchandise is prohibited.

3) Are actively involved in controling the placement of listings as presented to buyers.

4) Set standards and place controls on communications between buyers and sellers before, during and after transactions.

5) Participate in profit sharing on completed transactions through the assessment and collection of fees.

6) Dictate payment methods by excluding sellers from offering lower priced competetive systems in order to collect higher fee revenue.

7) Set standards for as well as monitor, edit and conrtol end of transaction ratings.

The involvement by eBay on so many levels of each and every action by buyers and sellers on the site shoots their 'venue' defense full of holes.

If Tiffany had taken part in the VeRO program, the outcome of this case would likely have been much different.

Not to mention, just as eBay has appealed their case in France after losing, it is sure that Tiffany will appeal here, and another judge may rule differently.

eFencing Legislation Targets eBay   eFencing Legislation Targets eBay

by: ann

Wed Jul 16 15:01:55 2008

Flea Market?
Classified Ad?
Venue?

None of these seem to fit. They are more like an on-line consignment shop.

What are  the laws for consignment shops I wonder.

eFencing Legislation Targets eBay   eFencing Legislation Targets eBay

This user has validated their user name. by: Ming the Merciless

Wed Jul 16 15:07:22 2008

Three cheers for RicRoe! Excellent, excellent analysis of precisely how ebay has LYING for years with their silly "venue" argument.

Some people have been making these same arguments against ebay's lame venue defense for years BUT NO ONE WAS LISTENING or even seemed to care much.

And I doubt anyone would be listening very carefully today if ebay hadn't continually shot itself in the foot for the last couple of years and finally reached critical mass in terms of antagonizing its customers.

The sellers' empire is striking back, and ebay's death star is on fire.

Ebay: the most despicable corporation in the world.

eFencing Legislation Targets eBay   eFencing Legislation Targets eBay

by: susan

Wed Jul 16 15:10:48 2008

Hey Ebay "Hows is feel now" do you like the thought that just maybe you clowns are going to get slapped around some.

eFencing Legislation Targets eBay   eFencing Legislation Targets eBay

This user has validated their user name. by: Ming the Merciless

Wed Jul 16 16:07:00 2008

In February, a friend of mine was robbed of slightly more than $16,000 worth of merchandise much of which was easily identifiable, one of a kind items. Two weeks later the merchandise began to appear on ebay, and as of two weeks ago, some of it still being sold on ebay.

My friend reported several specific items to ebay and produced receipts. Ebay told him to report it to police (he already had) and that they would work with the police.

Can you guess the end of story?

Ebay: the world's largest fencing "venue" and the world's most despicable corporation.

eFencing Legislation Targets eBay   eFencing Legislation Targets eBay

by: EinTexas

Wed Jul 16 19:07:58 2008

The only thing that Ebay CAN'T ever do is verify that every item on their site was acquired legitimately.  

They don't search for, buy, own, steal, fake or inherit any of the goods bought and sold on their site.

The ''Just a Venue'' chestnut doesn't hold water as they are very keen to charge for every aspect of selling on ebay and are also very quick to blame the seller   when things go pear shaped.

Seems that the 4 star buyer vs 5 star seller theory applies: Ebay publicly claims to be just a landlord but behind the scenes is very much an agent, landlord, micromanager, banker, auditor, judge, jury and sometimes thief of the sellers business growth, management, advertising, reputation and profits.

eFencing Legislation Targets eBay   eFencing Legislation Targets eBay

by: Bing, Bang, Boom!

Wed Jul 16 23:37:14 2008

All I can say is it is ABOUT TIME!!!

eFencing Legislation Targets eBay   eFencing Legislation Targets eBay

by: Ouch

Thu Jul 17 02:11:12 2008

"They don't search for, buy, own, steal, fake or inherit any of the goods bought and sold on their site."

EIN, that isn't completely true. When Paypal takes a counterfeit item, from a buyer and resells it, instead of destroying it like they said, that is STEALING.

They may call it inheriting the item, who knows, but it has to be against the law to resell counterfeit items that were returned.

See more about the counterfeit scheme here: http://tinyurl.com/6hm47q

eFencing Legislation Targets eBay   eFencing Legislation Targets eBay

by: Julie

Thu Jul 17 10:27:25 2008

"...and would make marketplaces like eBay more accountable for stolen goods listed on their sites."


I LOVE IT!!!!!!!! It's about time.

"We're just a venue."  Yeah, right.  Ebay uses this phrase wheever it's convenient.  I'm bloody well sick and tired of it.  Most venues I know of simply take your start-up fees and then keep their hands and noses out of the rest of your business.  Not Ebay.

eFencing Legislation Targets eBay   eFencing Legislation Targets eBay

by: tula

Thu Jul 17 12:51:46 2008

RicRoe has it right.  Maybe it its early days eBay was just a venue, but now they have their fingers in every piece of the pie and really can no longer fall back on that claim.  It's an interesting quandary they find themselves in.  Just how can they ensure everything listed on the site is legit?  A lot of people don't have receipts for the stuff they sell.  Suppose you got an ugly designer scarf for Christmas.  You have no receipt and want to sell it on eBay.  How does eBay prove it's not fake?  How do *you* even know it's not fake?  

It's a tough problem and I don't envy eBay trying to figure out how to solve it.  I can't really blame them for wanting to hide behind the "just a venue" claim, since that's the easiest and cheapest solution by far.  But people from all quarters are demanding more accountability so I suspect that claim just isn't going to hold water for much longer.  I wonder if this is part of the impetus for pulling more vendors of new items (like Buy.com)?

eFencing Legislation Targets eBay   eFencing Legislation Targets eBay

by: Ray

Thu Jul 17 17:33:26 2008

''Yet given that almost half of all retail inventory losses are due to thefts by store employees, we know that e-Commerce is not to blame.''

LOL! Yeah right, and where are those store employees taking those stolen items? To eBay drop stores, seller assistants, pawn shops (they ALL sell on eBay)or they can simply sell the stuff themselves on eBay.

eBay is the largest fencing operation in the world and it's been getting away with it since day one. Venue or not, eBay profits directly from the sale of stolen goods, 24/7 on a global scale. It has to end sooner or later.

eFencing Legislation Targets eBay   eFencing Legislation Targets eBay

by: Julie

Thu Jul 17 18:35:25 2008

"Just a venue"

So does this mean that every hometown newspaper in the country can claim this defense if someone pays them to insert an ad for kiddie porn or to solicit sex with a minor?  

Puh-lease.  

It might take an army of people to do it, but Ebay alone is responsible for policing its own site for illegal sales.  Period.

eFencing Legislation Targets eBay   eFencing Legislation Targets eBay

by: Caliente

Thu Jul 17 19:22:41 2008

The first thing ebay can to to stop the counterfeiting is to stop doing it themselves. Who knows how many counterfeit items they have put back on the market with the liquidation.com scheme.

I wonder why people are retiring! They wqant to get out before the company goes down.

eFencing Legislation Targets eBay   eFencing Legislation Targets eBay

by: Chris

Fri Aug 8 10:59:16 2008

Regardless of how you define them, there is no way ebay can be responsible for items stolen from lazy and irresponsible retailers.  If stolen goods are such a problem, perhaps retailers should invest in security safeguards that go beyond paying some lowlife minimum wage to stare around aimlessly all day.

99% of the goods on ebay are NOT stolen and forcing all the legit sellers to provide proof of ownership, which would be impossible for many collectibles, is simply nuts.  Good luck providing proof of ownership for your father's baseball card collection.

Retail crime should be controlled at its source - period.  



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