Criticism of E Bay - Intellectual Property in Auctions

Intellectual Property in Auctions

Holders of intellectual property rights, have claimed that eBay profits from the infringement of intellectual property rights. eBay responded by creating the Verified Rights Owner (VeRO) program, which provides to rightsholders auction takedowns and private information on eBay users on demand.

• In September 2005, eBay's privacy practices relating to its VeRO program came under scrutiny when South Bend, Indiana-based television station WNDU-TV reported that the Embroidery Software Protection Coalition was accusing American buyers, identified by eBay, of copyright infringement, and demanding monetary settlements. eBay's privacy policy warns that eBay may disclose personal information on the request of any VeRO rightsholder investigating illegal activity, although according to a University of Notre Dame law professor, there is no legal basis, in the United States, for copyright infringement claims against buyers.
• Some manufacturers have abused eBay's VeRo program, through which copyright and trademark owners can quickly protect their rights, by seeking to prevent all sales of their products on eBay.
• In November 2006, the English High Court ruled that a VeRO rightsholder's takedown request to eBay constituted a legal threat under design patent law. Since groundless legal threats under design patent law are unlawful, the ruling holds that groundless VeRO takedown requests based on design patents are also unlawful. Further, the text of the ruling appears critical of the VeRO program in general: "It is entirely wrong for owners of intellectual property rights to attempt to assert them without litigation, or without the threat of litigation, in reply."

• On June 4, 2008, a court in Troyes, France awarded luxury goods maker Hermes damages of $30,000 as a result of the sale of two counterfeit Hermes bags on eBay in 2006. The court also ordered eBay to run a statement reporting the court case on the home page of eBay's French Web site for three months.
• On June 29, 2008, a court in Paris, France awarded damages of 40 million euros ($ 63 million) to luxury goods group LVMH over eBay auctions of counterfeit bags, perfumes and other items. The plaintiffs further alleged that auctions of legitimate perfumes were also illegal, because, they claim, only authorized resellers are permitted to sell them, and authorized resellers are not permitted to sell on eBay. The court agreed, entering a permanent injunction against eBay auctions of LVMH perfumes, whether counterfeit or not. After the appeals court declined to stay that injunction, eBay announced that French users would be barred from buying or selling LVMH perfumes and cosmetics on any of eBay's sites.
• In July 2008, a United States court decided a trademark infringement lawsuit by jeweler Tiffany & Co. in eBay's favor: "... It is the trademark owner's burden to police its mark, and companies like eBay cannot be held liable for trademark infringement based solely on their generalized knowledge that trademark infringement might be occurring on their websites." eBay advertises and profits from the sale of Tiffany products through its site, while Tiffany claims that no third-party resellers are authorized to sell Tiffany jewelry. Despite eBay's efforts to find and cancel illegal listings, many "Tiffany" listings are judged by buyers or by Tiffany to be counterfeit. The judgment specifies that eBay's advertising of the availability of Tiffany products on its site is a protected fair use of Tiffany's trademark, that eBay sufficiently protects buyers by canceling auctions reported to the VeRO program as believed to be infringing, and that eBay is not obligated to suspend sellers reported to VeRO without further evidence of infringement.
• In October, 2008, Alan UK, manufacturers and importers of CB, Amateur and PBR radio equipment, announced to their official resellers that they planned to use their VeRO status to remove all listings of products bearing their brands (Midland, Alan, Albrecht et al.) listed in 'new' condition. They blamed this on refurbished equipment and grey imports being sold as new on eBay. After an outcry from both consumers and their resellers alike, they later changed the scheme to give each official reseller a numbered ID to be shown in the listings. It is unclear where this policy stands at the present time (November 2011), as some sellers still show the ID, whereas some do not. The Alan UK website still has a signup page for the approved dealer scheme, stating that "We do not support Ebay only stores or businesses".