eBay Liable for Auction of Fakes
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"A French court on Monday ordered eBay to pay $61 million US in damages to LVMH -- a manufacturer of designer goods -- for failing to block the sales of knock-off items on the online auction site.LVMH argued that eBay was not adequately safeguarding against the sale of counterfeit items, alleging that 90 per cent of Louis Vuitton handbags and Dior perfumes sold through the website were fakes.
eBay said it planned to appeal the decision."
This is a remarkable decision because it extends the liability found in the cases involving flea markets and other dubious second hand markets for selling fakes.
"According to Huget, a favorable decision for Tiffany would stretch the U.S. trademark laws to a place they haven't gone before. "As far as I know," he said, "no one has found a Web site operator, like eBay, liable for being the host for somebody else's selling of a counterfeit.The flea market cases haven't been applied in the Online world yet."
In the past, according to WSJ, eBay has defended itself against accusations from brands by touting a program it put in place several years ago, whereby companies can report items they think are suspicious.
However, the sheer volume of branded goods being sold on auction sites online has been too hefty for most companies to monitor."
I have argued for a number of years that Cashconverters, or an eBay drop-off franchise would be well placed to detect this type of fraud at the source or entry point into the eBay system.
However, there is an important legal hurdle to overcome: how does the collection of information which may provide a clue as to the bone fides of goods also respect the privacy of the individual?
As discussed in the leading case in Ontario, the Court of Appeal stated:
"The issue is whether the city has satisfied its onus to demonstrate that both the collection of all of the information and identification required by the by-law, as well as the daily transmission of that information to the police for storage in their data bank, is necessary for an effective consumer protection regime to license second-hand dealers that deters people from dealing in stolen goods.Both must be justified because it is clear that the by-law is structured to operate as a co-ordinated scheme that includes both the collection and the daily transmission of all the information to the police for storage in their data bank."
The City of Oshawa failed with their scheme, as it was too intrusive.
But should the maker of high end designer good want to employ a third party to set up checks that the goods have the appropriate bar code or some other unique id, the test enunciated in Cash Converters Canada Inc. v. Oshawa (City), 2007 ONCA 502 (CanLII) would likely be satisfied.
