When you sign up to sell on eBay, you agree—among other things—not to list any items that are illegal or infringing. That might seem fairly straightforward, yet intellectual property (IP) violations are one of the biggest headaches for eBay, its sellers, buyers and product manufacturers.
eBay's system for protecting IP is known as the Verified Rights Owner (VeRO) program. In light of recent high-profile cases involving the sale of counterfeits and illegal copies on eBay, here is a run-down of what VeRO is and how to stay out of its way.
eBay created the VeRO program in 2001 in response to federal legislation known as the Digital Millennium Copyright Act (DMCA). VeRO aims to reduce fraud and IP theft on eBay by deputizing brand owners to police the site and have any listing removed that is thought to infringe. eBay itself eschews involvement beyond obliging the take-down requests.
According to eBay, more than 18,000 brand owners participate in the program, and some 50,000-plus suspect listings were taken down in 2007 alone.
In the second quarter of 2008, eBay spent more than a $500,000 to lobby proposals that would beef up IP protection and crack down on counterfeiting, among other Internet-related consumer safeguards.
Detractors on both sides
It seems that, lately, just about anything eBay does is bound to generate some controversy. So it's not surprising the online auction venue has taken a lot of heat for the VeRO program—from both sides of the issue.
Many sellers believe eBay has granted brand owners undue power, effectively leaving the fox to guard the hen house. What's more, the program applies copyright protections fairly broadly to forms of IP that don't necessarily fall within the scope of the DMCA. (It was originally enacted to stem online distribution of illegally reproduced media).
The potential pitfalls to sellers are many. For one, the brand owner almost always gets the benefit of the doubt. eBay doesn't verify the validity of VeRO claims before taking suspect listings down. And sellers whose listings are removed due to a VeRO complaint seldom learn the specific reason. Under the DCMA, copyright owners only have to claim infringement, not say how they were infringed upon. Furthermore, eBay insists sellers resolve issues directly with the copyright owner, who is under no legal obligation to respond to the seller.
Some makers of luxury goods think eBay should do a lot more to prevent infringement
Despite eBay's deference to manufacturers' rights, some makers of luxury goods think eBay should do a lot more to prevent infringement, rather than leave it up to IP owners to troll its sites looking for violations. As a result, eBay has spent the last several years—and many millions in legal fees—fighting lawsuits that seek to hold eBay accountable for the sale of infringing or counterfeit items on its e-commerce platform.
Legal decisions thus far have fallen along national and political lines. In two 2008 rulings involving luxury fashion labels, courts in France—where high-fashion is big business—found eBay directly liable for the illegal sale of designer knockoffs and levied fines totaling more than $63 million. A year earlier, Rolex won a partial decision forcing eBay Germany to take preventive measures against the sale of counterfeit watches; however, the suit was recently ruled in eBay's favor in light of the company's VeRO efforts.
Meanwhile, in the U.S.—where lawmakers are at odds over how (or how much) to regulate the Internet—a New York judge dismissed a similar lawsuit brought by high-end jeweler Tiffany. The judge sided with eBay's argument that it is merely a platform for transactions, not a participant.
Common VeRO violations
IP infringement can take several forms. Following are the most common complaints on eBay and what they mean to sellers.
Counterfeit: A product carrying a brand name that is manufactured and/or distributed by unauthorized sources. When a brand owner files a counterfeit claim, the burden is on the seller to prove the item they're selling is genuine.
Copyright violation: Unauthorized use of material that is covered by copyright law, such as artistic works or computer software. This includes manufacturers' promotional product images, which eBay users commonly capture from retail sites such as Amazon.com and even other eBay listings. The important thing for sellers to know is that once an item has entered the market—even if it is in its original packaging—the item itself is fair game for resale under a legal principle known as the first-sale doctrine. Just be sure to use an original photo in your listing, or one provided by eBay.
Trademark infringement: Unauthorized use of a name or symbol to identify a product with a particular brand. Sellers should remember these three words: Nominative use doctrine. This means you can use the trademarked name of the item you are selling to truthfully describe the item, but not to imply that you are an authorized representative of the brand. For example, if you're selling a pair of Nike shoes, by all means state in your listing that they are Nike shoes. However, you'd be going too far by embedding an image of Nike's trademark "swoosh" logo.
So legendary is eBay's VeRO program that jewelry site Pugster.org has published an alphabetical list of terms that are sure to raise a red flag in eBay listings.
When VeRO strikes
Whatever you do, don't try to guess what went wrong and relist the item. It could just bring more strikes against you
When a VeRO member reports your eBay listing, eBay will take down the listing and send a notice to everyone who bid on it, stating that the item was in violation of VeRO rules. Your account will be permanently marked by eBay, and repeated VeRO citations will get you suspended for good.
If eBay shuts down your listing, getting it reinstated is not easy—but it's not impossible. PowerSeller tabberone, who sells licensed fabrics, has had her share of run-ins with eBay's VeRO squad and has come to be regarded as an expert on the subject. Her eBay guide on VeRO has been viewed nearly 7,000 times. Here, we summarize her recommendations for sellers who have been flagged as VeRO violators:
- Contact the VeRO member and ask why they shut down your listing. The brand owner doesn't have to communicate with you, but eBay won't tell you the reason, so it can't hurt to try and get information from the source. Whatever you do, don't try to guess what went wrong and relist the item. It could just bring more strikes against you.
- Keep all correspondence—both paper and electronic—from eBay, the brand owner and legal representatives. And always maintain a professional demeanor, no matter how frustrating the situation.
- If you are certain the item you're selling is legitimate, let the brand owner know they're misrepresenting IP infringement under U.S. code 17 U.S.C. 512(f). Often they will withdraw their complaint and you'll be able to relist the item.
- File a Counter Notice with eBay. The form is not posted on eBay's site, and if trademark infringement is the claim, eBay will refuse to give it to you anyway. However, baby gear merchant Owen and Emma has posted a downloadable copy on its Web site. Filing a Counter Notice establishes your location as jurisdiction, so in the event of a lawsuit, the VeRO member will have to travel to your backyard rather than the other way around.
Avoiding the 'take down'
The best way to keep your eBay record clean is to not sell anything that is obviously counterfeit or illegal. But the issue is not always so black and white. To avoid doubt, follow these guidelines:
- Use only your own photos, or those eBay provides sellers using pre-filled item specifics.
- Write an original item description or use pre-filled item specifics. Make sure to describe the item completely and truthfully.
- Check the VeRO AboutMe pages before you list a brand-name item. Not all VeRO members have About Me pages, so this is not fool-proof. But it can't hurt.
- Make sure the item you're selling is genuine and that you have the right to sell it. A helpful online guide to spotting fake merchandise can be found at myauthentics.com.
As always, let common sense prevail in deciding what and how you list on eBay. But if you do somehow trip the VeRO alarm, at least you know your legal rights—and a few tactics to help untangle the red tape.