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Counterfeits on Ebay: who is responsible?

By Frederick Mostert

Published: July 17 2008 18:37 | Last updated: July 17 2008 18:37

Where do the recent epic legal battles on both sides of the Atlantic between Tiffany and Louis Vuitton respectively and Ebay leave web customers who are saddled with counterfeit products daily? That there is a plethora of fakes online is glaringly obvious. Who then is responsible for removing the counterfeit products listed on Ebay? In the last two weeks, a French and a US federal court came to two diametrically opposed rulings on this same point. The French court placed full responsibility on Ebay to remove Louis Vuitton counterfeit product from its site while the US Court recognised the steps Ebay had already taken to decrease counterfeits and placed the onus on the trade mark owner to police further its products on Ebay. It is fascinating to see how these decisions symbolise a nationalistic walling of the internet in completely different ways. Both judgments significantly affect the nub of the business models of online market place sites and brand owners. In fact, these rulings pave the future of online commerce and will no doubt be appealed against all the way up to Supreme Court levels.

In a sense, this war between online auctioneers and trademark owners is similar to the concerns voiced when the first railways were constructed. The legal question raised back then: if a spark from a steam locomotive flew on to crops and set them ablaze, who bore the loss – the railway company or the farmer? In the end, reason prevailed – progress could not be halted if railway companies were subject to a flood of legal claims. However, the poor farmer could not be left carrying the full weight of the damaging consequences of scientific innovation. Then, as now, lawsuits were filed and the parties appeared at polar, irreconcilable positions. The solution: railway companies and farmers agreed to a voluntary middle ground: firebreaks along the tracks and spark arresters on the trains to minimise or prevent the harm.

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