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.
The problem in both the Tiffany and Louis Vuitton disputes with Ebay is similar – though in this case both parties represent significant political influence, unlike the farmer of old. The court decisions on both sides of the Atlantic seek to place the full burden of policing online fakes on either the online auctioneers or the trademark owners. Policing the world wide web for an exponentially growing giant wave of counterfeits is a Herculean burden. Tiffany, Louis Vuitton and other luxury good manufacturers chafe at having to commit unlimited time and resources to police auction sites and their growing number of counterfeit listings. Meanwhile, the auction sites claim that filtering everything that comes in and trying to determine what is counterfeit across all industries would be impossible. No wonder both sides are so quick to point the finger at the other – an all-consuming effort is at risk. The stakes are high.
As in so many other walks of life, the answer lies in constructive co-operation. Just like the railway company and farmer of yesteryear, brand owners and auction sites need to work together and share the responsibility to stop fakes, like wildfire, to avoid a restraint on the progress of society. For example, Ebay through the combination of its “verified rights owners” program that allows more than 18,000 companies to take down sellers violating their trademarks, often within hours, and its proactive filters that automatically delist obvious counterfeit and fraudulent listings, is a step in the right direction. And brand owners, in taking advantage of similarly effective reporting programs and informing the public on how to identify fakes online, similarly work to minimize the problem.
But Ebay and those brands that have tried to work with Ebay to date should act as a benchmark for others and not as a ceiling. More needs to be done, especially in the case of those other auction sites that do far less and refuse to implement filters or fail consistently to take down reported problematic listings (or even encourage the sale of counterfeits). Similarly, trademark owners who believe the problem will go away by claiming others should manage their needs in a changing market need to get in gear – the world has advanced and the net and its new marketing platforms are here to stay. Both sides need to work together to build a “firebreak” and “spark arrester” against counterfeits sold online. The answer for assessing responsibility lies in the middle – both sides should in equal measure diligently confront the online counterfeit problem together.
The writer is chairman of the Walpole IP & Brand Protection Working Group, representing the British luxury industry. He is also chairman of the Authentics Foundation and author of ‘From Edison to iPod – Protect Your Ideas’
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