Few would argue that the Internet has facilitated game-changing means and avenues for advertising, promotion and distribution of merchandise to the consumer.   Fewer still would argue that the electronic marketplace hasn’t been a boon for the attendant distribution of counterfeit and gray-market goods.   For eBay, the online auction giant, this problem has forced it to spend tens of millions of dollars on fraud detection and related programs to combat this problem — from its buyer protection program with PayPal to its proprietary fraud engine to detect fraudulent goods and its internal Trust & Safety Department, eBay has taken significant strides to address issue…and for good reason. Earlier this year, the Second Circuit Court of Appeals affirmed part of a lower court decision holding that eBay was not liable to Tiffany & Co. for direct or contributory trademark infringement (see a Law.com article summarizing it here) – a decision premised in no small part upon the steps eBay has taken to address the distribution of counterfeit goods through its website.   Its Verified Rights Owner  (VeRO) Program is arguably one of the cornerstones of eBay’s strategy…and for any business either distributing new merchandise for direct sale through an eBay store, or otherwise concerned about counterfeits or “gray market” goods (i.e. legitimate goods otherwise unauthorized for the specific distribution channel), VeRO is merely one tool in a larger toolbox for rights owners to be used as both a sword and shield in an effective eBay brand-protection strategy.

With over 28,000 companies currently participating (according to eBay’s estimates), the eBay VeRO Program basically permits intellectual property rights owners to notify eBay of listings that the rights owner believes contain goods or information the rights owner believes to be infringing. This notification takes the form of a Notice of Claimed Infringement (“NOCI”) that is completed by an authorized representative of the rights owner and submitted to eBay under penalty of perjury.  Once reviewed, eBay then takes action to notify the individual or company behind the listing of the NOCI and removes the listing.  In addition to the NOCI, there area number of steps a rights holder should take under not only under eBay’s VeRO Program, but its other policies and procedures:

  • Third-Party Monitoring Agents & Automated Searches

Search tools can be used to perform automated searches through Bay listings on a regular basis to police against improper listings.  On eBay, a rights owner can use the “Favorite Searches” feature to scan for potentially infringing items. For more detailed investigations and monitoring, eBay provides a list of some companies that will act as monitoring agents here. In addition, many third party tools are also available to scour eBay listings that rights owners can use on a regular basis to report violations. Used consistently, such tools can cast a wide net for problematic listings, or otherwise target specific goods or sellers.  At a minimum, the “Favorite Searches” feature or third-party software search tools reflect a cost-effective means of monitoring and enforcement that all rights owners faced with unauthorized eBay sales cannot ignore.

  • “About Me” Pages

Rights owners can create “About Me” pages as part of the VeRO program to provide information to potential purchasers about their products and their legal position concerning the sale of such products on eBay.  From counterfeit goods to items with a limited shelf life, such pages can be instructive to potential purchasers and help instruct them to purchase products directly from the rights owner’s website or other authorized channel. If designed correctly, however, such “About Me” pages can also be used to deter potential counterfeiters or product “dumpers” from placing listings on eBay in the first place. For example:

Avoid using Draconian language – this is an opportunity to sell the company, not scare off potential purchasers!

Use FAQs – it is a soft, yet direct, approach to educating potential purchasers and potential offenders.

Add a link permitting the potential purchaser to contact the company with any questions – it’s a channel to customer service that can also channel the potential purchaser.

Add a link to the company website – it’s a chance to further describe authentic goods and it may be good for SEO to boot!

Of course, having an “About Me” page is no guarantee that improper listing and sales won’t occur…but not having one likely is a sure fire way to allow them to continue.

  • Enforcing Your Rights Under the eBay Images and Text Policy

Consistent with its rules regarding intellectual property rights, the eBay Images and Text Policy for listings outlines certain content that is not permitted, such as text and photos from other users or websites without the permission of the owner.  The rights owner can report unauthorized use directly to eBay customer service, or otherwise via a NOCI.  Third parties who are not rights owners are otherwise encouraged to contact rights owners directly, such as by visiting any existing “About Me” pages for rights owners.

No program or policy is perfect – using the eBay VeRO Program and other eBay procedures effectively are only a few tools in what should be a much larger arsenal for protecting intellectual property rights online in the digital marketplace.  With eBay, the VeRO program is a great step but far from perfect – improper listings are not addressed without initial due diligence by the rights owner, and postings inevitably result in some improper sales until the listing is removed.  Counter-notices are also allowed, and can foreseeably result in re-listing if he rights owner does not do its homework.  Further, some goods may be subject to the first sale doctrine, which will limit the rights owner’s ability to restrict such sales.  The best course of action is to discuss options with qualified intellectual property counsel to plan and execute an effective overall rights protection strategy (including effectively leveraging options available through eBay).

One may argue that eBay’s motives in implementing the VeRO Program and other procedures were not altogether altruistic – it needed to protect its market channel from a flood of problematic goods that would tarnish its brand and hurt its bottom line.  Whatever the motive, doing so has also resulted in limiting eBay’s potential liability for trademark infringement (so far), giving eBay additional incentive to maintain (if not expand upon) this program. As such, intellectual property rights holders (especially brand owners) should take the time to understand the various tools available through eBay to leverage them to their advantage, and work with counsel to maximize the potential benefits  – customers (and the brand) will thank you for it…;)

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4 thoughts on “Beyond VeRO: Using eBay’s Tools and Policies to a Rights Owner’s Advantage

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