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No Breakfast At Tiffany’s For EBay
John Stith
Staff Writer
2006-02-02
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There's nothing like a little fraud to rattle the cage of the world's largest online auction house. Audrey Hepburn's favorite jewelry store claims their cage has been rattled long enough and has filed suit against eBay.
 | | No Breakfast At Tiffany's For eBay |  |
The legendary Manhattan jewelry store Tiffany and Co., now a global entity, charges that eBay is complicit in this illegal activity by facilitating and participating in counterfeiting and trademark infringement of Tiffany's trademarks.
The suit, filed back in June of 2004, is just another in a long list of online fraud issues coming from online auction houses. The largest of these is eBay.
It would seem Tiffany has some ammunition for this charge of the eBay brigade too. Back in the spring of 2003, the FBI raided a counterfeiting ring in NYC and the ring was selling counterfeit Tiffany products on eBay. This wasn't the only case either. Tiffany got a civil seizure against another company doing the counterfeiting thing with their toys.
Many eBay critics have seen this as a flaw in their system for quite a while as eBay has a very "hands-off" attitude toward how things operate. Even though it goes by auctions, one could probably equate eBay to a flea market in many ways. They set up a venue for people to buy and sell. Essentially, it's barn with people setting up tables everywhere with all kinds of things for sale.
Sometimes these swap meets have a few things that are illegal, like counterfeit CDs or movies or in this case jewelry. Well, in eBay's case, with the volume they have, there's a lot of this illegal activity going on. Are they liable for these illegal activities, even though they have no direct oversight?
Tiffany seems to think so and the case can easily be made for their argument too. First, as has been pointed out, eBay runs the Tiffany brand on their site. This means that while there is legitimate Tiffany's merchandise there, eBay also benefits from the sale of the counterfeit material because it bills itself as Tiffany.
Back in 2003, Tiffany and eBay tangled over counterfeiting then. Tiffany sued after requesting help from eBay on removing counterfeiters. Tiffany had gone through the eBay site and nearly 20,000 auctions of phony Tiffany product. EBay eventually removed all the auctions involved.
Then, one must keep in mind eBay also profits from these sales. This means eBay profits directly from illegal activities. It wouldn't be too far a leap to suggest the company doesn't have a vested interest in stopping these sales as long as they continue to profit from them. While eBay wouldn't expressly support illegal activities, charges have been made for years that various forms of fraud, fencing and other illegal activities go on there. eBay's "hands off" policy makes it easy to conduct these business dealings.
The big question then becomes: How responsible is eBay for these activities? Based on the nature of their model for the business, it makes it very difficult to regulate such things or does it? eBay often delists strange things. A few years ago, someone tried to sell their soul online. It was their for a few hours and eventually got pulled. Then, just recently, ebay pulled the sale of an iPod with thousands of songs on it. They claimed the sale violated their rules on copyright violations and referred back to their Replica and Counterfeit Items policy.
When reviewing the policy, they state explicitly:
Counterfeits, unauthorized replicas, unauthorized items (such as counterfeit watches, handbags, or other accessories) or unauthorized copies (such as copies of software programs, video games, music albums, movies, television programs, or photographs) are not permitted on eBay. Unauthorized copies include (but are not limited to) copies that are pirated, duplicated, backed-up or bootlegged. It is illegal to sell unauthorized copies of media.
They do have punishments within the network to stop these sales. They also have a route to report these counterfeit or replica items that are unauthorized. So what gives? If a company like Tiffany requested some help in going after counterfeiters, one would think they would spend a reasonable effort to stop it.
The tricky part comes in monitoring all these sales. Practically, it's going to be very difficult to do. Pragmatically, they may have to in order to prevent lawsuits and other legal action.
The lawsuit by Tiffany makes most of the points mentioned. If they win, eBay is going to require a major overhaul of the entire business model. Based on what many legal experts are saying though, eBay may want to start looking into quality online security.
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About the Author:
John is a staff writer for SecurityProNews covering cyber security.
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