eBay: A Community Approach to Protecting IP

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In the last decade, eBay has become one of the largest and best known Internet auction sites. Millions of users log on to the system each day, but while most are selling legitimate goods, the site remains a prime target for fraud. Robert Miller, eBay’s senior director of legal affairs, explains to Edward Fennell how eBay is rising to the challenge.

eBay has come a long way since it was founded in the USA in 1995. Almost every reader of this magazine will have used it or have a close friend or relation who has. The metrics are amazing: there are 181 million users worldwide; there are more than 50,000 categories of items traded; and on any given day there are 60 million items available for sale – with five million new items added every 24 hours. Altogether there are typically three million live listings every day: a toy car sells every 26 seconds; real cars take a little longer – two minutes.

Even for the UK alone, the figures are mind-boggling, with about one in six of the population – 13,000 – registered as a user. Take out infants and the elderly who have not switched on to the Internet and that is a hugely impressive statistic. The speed of growth and popularity of eBay is, of course, simply a reflection of the extraordinary development of the Internet. As the official eBay website puts it: ‘Our mission is to provide a global online marketplace where practically anyone can trade practically anything, enabling economic opportunity around the world.’

By moving away from the rigidities of the conventional High Street or shopping centre to the fluidity and flexibility of a virtual street market, eBay provides a new place for users to make many of their purchases. But the very informality of a street market opens it up to abuse – as anyone who has ever bought a dodgy pair of Nike trainers or so-called Armani jeans will know. And so for eBay, as the ‘market manager’, there have been real challenges in how to police the marketing leviathan to which it has given birth.

E-business is clearly vulnerable to fraud and identity theft, and the company now has a very substantial fraud investigation department. Operating worldwide and employing a number of former law enforcement officers, there is extensive liaison with the police as well as co-operation with other leading financial services and major IT organisations such as Microsoft.

Yet eBay has a fundamentally upbeat approach to these problems. It is aiming to create a ‘community’ of users and it is explicit about its community values – including, for example: ‘We believe people are basically good’ and ‘We encourage you to treat others the way you want to be treated.’

Protecting its own IP
Notwithstanding this benign outlook, eBay still falls victim to the usual trademark infringements that come with any prestigious brand once other organisations, some of them shady, attempt to capitalise on its ready-recognition. While there are a number of auction sites on the Internet today, eBay is generally regarded as the largest and most prominent. It is no surprise then if some people try to take advantage by spoofing themselves as linked to the company. But as London-based senior director of legal affairs Robert Miller explains, the company is vigilant in pursuing and confronting those who infringe eBay’s IP Rights by using the eBay logo on spoof e-mails, or any other misleading communications.

Yet, as well as protecting its own IP, it is also critically important for eBay to protect the reputation of the branded goods which are sold through its listings. As Robert comments: ‘As part of our mission we are committed to helping protect the IP Rights of brand owners and to provide our users with a safe and enjoyable place to trade.’

‘As part of our mission we are committed to helping protect the IP Rights of brand owners and to provide our users with a safe and enjoyable place to trade.’

Working for brand protection
The front line in this protective cordon is provided by eBay’s VeRO Programme for ‘Verified Rights Owners’. VeRO works in everyone’s interests – including even the putative infringers – by providing a means of co-operation between brand owners and eBay.

The basics of the VeRO operation are simple. Using an online process, rights owners can report infringements (of copyright or trademarks, for example) to eBay quickly and easily so the offending listing can be removed. For example, if an organisation sees goods being sold on eBay that infringe its IP Rights then it simply downloads a ‘Notice of Infringement form’ from the eBay website. Aggrieved parties must enter the item numbers of the infringing listings and the reason why the items are infringing. This initial notice also requires an authorised signature, in order to ensure that the people reporting infringements are either the rights owners or are authorised by the rights owners to do so.

Once a notification has been received, eBay then moves immediately to take down the listing. At the same time, it notifies the seller (and all bidders of auction watch service, please e-mail info@tmds.com that particular listing) what is happening and includes the fact that the rights owner has complained. The subsequent penalty can vary. In the first instance, the seller might simply be warned not to do it again. More serious or future cases will lead to a temporary or permanent suspension. And because eBay is resolute that it should not benefit from fraudulent attempts to sell misleading goods, it will actually refund any money it has received from the seller.

Of course, not every case is clear-cut. It may be that the seller genuinely believes that he or she has the right to list and sell these goods. To handle these cases eBay encourages the sellers and the rights owners to contact each other to resolve these issues between them. There is also a buyer protection programme in place so that users of eBay should not be vulnerable to predatory infringers.

Policing infringement
Over 13,000 rights owners have signed on to VeRO, covering a wide swathe of industries. Following the first notification, organisations are able, thereafter, to communicate details of any further breaches by e-mail or via the online webform. As an added benefit, once IP Rights owners are participating in the VeRO programme, it is possible to set up an automated search system, using a free eBay account, to conduct automatic searches for potentially infringing items. Owners are automatically notified of all new listings which contain any terms in selected search areas. This means it becomes much simpler for owners to check the site for any offending items.

As a result of these defensive systems, eBay’s level of infringement is very low. But no one pretends it will go away entirely. That is why the company is committed to a high level of user education. Within the eBay site VeRO participants can create ‘About Me’ pages which describe their own approach to protecting their rights. This should help to clarify any doubts or grey areas in the minds of sellers. Moreover, as Robert explains, eBay has recently introduced a VeRO online tutorial programme so that users can become competent in not infringing others’ IP Rights. And this is particularly useful for those who have been suspended for breaching the rules. Before being allowed back on to the site they must complete the programme.

IS MY BRAND AT RISK OF PIRACY?
Auction websites can make a brand more visible and memorable to customers, but this doesn’t come without risks. Brands must be constantly monitored if they are to be safeguarded against infringement. Today, as never before, IP Rights holders are falling victim to hostile tactics from unscrupulous businesses and individuals, which seek to profit from product piracy and other forms of online abuse. Companies need to move fast if they are to ensure that their brands are protected, but how can an
IP department ensure it keeps constant control of its rights on such websites?

WATCHING FOR INFRINGEMENT
Many auction sites are now working to help brand owners police their rights online. eBay’s VeRO programme for ‘Verified Rights Owners’ is already in use across its portfolio of websites. Rights owners can report perceived infringements to the company for immediate action, and use the programme’s search facility to ensure such infringements do not happen again. TMDS’s auction watch – the first service of its kind in Europe – provides a comprehensive means of searching a range of auction sites, such as eBay and Yahoo!. Watch reports include details of product, auction and vendor in case further action needs to be taken, but also allows clients to gauge how well their brands are selling in the arena.

For more information about TMDS’s auction watch service, please e-mail info@tmds.com

Robert Miller is now general counsel at eBay subsidiary Skype. To find out more about eBay visit www.ebay.co.uk

This article first appeared in IP Review, issue 14

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