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Date: Wednesday, November 14, 2007

Could Companies Get in Trouble for Pursuing Ebay Fakes?

Counterfeit goods are a problem that has plagued the luxury goods market for years. Burberry saw their brand image suffer when their distinctive Burberry check print was emblazoned onto fake clothes and accessories. Louis Vuitton have also seen their distinctive logo and uniquely styled bags copied and sold at low prices. The sale of counterfeit goods was primarily a black market business yet these days, third party websites such as eBay have seen their sale become a mainstream activity.

Fake goods, which tend to be designer fashion and accessories, cause a number of problems for companies. As discussed in relation to Burberry, mass production of a logo or style can damage the identity of a brand, particularly if it is a prestigious one. It also causes mass loss of revenue for the brand. After all, how many people would be willing to pay a designer price tag when they can get the same item at a reduced rate?

Many companies believe eBay and related sites are liable for this problem, as they provide a platform for pirates to sell fake goods. However, Intellectual Property lawyer Gill Grassie warns companies against taking the ‘middle man’ to court. She says: “Middle men are generally immune from prosecution provided they remove infringing material from their sites as soon as they are notified.”

In fact, Grassie warns that some companies many be “unaware that asserting what they consider to be genuine rights may give rise to liability.” By suing a middle man company, businesses may find themselves being ordered to pay compensation to the accused. These damages tend to be awarded for defamation and also for loss of revenue on the infringed products.

So, although it may not be fair, current Intellectual Property law means that companies should think twice before filing huge lawsuits with a middle man company. Very few companies emerge victorious from this kind of case and you might even end up with a large fine.

Sources:

The Times