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Is eBay the new Grokster?

The United States Supreme Court has laid down the law on contributory copyright infringement, stating unequivocally that “one who distributes a device with the object of promoting its use to infringe copyright, or is shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of third parties.” Does this apply to eBay as well?

According to Business Week, companies LVMH Moet Hennessy Louis Vuitton and Tiffany & Co. estimate up to 90% of the items on eBay bearing their trademarks are fakes. On September 12, 2006, trademark lawyers representing LVMH filed suit against eBay in a Paris court seeking $50 Million in damages. Although Parisian courts are much more likely than US courts to find liability in a case like this, they are much more frugal with their damage awards. A win in France may pave the way for a U.S. victim to obtain an award large enough to convince eBay to shut down trademark and copyright infringers.

After having received my second apparently counterfeit DVD in as many months from an eBay auction, I strongly support the action. The case smacks strongly of Arista Records Inc v Flea World Inc (DNJ, No 03-2670, 3/31/06) in which a New Jersey court found a flea market liable for contributory infringement. The flea market was ongoing and multiple vendors offered pirated compact discs and tapes for sale. Even though many of the vendors sold legitimate, non-infringing items, the court held that a contributory infringer is liable for copyright infringement where there is an on-going relationship between the direct infringer and contributory infringer that contributes indirectly to the infringement.

In my personal opinion, the prevalence of eBay auctions for fraudulent, counterfeit and illegal transactions has gotten out of hand. If eBay is unwilling to take steps to eliminate such auctions to protect innocent victims and legitimate copyright and trademark owners, perhaps a Flea World style suit may be in order.

Brett Trout

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