Another eBay Counterfeit Lawsuit Settled

Lawsuits defining a pattern of conduct in eBay’s counterfeit practices and policies.

November 2, 2017, Los Angeles, CA – eBay (NASDAQ: EBAY) is no stranger to claims, and lawsuits, that the e-commerce giant hasn't done enough to prevent sales of counterfeit goods on its websites.

For the second time in months, an eBay counterfeit product lawsuit has been settled with undisclosed terms.

“eBay Inc. and Spyderco Inc. have amicably resolved, on confidential terms, the issues raised in Civil Action No. 17-cv-01751-KLM (D.Colo.),” Spyderco wrote in a statement after it withdrew its lawsuit against eBay reports the knife industry news website, KnifeNews.com.

Just a few months earlier, another counterfeit lawsuit against eBay was settled and sealed in federal court (Wimo Labs LLC v. eBay 8:15-cv-1330).

Everyone knows counterfeiting is illegal. Counterfeit products are produced with the intent to take advantage of the superior value of the imitated product for a profit, and usually deliver a poor quality, substandard or dangerous product. E-commerce websites are open floodgates for an inexhaustible supply of counterfeit products to be distributed to unsuspecting consumers. eBay takes a transaction fee on each item sold.

The problem is that eBay has been successful in claiming it is just a venue and excluded from secondary liability for facilitating and enabling the sale of counterfeits. What eBay can’t dodge, and hasn’t yet been litigated, is eBay’s illusory policy claim "You can't list replicas, fakes, counterfeits, or other illegal copies on eBay." The fact is – you can.

The Counterfeit Report, a consumer advocate and industry watchdog, researched a handful of products and identified over 3.1 million counterfeit, fake and replica items listed on eBay. The actual eBay listings reflect that over 704,000 items were sold to eBay consumers. The tiny sample product group was not purses, watches, sunglasses or fake shoes, but items consumers wouldn't suspect; computer memory, a utility knife, cellphone cases, auto parts, over-the-counter “OTC” drugs and medical devices. Many of the trademarked items were products that don't even exist in the manufacturer's authentic product line. The Counterfeit Report, authorized by the right holders, had 1,984,308 infringing items removed from eBay,

Alarmingly, eBay even sends email solicitations to purchase the fake items.  

Buyers should be very wary of purchasing any trademarked item unless directly from the manufacturer or authorized retailer. Counterfeiters and dishonest sellers are very good at creating visually deceptive products, packaging, holograms, certification labels and documentation that easily deceive consumers.

Even if counterfeit items are removed from eBay, counterfeit sellers can easily relist the item, or return under new accounts.

Companies that facilitate criminal activity and profit from dishonest sales which impact consumer safety, jobs and public trust create a public perception of deception and impunity. However, their reputation damage is only a small part of the problem: the value of counterfeit and pirated goods is forecast to grow to $2.8 trillion, and cost 5.4 million net job losses¹ by 2022, while manufacturer's brand integrity is tarnished or destroyed.

Footnote:
¹ THE ECONOMIC COSTS OF COUNTERFEITING AND PIRACY
The report was prepared for The International Chamber of Commerce (ICC BASCAP) and The International Trademark Association (INTA)
January 2017
Frontier Economics, Ltd.