This guide examines the legality of the eBay VERO take-down procedure. If you trade on eBay you may know what it is like when one of your competitors requests eBay to take-down your listings based on alleged violations of copyright. What happens when you follow eBay's procedures to fight back but they don't work? This guide explains what other legal options you have to stop your competitor doing this and interfering with your online operations.
If you run a small business selling products through an online auction site such as eBay you would be very familiar with how frustrating it can be when you are faced with fake take-down notices by a rival trader or other third-party who inaccurately claims that your auction listing infringes their copyright rights. Unfortunately fake take-down notices under the eBay VERO program are becoming more and more common.
You make your living by selling your goods on eBay through e-commerce, but eBay VERO take-downs are causing you to lose profits and customers to your competitors or other third-parties issuing fake take-down notices. You have tried to fight back to prevent these fake take-down notices by filing a counter-notice under the eBay VERO program, but eBay has accepted the allegations made against you in the take-down notice that you have infringed a copyright owners' rights.
The Digital Millenium Copyright Act (DMCA) was enacted by the US Congress to stop infringement of copyright which occurs through the illegal reproduction of copyright on the internet. It was designed to encourage co-operation between copyright owners and online service providers like Internet Service Providers and other online intermediaries such as eBay from being held liable for copyright infringement liability, but only if have procedures for responding to and taking action responding to allegations of copyright infringement. This protection is known as "safe harbor" protection. eBay's VERO program was developed as a means of claiming the benefit of the immunity provided for by the DMCA.
When the copyright owner contacts the service provider, ISP or web hosting company providing details of the infringement, the service provider who receives a notice of infringement is entitled to disable the website, If eBay accept the take-down notice is valid it is entitled to disable your auction. By taking such action eBay are protecting themselves from infringement. eBay doesn't have to conduct much of an investigation.
However under the provisions of the DMCA (and equivalent provisions in other jurisdictions) you are entitled to be notified that the allegedly infringing material has been removed and given an opportunity to send a written notice to eBay stating that you believe your material has been wrongly removed.
As an eBay trader you have the option of filing a counter-notice if you have good reason to believe that the take-down is unfair or illegal. The problem is that service providers are pressured to take down materials to protect themselves from liability. Although eBay provides a means of explaining to eBay traders how to have their auctions re-instated, the reality is that counter-notices are often either not investigated adequately or wrongly rejected by eBay. You unjustly receive a negative mark against your name as a trader, marks which can accumulate quickly, and eventually leave you suspended from eBay even though you were the innocent party.
Take-downs based on alleged copyright infringement are often bogus, fraudulent and an abuse of the law. Abusive take-down notices which are bogus occur often because companies want to control who is selling their product. Companies also want to prevent sellers competing with their authorised dealers and rely on the small seller either not knowing or taking the trouble to fight a fraudulent take-down notice. Your rivals will also file take-down notices to try to eliminate their competition. The DMCA makes it very easy for unscrupulous traders to file fake take-down notices.
You can do something if eBay won't protect you.
You can file a legal action as if you have been the victim of a fraudulent take-down on eBay you may have a number of causes of action against the seller depending on the jurisdiction in which you bring your action. You may have an action for misleading and deceptive conduct, interference with contractual relations, the tort of injurious falsehood and violation of the equivalent US DMCA copyright legislation in Australia.
This guide explains how an eBayer in Chicago recently did just that to restrain a competitor from sending VERO take-down requests to eBay, alleging copyright violation in goods they never held a valid copyright over.
Copyright protection extends to certain products but it wasn't intended to extend to industrial designs or 'useful articles'. There is an overlap between different areas of intellectual property law. However, after investigating the trader's claims to copyright protection, you may have good reason to believe that the third-party is trying to protect something which doesn't fall within the proper scope of copyright protection. However eBay will not respond to your counter-notice or have rejected your claims. eBay may not have investigated your claims adequately.
You can seek relief from a Court to ask for an injunction to prevent the trader from continuing to issue take-down notices to shut your business down.
A Chicago Court recently heard a request for a temporary restraining order by an ebay trader against a rival ebay trader in the case of Design Furniture v Zen Products. You can read the decision at Scribd online. As you can see from the Court's judgement, the ebayer who was trying to protect their 'copyright' over their wicker furniture never had a right to copyright over the furniture in the first place. Yet the trader had sent 69 notices to eBay to have their competitors' auction listings removed.
The Court recognised that the defendant had violated s512(f) DMCA by knowingly and materially misrepresenting that plaintiff’s eBay auctions contained infringing material. The court held the plaintiff would probably succeed as the Defendant didn't have a valid copyright on their furniture, being a 'useful article' of commerce and not the subject of copyright protection.
Due to the risk of harm to the Plaintiff arising from the suspension of their activities and the loss of goodwill and customers, the court found that on balance, the injunction should be granted. The Court held that making the order would be in the public interest. The Court also made a remark indicating how permissive eBay’s policies were in taking down content based merely on an allegation of infringement, thus reversing the normal burden of proof which rests upon a plaintiff to discharge who alleges intellectual property infringement. However the reality is that legislation such as the DMCA and the practical operations of business often mean that unfortunately Internet Service Providers, online auction sites and content hosts are under pressure to take-down material without adequate investigation to shield themselves from liability.
The case serves as a reminder that EULA and TOS don’t always comply with law and that one should always look beyond the terms of service when evaluating whether or not a website is in compliance with the law.
EBAY routinely suspends users’ accounts and auction listings down at the request of a VERO member. The VeRo Program established the Verified Rights Owners Program to enable rights owners to easily report and request removal of listings offering items or containing materials that they allege infringe their intellectual property rights.
This is an easy method for rights owners to request auctions be removed from ebay without having to prove that the auction holder is infringing intellectual property rights of the owner, either in trademark or copyright. Ebay treats the notification of the alleged infringement as tantamount to proof. VERO is a means for rights holders to take a shortcut to shut any trader down. There is little due process for an alleged violation of copyright rights of a VERO member. A court order is not required for an ebay program participant to inform ebay to shut down a vendor.
eBay has framed guidelines and policies describing items that cannot be listed on eBay and might expose you to risk. These includes items prohibited by law, those prohibited by ebay policy, and reported by a VeRO program participant. All the rights holder has to do is follow the take-down procedure. They don't have to prove any of their accusations in a court of law, unless of course you do what Design Furniture did and force them to be accountable.
Any item which violates eBay policies or infringes on the copyrights of others may be removed and some listings are removed as the language or photos used in the item title or description violate ebay policy. This means that some items you may have purchased in a store, or even possibly on eBay, may not be allowed or could be removed due to listing policies.
This requires users and auction sellers to prove their innocence which is automatically granted to them until the point at which the intellectual property owner obtains a court order proving otherwise.
Online video services like Youtube have developed a notification mechanism to be eligible for the Safe Harbor protection from secondary copyright infringement charges. eBay has been using a similar procedure since 1997, a year before the DMCA was enacted. However the amount of power given to VeRO member leaves the system very open to misuse.
Rights holders have been using VeRO to suppress a vibrant secondary market for their goods and to restrict competition. There is a counter-notification procedure, as re quired by the DMCA, members wanting to object to the takedown are required to undergo a process by which they have to go to great lengths to get ebay involved in the counternotice process. If the rights holder claims the right being violated is a trademark right, not a copyright, being infringed, eBay will not send a counternotice to the user at all.
Notifying eBay of an infringing item is very easy, and a company only needs to file a form by fax, at which time they will be given an email address to expedite the process. Many interests who aren’t copyright holders at all misuse the VeRO process to have competitor’s auctions taken down. eBay states it has no tolerance for anti-competitive use of VeRO fraudulent notification of infringement is very easy.
Only three notifications by a VeRO member could lead to the suspension or termination of an eBay’s users account and infringement claims, and even if there is a successful counter-notice the infringement claims remain on the account holder’s record.
s512(f) DMCA Act provides for punishment for a false accusation through the VeRO program yet there hasn’t been one instance where this has occurred, despite studies showing 30% of notices demanding taken down for claims present a question for a court to consider. Thirty percent of notices demanded take-downs for claims that presented an obvious relating to whether certain material copyrightable, or where there existed a valid defence.
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eBay VERO take-down requests
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3 December 2010
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