Counterfeit trading suit filed against eBay

by Crystal Gottfried, Staff Writer

Knockoffs of famous designers are sold everywhere, but Tiffany & Company is suing eBay for facilitating the trade of counterfeit Tiffany items on their website.

Many unsuspecting collectors are getting counterfeit pieces through eBay, the biggest online marketplace, where the anonymity and reach of the market makes it nearly impossible for the company to police its site that now has 180 million members and 60 million items for sale at any one time.

The Tiffany suit challenges eBay's business model that states it has no responsibility for the fakes because it is nothing more than a marketplace that links buyers and seller. If a buyer discovers an item to be a fake, he can get a refund, but eBay refuses to remove listings for the fakes.

The website is the center of a new Internet universe of counterfeit with virtually no policing and eBay officials argue that they have no obligation to investigate counterfeiting claims unless the complaint come from a "rights owner," a party holding a trademark or copyright. A mere buyer who believes an item is a fake has almost no recourse.

Officials at eBay say they do everything they can to stop fraud. They never take possession of the goods sold through their website. They claim they are not experts in any of the millions of products sold through their marketplace.

Experienced eBay users say that fraud goes well beyond the company's estimate of 6,000 or so fraudulent items being sold at any given time. They feel counterfeiters easily pass off fakes in hundred of categories.

eBay only counts confirmed cases of fraud like when an item is never delivered.

If Tiffany wins its case, many more lawsuits are expected to follow.

In addition to accusing eBay of facilitating counterfeiting, the Tiffany lawsuit also contends that the company "charges hundreds of thousands of dollars in fees" for counterfeit sales.

In 2004, Tiffany secretly purchased about 200 items from eBay in its investigation of how the company was dealing with the thousands of pieces of counterfeit Tiffany jewelry. The jeweler found that three out of four pieces were fakes.

The case is expected to go to trial by the end of this year and the legal question of whether eBay is a facilitator of fraud would be a critical issue that could affect not only eBay's future but Internet commerce generally.

Intellectual property rights attorneys think that if eBay loses or even settles the lawsuit, they would have to begin policing the items that are sold on their site, and that would directly affect their business model. The cost implied could be tremendous.

In the meantime, collectors say that the profusion of counterfeits has confused the market values of authentic and good, quality merchandise, diluting the value of the "real thing."

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