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EBay lawsuit has far-reaching implications
Scripps Howard News Service


January 31, 2006

A legal case winding its way through the courts could have far-reaching implications for online auctions and e- commerce, especially to powerhouse, the defendant.

The suit was filed in New York in 2004 by esteemed jeweler Tiffany & Co. It claims eBay had not done enough to stop counterfeit goods from being sold on the auction site.

It could be a first major challenge to what I call the "telephone defense," in that the phone company isn't liable if someone uses the telephone to set up a murder-for- hire. All it did was provide the wires and the network; the users committed the crime.

EBay may be planning the same kind of defense. The company has consistently said it can't police 80 million items for sale at any one time and it relies on its users and the trademark owners to help keep the site free of counterfeits and knock-offs.

"If Tiffany wins, this is a ground-breaking case," intellectual property attorney Joseph Berghammer of Banner & Witcoff Ltd., told TechWeb News. "It changes the electronic marketplace. EBay would no longer just provide a tent, it would also have to provide police."

Actually a win for either side would be groundbreaking, in my opinion. If EBay wins (that all it does is put up the tent and has no responsibility for the authenticity of the goods), we will see a huge increase in the number of counterfeits all over the Web.

(Not that they are hard to find anyway. Like taking a walk in Times Square, anything is there if you look hard enough for it. And no, the Rolex you paid $20 for is not real, despite the heft and nice finish.)

EBay spokesman Hani Durzy told TechWeb that as a virtual marketplace, EBay never sees or touches the items. Therefore, the responsibility lies with the trademark owners to watch for counterfeits. If an item is found to be fake or pirated, EBay removes it from the site. "The (trademark) owners are the only ones who can truly understand who owns the rights, and what is fake and what is real," Durzy said.

He also makes a valid point. Who is to say what's real and what isn't?

"Real Sports" on HBO is running a segment this month about the incredible market for sports signatures and memorabilia, some of which ends up on EBay with a "certificate of authenticity." Experts interviewed on "Real Sports" said about 80 percent of the signed stuff out there is fake, even many items authenticated by outside firms. (For the record, a certificate of authenticity is only as good as the firm issuing it.) Either the forgers are great or the authenticators are rotten (or both), but when you lump in all the signed items from movie stars and music artists out there, it's billions of dollars in online revenue annually that will be at stake.

Whichever way the case falls, I think the concept of buying collectibles we have not touched is about to get way more interesting.

WEEKLY WEB WONDER: Auction Bytes is a compendium of all things surrounding the auction marketplace. You can see it at


James Derk is co-owner of CyberDads, a computer repair company, and a computer columnist for Scripps Howard News Service.
His e-mail address is jim(at)

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