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Third-Party Pirates and Shenanigans

Shopping online is a wholly unremarkable and integral part of modern-day life, and EBay and Amazon are two of the biggest and best-known online retailers. However, while online shopping itself is unremarkable, what is noteworthy about these two platforms in particular is how they have integrated third-party sellers into their business platforms, and how easy it has become for those third-parties to use dirty tricks to hobble their competitors. The unscrupulous ones have found that filing fake takedown notices is an easy way to throw a spanner into the works of your competitor. So, what exactly is going on here, and what, if anything, can be done about it?

Some background:

EBay started off as an auction site, with individual sellers using it to sell second-hand goods in their spare time. These days it hosts at least as much material that is brand-new product, sold both by larger companies and full-time professionals.

Amazon started off as a second-hand bookseller, moved into selling new books, and then moved into selling a wide range of brand-new goods in various areas: from household cleaning supplies, to car parts, to alcohol. From there it started hosting 3rd-party sellers who sell their own goods through the Amazon 'portal'.

A large proportion of the overall sales volume of both of these sites is now via their third-party sellers. Many of these sellers work on the 'pile it high and sell it cheap' principle - there are plenty of Chinese and Indian companies shipping to the UK, the US, mainland Europe and more-or-less anywhere else you want, as long as you're happy to pay the shipping cost, and there are plenty of western companies importing goods from Asia and selling them themselves.

So far, so unremarkable, and if you're interested in reading more about it, then here's a decent article from 2015. But from an Intellectual Property perspective, this 3rd-party model is where things start to get more interesting.

Both Amazon and EBay host the listings of third-party sellers using their own websites as a market place (with the websites hosted on their own servers). As noted above, there is an enormous volume of sales through these third-party sellers. Because Amazon and EBay don't want to be liable themselves for claims of IP infringement, they both have 'take down' programs in place, for example, the EBay VERO (Verified Rights Owners Program) program. Any party can make a take-down request against a sales listing, based on alleged copyright, trade mark, registered design or patent infringement.

In theory, this is A Good Thing. Sellers listing counterfeit goods such as brand-name clothing, footwear, electrical goods or similar can be easily and quickly shut down by the legitimate owner of the brand or other relevant IP.

But, human nature being what it is, people have inevitably found a way to use this for mischief.

There are many, many 3rd-party sellers on both of these platforms, who are in many cases directly competing against one another. The unscrupulous ones have found that filing fake takedown notices an easy way to throw a spanner into the works of competitors. A rival trader files a claim via the VERO program, alleging that their rights have been infringed. The claim process is straightforward, costs nothing, and doesn't require legal niceties such as a court order or similar.

Once the claim has been filed, EBay or Amazon will almost always immediately remove the listing in question, essentially accepting the allegations and placing the onus on the accused to prove that there is no infringement - guilty until proven innocent. By taking such action EBay are protecting themselves from allegations of infringement and protecting themselves from liability. As a bonus, EBay doesn't have to expend much in the way of resources conducting it's own investigation.

It doesn't take many of these notices to against a seller to severely disrupt their business. A single notice disrupts a sales stream for a particular product, and for a best seller, this might allow a rival to get an edge with sales and revenue. Three notifications can lead to the suspension or termination of an account, and even if there is a successful counter-notice the infringement claims remain on the account holder’s record.

So what can a seller do to counter this?

Unfortunately, the answer is that while there are mechanisms to respond, both legal and through the platform, these are not quick, and often not that useful.

A trader can respond to an infringement notice by filing a counter-notice. However, counter-notices are frequently not investigated adequately, or wrongly rejected. EBay will often ask the two parties to sort it out between themselves.

A trader can also attempt to force accountability onto an accuser, by taking them to court. This approach was successful when 'Design Furniture' took their accuser 'Zen Products' to court in the US, the court ultimately granting a restraining order to prevent 'Zen Furniture' filing any more take down notices (they had by this point already filed 69 notices based on copyright). The Court recognised that the defendant ('Zen Products') had violated s512(f) DMCA by knowingly and materially misrepresenting that plaintiff’s listings ('Design Furniture', applying for the injunction) contained infringing material, and held that the plaintiff would probably succeed in any actual infringement action, as the defendant didn't actually hold any copyrights.

If other specific rights have been cited, such as a registered design, a trader can attempt to invalidate the design or show non-infringement. I have been involved with a design invalidity action in the UK, specifically in relation to an EBay takedown notice.

However, the problem with these types of actions is that they are long-winded and never resolved quickly. Each round of the action - evidence submission, hearing, and so on - takes weeks, so an action can take months to fully resolve, even without going to a formal court. Formal court action is hugely expensive and time-consuming for the average trader, and again, nothing is resolved quickly.

Unfortunately, I can't end this post by describing a magic bullet solution. I can assist with court actions or invalidity actions, but be aware that these need time. While I'm almost certainly more cost-effective than many others, these types of actions also tend to take a fair bit of money. However, please get in touch if you need help with this, or need more information.

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