Confusion Over Liability Extends To The Real World, Rather Than Just Online

from the sue-sue-sue-sue dept

Reader jjmsan alerts us to a story that shows that various luxury brands suing service providers rather than those actually responsible doesn't just happen online, but can happen offline as well. Apparently, luxury goods maker Coach is suing the city of Chicago, because some vendors were selling counterfeit goods at the Maxwell Street Market. I'm at a loss as to why suing the city makes any sense at all. In response to the original complaints, the city sent police officers to the market, and actually arrested those selling counterfeit goods (why this is a criminal, rather than a civil, matter is left as an exercise to the reader). Either way, rather than recognize that the city appeared to be more than willing to work with Coach, the company sent a legal threat letter demanding that the city proactively crackdown on counterfeits. When that failed, Coach sued the city. Hopefully the courts will recognize the ridiculousness of suing the city, rather than focusing on the vendors actually responsible.

Filed Under: chicago, counterfeit, liability
Companies: coach

Tiffany Learns, Yet Again, That eBay Is Not Responsible For Users Selling Counterfeit Items

from the secondary-liability dept

Back in 2004, famed jeweler Tiffany sued eBay, because some users on eBay were selling counterfeit Tiffany items. It's the same old story of secondary liability -- with eBay pointing out (quite accurately) that if users are selling counterfeit goods, that's between Tiffany and those users. eBay is just the platform. But Tiffany didn't care. Its CEO even admitted that it was suing eBay because that was easier than going after those actually responsible. It's an incredible sense of entitlement by Tiffany: because it doesn't want to actually police counterfeit sellers, eBay should just step up and do so automatically?

The district court smacked down Tiffany on every count, explaining pretty clearly that it makes no sense at all for eBay to be responsible for the actions of users. And, of course, Tiffany appealed.

The appeals court has sided with eBay yet again, telling Tiffany, once again, that eBay is not liable for the actions of its users (full decision -- pdf). The court notes that eBay seems to have bent over backwards -- beyond what the law requires -- to help Tiffany stop the sale of counterfeit items and to warn users to make sure they're buying legitimate items. It notes that while eBay may have had "general knowledge" of counterfeit goods on the site, whenever it had specific knowledge, it was quick to take down the offending content, and thus there was no secondary or contributory trademark infringement.

Separately, the court agreed with the lower court that eBay did not violate Tiffany's trademarks by mentioning Tiffany in its own ads -- saying that it was entirely accurate to note that you could buy Tiffany products on eBay. That was factual, and thus, no trademark infringement. It made quick work of Tiffany's "dilution" claim as well, pointing out that eBay has nothing to do with that:

Tiffany argues that counterfeiting dilutes the value of its product. Perhaps. But insofar as eBay did not itself sell the goods at issue, it did not itself engage in dilution.

The one area where the appeals court differed from the district court is outside of the trademark realm, but on the question of whether or not eBay's ads that mention Tiffany could, potentially, be seen as "false advertising." The court noted that there was nothing that was directly false in the ads (it was, again, accurate that you could buy Tiffany goods via eBay), but that it could be possible that users were mislead or confused. So it sent the case back to the lower court to retry that particular issue.

In the meantime, though, Tiffany wants to appeal the rest of the ruling to the Supreme Court, which may now have a chance to establish, clearly, that you can't pin secondary liability on a service provider. Tiffany's response to the ruling actually seems a hell of a lot more "misleading" than any of eBay's ads:

"EBay knew that counterfeit merchandise was being sold on its site -- and EBay took no effective steps to stop it," Tiffany Chief Executive Officer Michael J. Kowalski said in a statement. "EBay deliberately misled consumers for profit, and unfortunately the court has justified its actions."

But that's simply, factually, incorrect. As the court clearly noted, eBay bends over backwards to try to stop counterfeit merchandise from being sold on the site. Hopefully Tiffany execs come to their senses, but it seems likely they'll still appeal, and still fail to recognize the difference between blaming the party doing the actual infringement and the service provider they use.

Filed Under: counterfeit
Companies: ebay, tiffany

Malaysia's New Copyright Act To Make Owning A Single Counterfeit DVD Illegal

from the can't-have-any-sort-of-competition dept

All over the world, it seems, the entertainment industry keeps pushing for ever more draconian copyright laws. Copycense points us to the latest out of Malaysia, where an amendment to the Copyright Act would making owning a single counterfeit DVD illegal. Yes, just owning it. In most places, it's distributing or reproducing that causes infringement. But now we're adding owning to the list. Imagine buying what you thought was a legitimate DVD and then being dragged to court for it. That seems reasonable.

Filed Under: copyright, counterfeit, dvds, malaysia

Study Shows Counterfeit Buyers Frequently Buy Real Products Later

from the acta-what-now? dept

As the negotiations over the ACTA treaty continue in secret, one of the more frustrating aspects is how defenders of ACTA repeatedly conflate "counterfeit goods" with "copyright infringement." Witness Senator Evan Bayh's nonsensical response to being asked about ACTA, where it becomes clear quite quickly that he's unfamiliar with the most basic information on the subject. He switches back and forth between counterfeiting and copyright as if they're the same thing, and seems to think that any treaty on the matter must be good.

But, an even more annoying part of all this is the use of fear mongering over "counterfeit goods" as some huge problem that has to be solved, when the evidence increasingly suggests otherwise. The copyright lobbyists are using the cover of some mythical massive counterfeiting problem to push for unnecessary and potentially dangerous copyright law changes, but even the counterfeiting claims are suspect. In the past, we've noted that both the GAO and the OECD have noted that the "problem" of counterfeiting has been massively inflated by lobbyists.

And, a new study suggests that even the counterfeit goods that do get sold aren't really a huge problem to the original manufacturers (thanks to Dave Barnes for sending this in) -- if there a problem at all. In a study that was actually carried out by a former brand manager at LVMH, it was discovered that people don't view counterfeit goods as a substitute to the real goods. People aren't being tricked -- they know they're buying counterfeits, and others know that they have counterfeit goods as well:

"Consumers are a lot smarter than we may give them credit for -- just because you've got a nice fake doesn't mean you're going to get away with it."

But, even more importantly, it looks like counterfeit products often act as a stepping stone to get people to go forward and buy the original version:

"The counterfeit actually served as a placebo for brand attachment," she said. "People were becoming increasingly attached to the real brand even though they never possessed it at all."

Forty-six percent of the counterfeit-bag owners bought the authentic products within two and a half years, she said. Shoppers were willing to pay $786 for a real luxury bag....

So, for all the reports of "harm" done by counterfeit products, here's a study suggesting that it actually helps build brand loyalty, and appears to often lead to the counterfeit buyer later buying a massively expensive real offering in a relatively short time frame. As some are noting, this suggests that the counterfeit goods act as advertising for the real goods. These are the sorts of things that would probably be useful to discuss with those negotiating ACTA. If only those discussions weren't all happening behind closed doors due to "national security" issues.

Filed Under: counterfeit, promotion, study

Peter Sunde Brings Criminal Charges Against BREIN, Claims They Falsified Documents Against The Pirate Bay

from the spectrial-indeed dept

You may remember, back in July, that a Dutch court made an odd ruling against The Pirate Bay at the behest of BREIN, the local anti-piracy group. Now, there was a lot of things odd about the case. BREIN has always been quite aggressive in demanding that sites be blocked or that ISPs be forced to block sites, but this case went really far. BREIN was able to bring the case without even letting any of the four defendants (the same four who were on trial in Sweden) know about the case. However, BREIN told the court that the defendants were fairly summoned, despite no evidence that was true at all. BREIN also claimed that The Pirate Bay had launched a DDoS attack on BREIN's website, and seemed so close to the court that when the defendants themselves asked the court for the very ruling made against them, the court told them that they could only get the copy directly from BREIN.

Of course, after all this happened, a second problem cropped up. Swedish authorities did an investigation and came to the conclusion -- as the four defendants had said all along -- that those four guys did not actually own The Pirate Bay. Instead, it was a company called Reservella, information that came out to the public after the attempt by GGF to buy The Pirate Bay (which has since collapsed).

BREIN wasted little time in adding Reservella to its lawsuits... but then did something strange. It came up with a credit report that purports to prove that one of the four defendants, Fredrik Neij, is the CEO and a director of Reservella. However, there were some oddities in that credit report, and Peter Sunde (one of the other defendants, better known as brokep) began investigating and has rather detailed evidence that the entire credit report is a fake. Almost none of the information on the report checks out, and the companies listed -- including Experian, who supposedly supplied the credit report, claim that they have no record of this particular credit report at all.

Sunde is now filing criminal charges against BREIN and its boss Tim Kuik, claiming that they forged a document and used it for fraud (trying to get money out of these four defendants). As Sunde notes, such charges seem to be far more serious than inducing copyright infringement. The evidence that Sunde lays out certainly looks convincing that the document is fake, but what's still not clear is how BREIN got the document, and whether it was responsible for creating the document, or if it was merely convinced that the fake document was real from someone else.

Still, it doesn't look good for BREIN to be caught using what appear to be faked documents in its lawsuit.

Filed Under: brein, counterfeit, forgery, fraud, frederik neij, netherlands, peter sunde, tim kuik
Companies: brein

Clothing Firm Pirated Itself... And It Worked Great

from the competing-in-the-market dept

As fashion designers in the US are, once again, pushing for a misguided new "fashion copyright," it's worth remembering that studies have repeatedly shown that knock off fashions are what help make the fashion industry so successful. They serve a few different purposes. They make the authentic versions appear more valuable (who would knockoff an unpopular fashion?). They help differentiate the market by letting the clothes diffuse to the lower end that would never buy the designer level clothes, and they push designers to keep innovating each year, because they want to keep coming out with something new to stay ahead of the counterfeiters.

Now, it appears that at least one clothing designer decided to use these facts to its own advantage. ReallyEvilCanine writes in to let us know how a South African t-shirt designer made its own counterfeit line of t-shirts and used that to boost the perception of the original line, while also being able to differentiate and sell into different markets: The brand, Love Jozi, created the "knockoffs" using the name Luv Jozi, and plenty of people picked up on it, at times lamenting how the Love Jozi people must be upset, but noting that "all the biggest brands" get copied. The Love Jozi people let the whole experiment run for about two years before revealing it. However, in the process, they showed that rather than worrying about counterfeits and fakes, there's something to be said for cornering the market on such things yourself. As REC noted in the submission, even when counterfeiters don't "play fair," you can still sell looooooots of t-shirts.

Filed Under: clothing, counterfeit, love jovi, luv jovi, south africa
Companies: love jovi

Is HP Finally Just Targeting Ink Counterfeiters, and Not Legit Refillers?

from the about-time dept

HP has stepped up its efforts to crack down on printer ink counterfeiters -- and with good reason. While the company plays up that it's helping consumers by getting shoddy products off the market, it's more about protecting its business. In the past, HP's put pressure on retailers not to carry cheaper alternatives to its expensive replacement ink cartridges, and it's tried to use patent suits to shut down cartridge refillers. But with sales down across the board, HP is moving to try and recoup some of the $1 billion analysts allege it loses to fake ink every year. BusinessWeek says "For years, HP could afford to ignore the problem," because of booming sales. But apparently, it couldn't afford to try and use patent lawsuits, pressure on retailers and other shady tactics to try and crowd lower-priced alternative products out of the market. It's perfectly fine for HP to go after counterfeiters selling inferior products under its name, trying to defraud consumers. But let's hope that's all it's now doing, and it's given up on trying to force legitimate alternative products out of the market.

Filed Under: counterfeit, ink
Companies: hp

Court Finds Web Hosts Liable For Counterfeit Sales By Web Sites

from the bad-precedents dept

While a US court last year (correctly) found that eBay is not liable for counterfeit goods sold by users, a recent court case won by Louis Vuitton surprisingly found that a web hosting company could be found liable, if a site hosted by the company sells counterfeit goods. The court finds the site guilty of both contributory copyright infringement and contributory trademark infringement, claiming that the host knows about the infringement due to notices from Louis Vuitton, without explaining how the hosting firm could possibly know if the complaints were legit or not (or whether the goods being sold were counterfeit or not). In a bit of a scary connecting of the dots, the court suggests that because the web host was notified, and because it could then disable the accounts, it's now liable as well. That creates a huge chilling effect for web hosts -- as it encourages them to basically shut off any website based on any accusation of selling counterfeit goods. If web hosts don't do that, they may face significant liability. There's nothing wrong with companies going after the actual sellers of counterfeit goods -- but going after the web host (and winning!) sets a dangerous precedent.

Filed Under: counterfeit, liability, web hosts
Companies: louis vuitton

Belgian Court Agrees With US Court That eBay Not Liable For Fake Products

from the another-good-decision dept

Just days after Tiffany appealed the correct US ruling that eBay isn't liable for counterfeit goods sold on the site, a Belgian court has sided with eBay in a very similar lawsuit involving L'Oreal. Apparently, the Belgian courts understand how liability works a lot better than their neighbors in France, who ruled the other way in a case involving Louis Vuitton.

L'Oreal says it's "surprised" by the decision and will appeal, but fails to explain why eBay, as a platform maker, should be responsible for what people do with that platform. About the only answer seems to be that L'Oreal recognizes eBay is an easier target than going after those actually responsible (those selling the counterfeit goods). It's nice that most courts recognize that the easiest entity to sue is not necessarily the proper entity to sue.

Filed Under: auctions, counterfeit, fraud. belgium, liability, luxury goods
Companies: ebay, l'oreal

A Little Sunshine Brings Out Rapid And Well Deserved Anger Towards ACTA Treaty

from the spreading-the-word dept

Last week, I wrote a post highlighting the faulty premises behind a secretly negotiated treaty between the US and many other countries, the so-called Anti-Counterfeiting Trade Agreement (ACTA). Since then a bunch of news articles have been written about ACTA, with most of the focus on how it will have border guards going through your iPod and computers to see if you have any infringing content. A bunch of folks have been submitting stories on this all week, despite the fact that we wrote about it last week. However, what's most interesting to me is how quickly this turned from a little story -- first posted to Wikileaks and a few blogs, into something that's been in major newspapers (oddly, mostly focused in Canada).

Even more interesting, however, is how this has so quickly turned into activism, with some newspapers already already calling for people to stand up against ACTA to protect our privacy rights. Think about that for a second. This was a treaty on the "boring" topic of copyright, that was basically pitched by the entertainment industry to politicians who wrote it up in secret. It leaked out to a single website, and within a week there were major newspaper editorials calling for people to stand up against it, and thousands, if not millions, of people informed about the potential harm this treaty could cause. So much for slipping it under the radar.

This is really the culmination of a few different factors, including the entertainment industry's misguided and rapidly backfiring battle against consumers, that has catapulted copyright from a boring "wonkish" issue into one that people recognize effects so many aspects of their daily lives. Combined with the wonderful communications ability of the internet, it makes it harder for the entertainment industry to simply pull one over on people like this. Of course, as we've noted, the industry keeps on trying, and they love sneaking through legislation and treaties before anyone recognizes it -- but the rapid response to ACTA (which is far from over, of course) suggests that some of the industry's advantages are slipping away. Hopefully, this issue will continue to receive the attention it deserves so that there's a real debate on whether or not such a treaty is needed (it's not).

Filed Under: acta, canada, copyright, counterfeit, trade agreements, treaties