March 31, 2016

Brands Must Police Trademark Infringement on eBay and Other Sites Themselves


If a company suspects that an online seller is engaged in the unauthorized re-selling of its products on websites like eBay, it is up to that company to take action. The brand will need to attempt to enforce their policies and procedures -- to the extent that it has any. While third-party websites might host the forums on which the unauthorized sales are taking place, these websites will typically not get involved with enforcing a company's policies and procedures. Ultimately, it is in a brand's best interest to police trademark infringement on eBay and other site themselves.

Trademark infringement on eBay and other sites

Under the First Sale Doctrine, people can generally sell another's genuine products without infringing upon that other party's trademark.

Thus, potential illegality in the form of trademark infringement on eBay and other sites often turns on whether an online seller has sold products that are "materially different” from the genuine trademarked goods or that lack the quality controls applied by the companies - exceptions to the First Sale Doctrine.

According to the United States Court of Appeals for the First Circuit, “any difference” between an allegedly infringing product and those of a trademark owner" that consumers would likely consider to be relevant when purchasing a product creates a presumption of consumer confusion sufficient to support a Lanham Act claim.” See Societe Des Produits Nestle, S.A. v. Casa Helvetia, Inc., 982 F.2d 633 (1st Cir. 1992).

Moreover, a company can demonstrate that an online seller is not following quality controls by showing the following: 1) the asserted quality control procedures are established, legitimate, substantial, and nonpretextual; 2) it abides by these procedures; and 3) sales of products that fail to conform to these procedures will diminish the value of its mark.” See Zino Davidoff SA v. CVS Corp., 571 F.3d 238 (2d Cir. 2009).

Clearly, determining whether someone has actually sold "materially different” products or failed to adhere to specified quality controls involves a fact-specific analysis. Thus, it would be unrealistic for e-websites such as the aforementioned eBay to get involved with making factual determinations of whether purported unauthorized sales are, indeed, unauthorized; nor would they want to assume such a role.

The websites do not have the resources to undertake all of this for every alleged unauthorized sale. Besides, there is not enough incentive to engage in such thorough investigations regarding trademark infringement on eBay and other sites.

Further, there is traditionally no legal mechanism to compel eBay or a similar website to do so either.

Contributory trademark infringement

Section 230 of the Communications Decency Act of 1996 generally shields “interactive” websites from liability for the actions of third-party users on their websites. For instance, eBay generally cannot be held liable for a user of the website's unauthorized sales, much in the same way that Facebook cannot be held liable for a false and defamatory post by one of its many users.

However, there is an exception for intellectual property violations and websites can be held liable for contributory trademark infringement (“Nothing in this section shall be construed to limit or expand any law pertaining to intellectual property.”)

In order to realistically threaten or attempt to pin liability on eBay for contributory infringement, a company would have to show that eBay knew the sales on its website constituted trademark infringement but chose to do nothing about it.

But this, in and of itself, is difficult to show.

All of this is to say that companies are generally left to police unauthorized sales and enforce trademark claims themselves. They cannot rely on others to resolve trademark infringement on eBay and other sites.

Therefore, it is critical that companies dealing with a high volume of unauthorized sellers have a plan in place to stop these unauthorized sales. They cannot rely on eBay or other websites.