Can eBay’s VERO program be fixed? – by Cliff Ennico (03 May 09)

Big book

“We started selling on eBay a few months ago.  We’ve had spectacular success with most of our items, but recently have had two listings removed from the site because of alleged trademark violations.  eBay told us that unless the manufacturer contacts eBay to resolve the violation request, we are suspended from selling on the site for one year.  We have attempted to contact the manufacturer to discuss the situation, as in both cases the items we had for sale were 100% genuine, but there has been no response.  Is there any way a seller can get justice in a situation like this?”

Sadly, the answer is “probably not”.

It is illegal to sell counterfeit or “knockoff” merchandise on eBay, or in fact anywhere else.  These products are manufactured in violation of U.S. and international trademark and copyright laws, which are designed to protect the manufacturers of these goods (think Tiffany’s or Louis Vuitton), their brand names and their “brand image” in the marketplace.

Manufacturers have an absolute right to block the sale of counterfeit or unauthorized merchandise on eBay, but they cannot legally prohibit the sale of used or secondhand merchandise if it is in fact genuine.  So the manufacturer of Coach handbags should have no right to object if you’re selling on eBay a genuine vintage Coach handbag you acquired in an estate sale.   Since most eBay sellers are not experts in the merchandise they sell, how can the typical eBay seller know whether the brand name merchandise they’re selling is genuine or not?

To deal with this situation, eBay long ago developed its Verified Rights Ownership (“VeRO”) program (http://pages.ebay.com/help/tp/programs-vero-ov.html).  Here’s how it’s supposed to work:

O         manufacturers of brand name merchandise create an “About Me” page on eBay with information and resources to help eBay sellers determine whether the merchandise they’re selling is genuine or not;

O         if a manufacturer believes a seller is selling counterfeit or “knockoff” merchandise, it notifies eBay, which then shuts down the offending listing and instructs the seller to contact the manufacturer directly to resolve the matter;

O         the seller contacts the manufacturer, and the question of genuineness is resolved one way or the other; and

O         if the manufacturer doesn’t respond to the seller, eBay contacts the manufacturer on the seller’s behalf and “facilitates” the discussion.

That’s all great in principle.  But it doesn’t work in practice.  Manufacturers do not like the idea of even legitimate brand name merchandise being sold on eBay, because it circumvents their other distribution channels and (in their view) cheapens their brand image in the marketplace.  While eBay doesn’t want to frustrate its sellers, it is absolutely petrified of being sued by large manufacturers, and so gives in to most VeRO requests to suspend a seller’s listings (or the seller itself) with hardly any investigation.

Here’s a recommendation for an improved VeRO that may level the playing field between sellers and manufacturers without exposing eBay to unnecessary risk:

(1)       whenever a seller includes a brand name or trademark in a listing title, he or she should be required to fill out a separate box with evidence demonstrating that the item is genuine – this could be a photocopy of the original sales receipt, the story of how the seller acquired the merchandise (what antiques dealers call “provenance”), a certificate of authentication by a recognized independent authority, or a listing of product details that only genuine merchandise would have;

(2)       if a seller completes this “provenance” box, the word “documented” should then automatically appear in the listing title alongside the trademark or brand name (for example, “documented Coach handbag”);

(3)       if a manufacturer complains that a listing offers bogus merchandise for sale, and the listing does not have the word “documented” in the title (i.e. the provenance box wasn’t filled out), eBay can terminate the listing without explanation;

(4)       if a manufacturer complains that a listing offers bogus merchandise for sale, and the listing has the word “documented” in the title, eBay notifies the seller and requires them to contact the manufacturer, via a specific e-mail address, within 24 hours of the notice;

(5)       if the seller fails to contact the manufacturer within 24 hours of eBay’s notice, the listing is automatically terminated;

(6)       if the seller contacts the manufacturer but the manufacturer doesn’t respond to the seller’s inquiry within 24 hours of delivery, then the listing continues and the manufacturer is barred from complaining;

(7)       if the manufacturer responds to the “documented” seller’s inquiry and insists the merchandise isn’t genuine, giving specific reasons why (not just a form response), then eBay suspends the listing (not the seller) and the matter is referred to eBay’s mediation system or SquareTrade for resolution, the same as disputes between a seller and a buyer.

One more thing:  since sales of trademarked merchandise on eBay are occasional or infrequent transactions for most sellers, eBay should never suspend a seller (as opposed to striking individual listings) from the site for VeRO violations absent compelling evidence that the seller is engaged in multiple, repeated sales of blatantly counterfeit merchandise. 

Cliff Ennico (cennico@legalcareer.com) is a syndicated columnist, author and former host of the PBS television series ‘Money Hunt’.  This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.  To find out more about Cliff Ennico and other Creators Syndicate writers and cartoonists, visit our Web page at www.creators.com.  COPYRIGHT 2009 CLIFFORD R. ENNICO.  DISTRIBUTED BY CREATORS SYNDICATE, INC.

Tagged with: