Why Ebay should not pay Louis Vuitton
If you had bought a can of tomato sauce from the supermarket and fell ill after eating it, would you be going after the supermarket or the manufacturer of the sauce?
The Ebay vs LV case demonstrates the clash between the interests of intellectual property owners and online intermediaries. No doubt allowing manufacturers to enforce their trademarks and copyrights would ensure a wholesome system of intellectual property rights, but extending the responsibility of implementing these rights to online intermediaries would be tantamount to imposing an extra burden on them to function like copyright cops – which is clearly beyond their job scope since they merely serve as mediums for consumers to buy and sell the designer bags.
Applying that to the case at hand, compelling eBay to enforce copyrights would not solve the problem of counterfeits – the essence of this argument is captured in a particular statement made by eBay in a press release issued after the ruling, “ If counterfeits appear on our sites we take them down swiftly, but today’s ruling is not about our fight against counterfeit[s],” – indeed, the issue in this case is not about combating fake goods but rather, whether manufacturers have the right to prevent consumers from selling pirated versions of their goods, and whether online intermediaries ought to bear the legal responsibility for regulating site activities.
In response to the abovementioned issue, it is obvious that the French court’s ruling against eBay would place unreasonable liability on the latter to police itself, for eBay is merely a transaction facilitator, not a retailer. With the existence of such liability, the jurisdictions in which eBay operates would compel it to increase its policing activity. A direct ramification of that would be gargantuan losses incurred – for regulating site activities is costly, and eBay thrives on countless transactions run entirely by software. Self-policing is a labor-intensive business, which means that eBay’s profitability would be damaged significantly if policing were made mandatory.
Also, even if the ruling succeeds in protecting LV’s interests, it would most likely have negative implications on other companies which use the French eBay for publicity as well as individuals who are accustomed to selling their goods on the site – if eBay has to enforce LV ’s trademarks and copyrights, these costs will be passed onto LV customers. In addition to that, other big brands might follow suit in the name of upholding their reputation, adding onto the burden of sellers and buyers at eBay. That would eventually lead to eBay users ditching the site.
Hard cases make bad law - if eBay loses its appeal, the French court’s ruling could set a disturbing precedent for eBay’s worldwide operations and manufacturers’ ability to control the sales of their products. Other online intermediaries would most likely be required by law to follow the same standard as well, and that might lead to a sharp decrease in the usage of such sites once users find that they are unable to cover the trademark and copyright costs. If the ruling translates into a new standard for online intermediaries, internet organizations would have to alter their business practices to remove user submissions that could flout the law – this would inevitably discourage selling and buying online and thus, dampen the growth of websites which have built their success on the participation of their users.
So should the middleman a.k.a supermarket be opening up every can and pack to make sure every product they sell is authentic and safe?
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