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Bogus Brands and the Internet
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According to Tiffany, a study of certain Tiffany items for sale on eBay revealed 73% of the jewelry was counterfeit and that only 5% was genuine. In its lawsuit, the retailer says the auction site is “infested with many thousands” of poor quality counterfeit Tiffany items.
Further, Tiffany contends that eBay, by providing a forum for the sale, has made it easier for counterfeiters to sell fake goods and that it actually promotes such sales. Tiffany cites promotions on eBay’s greetings page that list a variety of brand-name goods. “Moreover, eBay has arranged with Yahoo and Google so that an Internet user who types in ‘Tiffany’ is greeted with a ‘sponsored link’ for eBay,” Tiffany says in the suit.
Tiffany says eBay should know that the large quantities of Tiffany products it lists are almost certainly counterfeit because there are limited channels of trade for genuine Tiffany merchandise.
EBay also has a financial interest in promoting the sale of counterfeit items, Tiffany alleges. “Tens of thousands of counterfeit items are sold through the eBay web site each year, and eBay charges hundreds of thousands of dollars in fees in connection with the sale of this counterfeit merchandise on an annual basis,” Tiffany says in the suit.
The eBay spokesman won’t discuss the Tiffany suit other than to say: “We’re very disappointed that they filed that suit given that we’ve cooperated with their brand- protection efforts.”
For its part, eBay says it has no way of knowing whether an item listed on its site is counterfeit unless contacted by the brand owner. “We are not a retailer, we’re not the ones doing the selling, and we never at any point during the transaction process have the item in our possession,” the spokesman says.
EBay wants to do whatever it can to help copyright, trademark and intellectual property owners protect their rights, the spokesman says. The auction site conducts daily searches for listings using words such as “replica” or “looks like” that could indicate possible infringement of a trademark or copyright. “It’s against eBay policy to say ‘I’m selling this handbag. I’m not sure if it’s a Gucci or not. It could be but it might not be,’” the spokesman says.
And eBay says it is not feasible for it to become expert in all of the products, trademarks, copyrights, patents, publicity rights, licenses and pricing structures of all rights owners. “Until the copyright owner lets us know that something looks like an infringement of their copyright, we’re not going to take it down,” the spokesman says.
Under eBay’s Verified Rights Owner program, brand name owners can have fraudulent listings pulled from eBay by filing a notice of copyright infringement. EBay won’t disclose the number of notices filed, but the program has about 710,000 participants. However, filing a notice can be time-consuming, especially if the brand name owner has uncovered a large number of listings of counterfeit products.
If an item is identified as counterfeit, it’s removed from the site, and often, the seller is suspended. In some cases, eBay takes the information to law enforcement officials. “We can and do work with law enforcement on a regular basis,” the spokesman says.
But auction sites are only one means counterfeiters use to sell items online. Many set up web sites of their own. One high-profile case involved a site named fakegifts.com, operated by Mark E. Dipadova and Theresa G. Ford.
Both Dipadova and Ford in 2001 pleaded guilty to selling counterfeit Rolex, Cartier and Tag Heuer watches; Mont Blanc pens and Oakley Sunglasses through fakegifts.com and other sites. Dipadova was sentenced to 24 months in federal prison and ordered to pay $138,265 in restitution to owners of the trademarks.
Dipadova and Ford made no effort to hide the fact they sold counterfeit goods, says Dean Eichelberger, assistant U.S. Attorney for the District of South Carolina, who prosecuted the case. “It was fairly obvious in the name of the web site,” he says.
So brazen was Dipadova that he told a radio interviewer that even though he knew he was violating a company’s trademark, he was making too much money to stop. The fakegifts.com site today proclaims that “The largest replica site on the planet is coming back!!! with even more products than before.” Eichelberger says the message has “been up for some time.”
The Senate’s attention
No one expects to find an easy answer to counterfeit fraud, on or off the Internet. But lawmakers and law enforcement are focusing more attention on the problem as evidence mounts that the proceeds of counterfeit fraud are funding organized crime and terrorist groups.
Indeed, the U.S. Senate Homeland Security and Governmental Affairs Committee in May held a hearing on the link between the sale of counterfeit goods and organized crime and terrorist groups. The committee chair, Sen. Susan Collins, R-ME, said she expects the hearings to lead to increased efforts by the government and law enforcement “to close off this rich avenue of terrorist financing.”
The International Chamber of Commerce also has launched a campaign to combat counterfeiting worldwide. And countries whose manufacturers and brand name owners are being victimized by counterfeiting are putting pressure on the governments of countries, such as China, where most of the fake goods are manufactured.
But chasing down the counterfeiters is not enough, Loomis says. “Too many consumers just want the brand name, regardless of if it’s real or not,” Loomis says.
A recent Gallup poll found that 13% of 1,304 adults surveyed said they had purchased or downloaded an imitation or counterfeit product in the past year. Of that group, 52.6% said they knew the product was counterfeit prior to the purchase.
That same poll indicates that consumers might think twice about buying fake products if they knew where the proceeds go. More than 95% of those who bought counterfeit goods said they would not do so if they knew the money was going to a terrorist or organized crime group. “We need to attack not only the problem, but also the desire to buy,” Loomis says. l