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SAY SUJINTAYA
There have been a number of cases brought against eBay in relation to the sale of counterfeit goods via the popular auction website.
The rulings on these cases appear to have been polar opposites with eBay found not guilty by the US Federal Court but in two separate French court cases, guilty as charged.
In the US, Tiffany & Co filed suit against eBay in 2004 when investigators discovered that only five percent of more than 186 items sold on eBay were authentic Tiffany jewelry. However, on July 14, 2008 the US Federal Court ruled that eBay was not liable for direct or contributory trademark infringement, unfair competition, false advertising or trade dilution.
Of note is that eBay was not guilty in the same manner as an employee or the owner of a store selling counterfeit goods. This is because eBay never physically possesses the goods on its website, nor does it actually sell the goods to buyers. Furthermore, the court found that a general knowledge that counterfeit were being sold though its website did not mean that it knew which particular sellers were selling counterfeits. In fact whenever eBay was put on notice that a particular sellers was selling counterfeit goods, it always took steps to remove the listing and suspend the service for such seller.
Across the Atlantic, in a case brought before the Paris Commercial Court, a decision on 30 June this year found eBay liable under the French Civil Code for negligence and omissions in allowing the sale of counterfeit goods on its website. However, in a previous case against eBay, the Troyes High Court had found eBay guilty of contributory infringement based on trademark infringement provisions rather than civil liability provisions. In this case eBay was charged with contributory infringement for allowing the sale of counterfeit Hermes bags in one of its online auctions.
It is this concept of contributory infringement, also known as secondary infringement, that is interesting. Usually contributory infringement is applicable when companies knowingly facilitate offenders' counterfeiting or sale of counterfeits as co-conspirators and they are held jointly responsible for the infringement.
The French court ruling turned on whether eBay was aware of the sellers' illegal conduct and whether it had responded in a timely fashion, if at all. eBay claimed that its Verified Rights Owner (VeRO) feature, which allows retailers to report instances of infringement, exceeded the company's legal obligations and was more than adequate in addressing any counterfeiting issues. The court, however, disagreed, finding VeRO insufficient in authenticating products and informing users of the legal consequences of selling or purchasing counterfeit goods.
Claims similar to that of Hermes have been filed against eBay in other jurisdictions. Meanwhile, in France, Christian Dior Couture and Louis Vuitton brought legal action, urging eBay to police its auctions more effectively, after losing US$40 million to infringers. In the European Union, L'Ore{aac}al brought suits in Germany, Belgium, Spain, France, and the UK, demanding eBay be held accountable for contributory infringement based on its commissions profit from counterfeit cosmetics sales.
What is the difference between the US and French cases? In general terms, both French and US courts have rejected eBay's contention that it is simply a medium for advertisements placed by members and has no responsibility over what is being sold. However, where the decisions differ is that the US court concludes that eBay is already taking appropriate measures to suppress the sale of counterfeit goods, while the French court views that eBay is not doing enough. How does this link in with the bricksand-mortar world of Thailand?
At present Thailand is still far behind Europe and the US in terms of having an online shopping culture and the vast majority of Thais do their shopping in the real world. This is most certainly due to internet access not yet being as pervasive as in Europe and the US. However, the aforesaid cases may help to point the way in dealing with the problem of ''real'' world sales of counterfeit goods for which Thailand is well known.
Many shopping malls in Thailand are notorious for the availability of counterfeit goods and while some of the shops are raided from time to time, the landlords have not been held responsible as contributors to the problem. Under Thai law, in certain cases relating to gambling offences, landlords have been found guilty as supporters or co-conspirators under the Gambling Act and Penal Code.
However, a similar concept under the Trademark Act has not yet been tested in respect of landlords of shopping centres whose tenants sell counterfeit goods. If we were to apply the French stance to the situation in Thailand, it would be very difficult for the owners of well known malls to deny any knowledge of the pirated software, movies, music, handbags, watches, etc, sold by many tenants and, thus, the owners would be subject to penalties.
However, following the US standard, simply being aware that counterfeit goods are being sold by some shops in a mall would not be sufficient. You would need to be able to prove that owners knew which shops were selling the counterfeits and yet took no action.
Although it has not yet been tested in Thai court, perhaps a way to get around this would be simply for the rights owners to issue notice to the landlords pointing out which of their tenants are involved in selling counterfeits. Failure of the tenants to take action may then open cause for the rights owners not only to take action against the shops but also the landlords.
The courts in some jurisdictions, such as China, have already begun to embrace this concept of contributory infringement, whereby brand owners are empowered to pursue claims against landlords who, unlike vendors of counterfeits, had permanent addresses and commercial reputations to maintain. In China, the landlord of Beijing's infamous Silk Market was found guilty of contributory infringement for permitting tenants to sell fake Burberry, Chanel, Gucci, Louis Vuitton and Prada merchandise. Let's hope the same attitude is adopted by the Thai courts.
Say Sujintaya is a partner with the intellectual property practice group of Baker & McKenzie.
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