Legal Issues

by Mike Masnick


Filed Under:
dmca, first sale, price fixing, takedown

Companies:
ebay, innovate



eBay Strikes Back, Sues For Frivolous DMCA Takedowns

from the good-for-them dept

For quite some time we've seen companies try to make bogus intellectual property claims against people reselling their products on eBay. For example, a company making shampoo once claimed that you couldn't resell its bottles online -- even when legally purchased. The companies always claim that only "authorized" resellers are allowed to sell their products, and they must do so at a specific price. Last year, when the Supreme Court changed rules about whether manufacturers could demand retailers abide by a specific price, it kicked off speculation that we'd see more such cases. In fact, that's exactly what happened. In one case, a company named Innovate! Technology claimed that someone selling their products on eBay violated their intellectual property (including patents, trademarks and copyright!). The real complaint, of course, had nothing to do with intellectual property, but that this seller was selling below the company's official pricing. This seemed pretty ridiculous already, but these types of cases are designed to scare off small time sellers who don't have big legal guns to back them up.

However, Innovate appears to have made a huge strategic error that has brought some big legal guns into the case, and they're clearly pointed at shooting Innovate's use of the DMCA down. Greg Beck writes in to note that while the case was directly between Innovate and the eBay seller, Innovate made the mistake of pushing to get eBay involved in the case. Normally, eBay just does what's required of it in DMCA cases and gets out of the way. However, now that eBay is involved, it got involved in a big way. It's fighting back against Innovate, claiming that Innovate has been filing bogus DMCA requests and so now eBay is seeking damages, attorney's fees and an injunction preventing Innovate from filing any more DMCA notices to eBay. In other words, it's trying to make an example of Innovate. Hopefully it works, and others pursuing this same strategy of trying to stop legitimate competition through bogus DMCA notices will think twice before continuing.

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  • icon
    GeneralEmergency (profile), 7 Jan 2008 @ 3:30pm

    Let's not be too proud of eBay here...

    Yes, to their credit, they are doing the right thing, but they are also doing it to proactively keep operating expenses down in the future. DMCA notices take touch labor to process and document.

    Darn. I must have gotten up on the cynical side of my bed this morning!

    reply to this | link to this | view in chronology ]

  • identicon
    Hellsvilla, 7 Jan 2008 @ 3:38pm

    oooh

    FOR GREAT JUSTICE!

    reply to this | link to this | view in chronology ]

  • identicon
    dualboot, 7 Jan 2008 @ 3:39pm

    what's the point...

    ... of limiting sales of your product to within the full retail segment? Innovate received their cut when the reseller bought it, and allowing auction sales generates more unit sales, and hence more profit dollars. People who would not purchase @ full price at all, will buy an auction. It's how I got about 25% of all my high-priced gadgets (which I would not have purchased otherwise).

    Some other companies even honor warranties on their products sold through internet auctions, beginning on the sale dato. This teaches me to keep shopping those brands, and not shop Innovate.

    reply to this | link to this | view in chronology ]

    • identicon
      Boost, 8 Jan 2008 @ 10:11am

      Re: what's the point...

      Because if retailers have to drive their price down to compete with Ebay acutions then they will be less willing to bring that product to market for the supplier...eventually putting the supplier out of business. Some suppliers can compete with the broad Ebay market, but others with higher costs can't. Most of the time the suppliers combat this by only offering product warrentees through authorized retailers. Really, it's what keeps smaller industries, such as the bicycle industry afloat.

      reply to this | link to this | view in chronology ]

  • identicon
    Lucretious, 7 Jan 2008 @ 3:52pm

    The old phrase "I fear we have awoken a sleeping giant" somehow seems appropriate here

    reply to this | link to this | view in chronology ]

  • identicon
    Urza, 7 Jan 2008 @ 4:02pm

    Oh man.

    All I could do as I read this was laugh. Someone just made a huge mistake. They're gonna get screwed.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 7 Jan 2008 @ 4:13pm

    Yet another example of people bastardizing the IP laws to control the market and the flow of their product within it.

    Kudos to ebay, and may ebay rend the flesh from the bones of it's enemies!

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 7 Jan 2008 @ 4:48pm

    Innovate! Technology

    Don't you just love how some companies choose a name that is actually the opposite of what they really do in order to hide their true nature?

    reply to this | link to this | view in chronology ]

  • identicon
    sylvester, 7 Jan 2008 @ 6:20pm

    EBay is not an IP hero

    Just because EBay is trying to save a buck by suing Innovate! Technology. EBay still pulls auctions at the behest of trademark owners and copyright owners as official EBay policy. Let's keep things in perspective.

    reply to this | link to this | view in chronology ]

  • identicon
    Idleline, 7 Jan 2008 @ 6:56pm

    Re: Let's not be too proud of eBay here...

    What a horribly poor assessment. The operating expenses revolving around honoring DMCA takedowns is nothing compared to the loss of business from eBay sellers. eBay has been under tremendous pressure to improve user experience, which affects user retention rates tremendously, which affects the number of listings, which affects the growth of the company, which affects the stock price, etc...

    eBay has never been under pressure for their operating expenses. Capital spending, if anything, is the only hot topic on that side of the balance sheet.

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 7 Jan 2008 @ 7:19pm

    If Ebay wins, I'ma start selling CD and single songs on Ebay for $0.01 cent :D

    I wonder what will the music industry say or do?

    reply to this | link to this | view in chronology ]

    • icon
      PaulT (profile), 8 Jan 2008 @ 7:38am

      Re:

      #10 - that's a pretty dumb comment and nothing to do with the case at hand. The legal case here is somebody reselling legally purchased goods, just at a price that the manufacturers don't like (even though they've already been paid). You're on about piracy and not paying the creators of the goods - very different and you'd rightfully be shut down if you tried it.

      To everyone else talking about how eBay's only looking after #1 - that's fine. Hopefully this will help set a precedent that people who issue DMCA notices really do have to be sure that they own the relevant copyrights and reduce bogus compliants for everyone. It will reduce eBay's costs, but will also help many other industries who have to waste money on this kind of garbage.

      reply to this | link to this | view in chronology ]

  • identicon
    Bobb E. Bob, 7 Jan 2008 @ 10:01pm

    Ebay does what's best for Ebay.

    reply to this | link to this | view in chronology ]

  • identicon
    Bob E. Bob, 7 Jan 2008 @ 10:21pm

    Ebay does what's best for Ebay.

    Errr. Someone names Ebay as a co-defendant? Well, that's ... suicidal. Ebay understands the way the US legal works - $$$=might=right. You simply can't fight an 800 pound gorilla unless you're a 900 pounder. If one decides to challange the legality of Ebay's actions, that [poor misguided] one better make things right with his God and get ready for his [oh, it hurts just thinking about it] due.
    A giant corporation [mis?]uses the legal system to protect its interests - what's so newsworthy or laudable 'bout that?

    reply to this | link to this | view in chronology ]

  • identicon
    Bullethead, 8 Jan 2008 @ 12:33pm

    Getting It Right

    A people should not be afraid of there government, a government should be afraid of there people.

    reply to this | link to this | view in chronology ]

  • identicon
    Bill, 8 Jan 2008 @ 3:53pm

    #13

    I think you're mistaken. #10 said nothing about the music being illegally acquired. Whether it's the music industry or a shampoo maker, their compensation should end when the item has been legally purchased. What the user does with the product is their own business. If it's legal to resell a bottle of shampoo then it should be legal to resell your CDs and legally acquired tracks at whatever price you choose. #10 didn't say his tracks would be ripped or from p2p, so any claim of infringement is bogus. If you can't see why this ties in with the Ebay case then think a little harder.

    reply to this | link to this | view in chronology ]

  • identicon
    Yelky business, 16 Jan 2008 @ 6:19pm

    bogus baloney and bs

    Anytime I purchase something legally the maufactures right to get additional compensation ends. Weather I pay one penney or $200.oo bucks for something, when I purchase it, keep my receipts, it's mine..I can choose to do with it as I please regardless of X)???? manufactuer.
    I may give it away, resell it or burn it..that's my decision and my right as an American. It no longer belongs to X)???? manufactor or *^?>

    reply to this | link to this | view in chronology ]

  • identicon
    Ewan Lamont, 24 Jan 2008 @ 1:13pm

    bogus DMCA

    I have suspected for some time that some merchants of big, nay inflated, ticket items have been getting eBay auctions pulled to prevent consumers seeing the real (low) price levels set by market demand, not manic hype and advertising.

    reply to this | link to this | view in chronology ]

  • identicon
    Carol, 24 Jan 2008 @ 2:36pm

    VERO

    As a very small seller,I have had items pulled as I used the items legal name.It is mine after I buy it.I can understand the large manufacturer being upset with me for selling10,50.or whatever larger amounts to sell as that is a lot of merchandise being sold ,or at least more than 1.But when it is just a lowly seller with one item of a large manufacturer(and seller having already paid the purchase price,when they bought it or received it as a gift or whatever)I cannot understand the reason for pulling their item,unless it was being sold by the seller in numerous quantity,at a way,way lower price than they sell the new unused product at.I make very little money doing this,and have been robbed to be able to sell some of my very best items where I might actually have made a decent price for a change!

    reply to this | link to this | view in chronology ]

  • identicon
    Carol, 24 Jan 2008 @ 2:36pm

    VERO

    As a very small seller,I have had items pulled as I used the items legal name.It is mine after I buy it.I can understand the large manufacturer being upset with me for selling10,50.or whatever larger amounts to sell as that is a lot of merchandise being sold ,or at least more than 1.But when it is just a lowly seller with one item of a large manufacturer(and seller having already paid the purchase price,when they bought it or received it as a gift or whatever)I cannot understand the reason for pulling their item,unless it was being sold by the seller in numerous quantity,at a way,way lower price than they sell the new unused product at.I make very little money doing this,and have been robbed to be able to sell some of my very best items where I might actually have made a decent price for a change!

    reply to this | link to this | view in chronology ]

  • identicon
    Jim Page, 27 Jan 2008 @ 10:10am

    Same here

    I have also had several large Co. items hanked from EBAY for the simple fact that the Co. in Question does not like to see their products resold. I own the product I payed for the product, they have already made their money but they are not satisfied with that. Hell Why not stop stamp, record and figuine collectors from buying and selling. These items mostly fall under collector's items ie: old software and games that Companies like Microsoft do not even support any more. Time for them to get real!
    Jim

    reply to this | link to this | view in chronology ]

  • identicon
    FINK, 18 Feb 2008 @ 4:57pm

    EBAY AND THERE FEES SUE EBAY

    I DONT CARE BOUT EBAY HOPE THEY DO GET SUED IND LOSE THERE SHIRT..I HAVE PAID UP AND OVER 500$ A MONTH IN EBAY FEES...AT TIMES MORE THAN MY SALES...IS THIS THE CURE .99 CENT AUCTIONS AND HIGH SHIPPING..THEY DONT GET A CUT OF SHIPPING DO THEY.??

    reply to this | link to this | view in chronology ]

  • identicon
    askmewhyiwearamask, 20 Feb 2008 @ 11:08am

    sounds like someone's still doing this...

    Like Scientology thinking they have the right to pull down resales of valid e-meters sold by ex-scientologists. That's not 'copyright infringement" that's called PRICE GOUGING.

    some "religion" huh?

    reply to this | link to this | view in chronology ]


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