THE AB SEIZE OF ONLINE COUNTERFEITS

By Rachel Dawson, Senior Solicitor, James & Wells Intellectual Property Catching the distributor of counterfeit goods is a constant headache for the fashion industry. And, the ability for a them to now reach an international audience online has only widened the problem.

Given the difficulty in locating the distributor behind online counterfeits in an electronic world, a number of leading fashion names (including Louis Vuitton, Hermès, Tiffany and Rolex) have brought cases against eBay for the sale of counterfeit goods on its various sites, with varying success.

Mirroring this trend, a case has now been brought in New Zealand against TradeMe for the sale of AB KING PRO exercise machines on its site. The case won't be heard until next year, but the decision will impact greatly on the fashion industry in its struggle to prevent the sale of counterfeit goods online. How then have courts overseas handled the many eBay cases? And, could they be a guide to the direction New Zealand will take in the TradeMe case?

Earlier this year in April, a German court upheld a claim that eBay had not done enough to prevent the sale of counterfeit Rolex goods on its site. The same decision was made in a French commercial court at the beginning of July in a case brought in relation to Louis Vuitton and Hermès counterfeits. However, eBay had better success in mid-July, when a New York court held that it was not liable for sale of counterfeit goods, particularly since it immediately removed the listings after being notified by Tiffany Inc.

In August, eBay had success again when a Belgian court said that it was not liable for the sale of counterfeit Lancôme goods on its site. However, L'Oréal has said it will appeal this decision and will continue to pursue four further cases that are yet to be heard in Europe.

All these cases have focused on the degree of control eBay had over the goods being sold on its site. In the past, decisions in similar cases had also focused on whether editorial control had been exercised by the relevant online service provider. Many countries have now amended their legislation to recognise this principle, including New Zealand, which recently introduced the Copyright (New Technologies) Amendment Act 2008.

The New Zealand legislation also requires online service providers to have a policy for terminating repeat infringers and to act quickly to remove or disable access to infringing goods. However, the Act has not yet come into force and is therefore unlikely to apply to the bulk of TradeMe's alleged infringing conduct.

Given the direction of the courts and relevant legislation, the following factors are likely to be relevant in a claim against an online marketplace for sale of counterfeit goods: Has the online service provider got a policy for terminating repeat infringers? Has the copyright owner notified the online service provider of the infringing goods being sold on its site? Has the online service provider responded to the notification by removing or disabling access to the infringing goods in a timely manner?

Until the TradeMe case is heard, the definitive answer to the question of online marketplace liability in New Zealand will not be known. In the meantime, the best advice for New Zealand copyright owners is to be alert to the growing market for online counterfeits and not to rely on online service providers to act as a lookout for you.