Understanding the eBay VeRO Program

Let’s start with some random trivia. What was the first item ever sold on eBay? The answer: a broken laser pointer. When the founder of eBay sent a message to the buyer asking him whether he understood the pointer was broken, the buyer responded, “I’m a collector of broken laser pointers.”

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Collectors love eBay because it allows them access to items them may never otherwise be able to purchase. Bargain hunters love eBay for the ability to buy items at a much lower cost than normal retail. But, sometimes costs are lower because the goods infringe on someone’s intellectual property. Section 512(c) of the DMCA provides a safe harbor from liability for “online service providers” (OSP), like eBay, as long as the OSP: (1) does not receive a financial benefit directly attributable to the infringing activity; (2) is not directly or circumstantially aware of the presence of infringing material; and (3) promptly takes steps to remove purported infringing material upon receiving notice from copyright owners. To streamline this process, eBay created the Verified Rights Owner (VeRO) program. It allows intellectual property rights owners to request removal of listings that infringe on their intellectual property rights, including copyrights, trademarks, and patents.

 

How VeRO Works

First, eBay requires that the intellectual property rights owner register with VeRO. They must send proof that they own the specified intellectual property. Once the membership is complete and ownership is documents, the rights owners can report infringing listings by completing a Notice of Claimed Infringement (NOCI). eBay provides the NOCI form in an easy fillable online document to print and submit via email or fax. eBay will generally remove an item within twenty-four hours of receiving the NOCI due to DMCA safe harbor requirements. VeRO is not an automatic service, so rights owners are responsible for finding their own infringements on eBay.

 

How Sellers can Rebut NOCIs

Once a listing is removed, he creator of the listing is notified. If there is a dispute regarding the removal, eBay encourages the sellers to resolve the problem directly with the rights owner. But, the sellers can also reach out to eBay if the rights owner’s email address cannot be located, if the rights owner has not replied after seven days, or if the rights owner did reply but the seller still believes that reporting the listing was a mistake. If the rights owner does agree that they made a mistake, the rights owners must email eBay in order for the seller to relist the item.

A counter-notice is also available to combat wrongful removals. The counter-notice allow sellers to request eBay to reinstate the post. Once a valid counter-notice is received, eBay will provide a copy of the notice to the VeRO member. eBay will also re-list the post if the rights owner does not file a court action against the seller within ten business days.

 

Does VeRO work?

Rights holders generally seem to view the VeRO program positively. Completing a NOCI is quick and easy. However, there are significant drawbacks to the program, which cause both rights owners and sellers to be critical of its effectiveness.

Rights owners believe that sellers can circumvent the VeRO program. Sellers of counterfeit goods can list the items using a “Buy it Now” option or as a one-day auction to sell items before the postings are found and reported. Sellers can also try to sell the same items under a different name even if their original post is removed leading to a game of whack-a-mole. Another problem stems from the VeRO system itself, which depends in part using the picture displays to identify possibly infringing items. Sellers post pictures that do not show the actual items being sold, which makes it harder to police. These issues become more complex since it is nearly impossible to monitor the millions of eBay users. Many sellers believe that eBay could, and should, be doing a better job of removing infringing items from the site on its own. Lawsuits brought against the site suggest that many luxury brands are unhappy with the extent of eBay’s efforts to combat counterfeit goods. (See, Hendrickson v. Ebay, Inc., 165 F. Supp. 2d 1082 (C.D. Cal. 2001); Tiffany (NJ) Inc. v. eBay, Inc., 600 F.3d 93 (2d Cir. 2010)).

Sellers also have concerns with the VeRO program. Rights owners are given a lot of power. Reported listings may not consider items that are lawfully bought and resold under the first sale doctrine. eBay puts the burden of proof on sellers to prove a lawful purchase, but this may be difficult if items were purchased a long time ago. Additionally, sellers question whether there is proper assessment of the validity of the claim when VeRO members submit a NOCI form. Moreover, because sellers do not have a trademark counterpart to the counter-notice option under the DMCA, rights holders have incentive to remove items claiming trademark infringement as opposed to copyright infringement. By doing so, the rights holder circumvents copyright law and effectively prevents the seller from sending a counter-notice.

Although the VeRO system is a step in the right direction, it is currently flawed. But striking the balance between the interests of eBay, rights holder, and sellers is not an easy task. I have represented sellers and right’s owners, so I may keep my thoughts to myself on this one. But what do you think; does the system work? Let us know if you a seller or a rights owner?