Brand owners enraged by eBay's controversial campaign to amend EU law
Brand owners have today come out in force to protest against an action that they say is a deliberate attempt by eBay to confuse consumers and EU policymakers. Several brand owner groups have told WTR that, in its campaign to amend EU competition law, eBay is misrepresenting the legitimate fight against counterfeits as a way of stifling all internet trade.
eBay has this week contacted UK private sellers to argue that it is "under threat" from brand owners who, it alleges, are trying to "block the sale of their products on online marketplaces". The website adds that "brand owners argue that their objective is to prevent the sale of counterfeits on eBay," then encourages the 14 million UK users to sign a petition to amend the EU Vertical Restraints Regulation (2790/1999).
Frustratingly, these are two very different issues, says Ruth Orchard, director general of the United Kingdom's Anti-Counterfeiting Group (ACG). "This is an attempt to confuse counterfeiting with selective distribution," she explained. John Anderson, chairman of the Global Anti-Counterfeiting Group, added that eBay risks "enraging" brand owners with this action.
eBay's statements seem to undermine the legitimate fight against the sale of counterfeit goods. In a recent report, eBay alleges that "to divert attention from the motives for their strategy, entrenched manufacturers publicly attack the 21st century market, seeking to unfairly characterize internet platforms that they do not control as nothing more than a distribution channel for counterfeits". But brand owners disagree that they are overstating the problem. According to Guido Baumgartner, chair of MARQUES, "a University of Mainz survey found that one particular product had an 86% fake rate on eBay". "Few people doubt that there are very significant quantities of counterfeit products being offered on eBay sites," Tim Behean, general counsel, group intellectual property at adidas, told WTR yesterday.
Notwithstanding brand owners' ire over eBay's apparent conflation of issues surrounding counterfeiting and distribution methods, there is also a great deal of concern over eBay's attempt to amend European law on selective distribution. In a statement issued to WTR, eBay explained: "We are trying to amend the EU Vertical Restraints Regulation (2790/1999) which governs the conditions under which brands and manufacturers can enter into vertical agreements with their retailers." This in itself could harm some brand owners' operations, said John Noble, director of the British Brands Group. "Some of our members' business models depend on selective distribution," he explained. "The whole point of selective distribution is that the producer is adding something of benefit to consumers, such as additional advice or services." Some manufacturers must distribute their products in a controlled manner in the interests of safety. For example, car part manufacturers are increasingly concerned that airbags which contain explosives and are sold on eBay are sent to the buyer using the standard postal service."Brands have engaged in a lawful practice of specifying where their goods can be sold and how they are distributed," commented Orchard. "This is perfectly legitimate protection of their trade."
One of the most worrying aspects of eBay's latest campaign is that it will confuse not only consumers but also EU policymakers. "The real danger here is that policymakers will get the wrong end of the stick and make bad policy," predicted Noble. "Policymakers look for evidence when making decisions and the evidence eBay is presenting them with is actually smoke and mirrors." Baumgartner hopes that EU lawmakers will be aware of the strengths and weaknesses of statistics and eBay's "trick" of using "questionable data to trigger this petition".
The motive behind the action itself is open to debate. Some observers suggest that eBay may be clutching at straws after having come under fire for its policy towards counterfeit sales. In its recent judgment in L'Oréal v eBay, the UK High Court could not hold eBay jointly liable for infringement over the sale of counterfeit L'Oréal products on the online auction platform, but did declare that "it would be possible for eBay Europe to do more than they currently do", before outlining (in Paragraph 277) 10 suggestions. The European Court of Justice is yet to answer questions on this matter which have been referred from courts across the European Union. But the European Commission is trying to reach agreement between brands and the e-commerce industry on voluntary standards for tackling the issue. Although some websites are supportive, eBay is objecting to the plans. "Perhaps their new campaign shows that they feel under pressure on the counterfeit issue," suggested Behean.
Brand owner groups will be hoping to build on this pressure and will be taking steps to ensure that rights holders' views are considered. "We're braced for eBay's campaign to achieve some level of policy influence," said Noble. "We'll be making sure that the true picture is presented."
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