Earlier today, I was reading a post on Professor Lessig’s blog about a new law in New Zealand that compels ISPs to terminate someone’s internet service if they are simply accused of copyright infringement. Though I have long followed the issues surrounding warrantless wiretapping and other national security-related breaches of civil liberties, I took solace in the fact that we live in a country where our innocence is presumed until we are otherwise proven guilty. Or so I thought…
Just as online video services like Youtube have developed a notification mechanism to be eligible for the Safe Harbor protection from secondary copyright infringement charges, eBay has been using a similar procedure since 1997—a year before the DMCA was enacted.
eBay’s Verified Rights Owner, or VeRO, program allows copyrights holders to notify eBay that an item or listing infringes on a copyright they hold. Without requiring copyright holders to explain the alleged violations they claim to have observed, eBay will promptly remove the listings in question. Rights holders are essentially “deputized” and can have any listing removed; by eBay’s own admission, “eBay cannot be an expert in your intellectual property rights in over 25,000 categories, and cannot verify that sellers have the right to sell the millions of items they post on eBay each day, we need your help in identifying listings which do not appear on their face to infringe your rights.” Perhaps this should come as no surprise, airing on the side of overreaching is more prudent for eBay since the DCMA explicitly states that the Safe Harbor immunity only applies if the online service provider “responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.”
There are certainly circumstances in which a company could legitimately claim copyright infringement. If, for example, a copy of Photoshop were being sold with a picture of an installation CD that was obviously counterfeit, Adobe could file a good faith notification that a pirated copy of its software was being offered on the site. However, amount of power granted to VeRO member leaves the system very prone to abuse.
Companies ranging from high-end electronics-manufactures to the Church of Scientology are allegedly using VeRO to suppress a secondary market for their goods and to squash competition. While there is a counter-notification procedure, as mandated by the DMCA, according to one eBay guide , members wishing to protest their takedown need to undergo an obfuscated process by which they virtually need to “pry it [a counternotice] out of eBays hands. That is tough, eBay doesn’t seem to want to get involved in the counternotice process [sic] .” Furthermore, if the rights holder claims that it is a trademark, not a copyright, that is being infringed upon, eBay will “refuse to forward the counternotice at all”. Scott Pilutnik, an IP lawyer has likened VeRO to a fox having “little incentive to act prudently while guarding the henhouse”.
The process of notifying eBay that an item is infringing is remarkably easy. All a company needs to do is fax this very simple form. After the first complaint is filed by fax, companies are given an e-mail address to speed up the execution of subsequent claims. Unfortunately, this has led to people or groups—who are not copyright holders—using the VeRO process to have competitor’s auctions taken down). While eBay claims to have no tolerance for anti-competitive use of VeRO, just a quick glance at the form will reveal that filing a fraudulent notification would not be very difficult. As one blogger writes, all one needs to do is:
“1 – Purchase a prepaid cell phone with cash at any 7-11.
2 – Download the VeRO application/complaint form here.
3 – Sign up for a dead end email address (yahoo, gmail etc).
4 – Fill out the form and fax it to eBay (use a fax not at your home)
eBay will call the phone the first time you use the VeRO against someone, so never give the number to anyone and always answer it with your ‘Company Name’.”
The sheer amount of time involved and the often-frightening prospect of making statements under penalty of perjury and being embroiled in litigation—particularly against behemoth corporations—serve as deterrent to fighting the takedowns. Just look at how intimidating the counter-notice procedure is compared to the infringement claim form. Especially considering the sheer number of people whose businesses are centered around their sales on eBay, having listings taken down could be financially perilous and leave one feeling like Joseph K. in Kafka’s The Trial. Just three notifications by a VeRO member can result in suspension or termination of an eBay account and infringement claims—even if there is a successful counter-notice—remain on account holder’s record. This is beginning to sound more and more like the law in New Zealand that made me so outraged.
Even though part (f) of section 512 of the DMCA clearly stipulates the consequences of misrepresenting an infringement claim, I have yet to hear of anyone being punished for a false accusation through the VeRO program. This is especially disconcerting when a study spearheaded by the Director of the Intellectual Property Clinic at USC found that:
Thirty percent of notices demanded takedown for claims that presented an obvious question for a court (a clear fair use argument, complaints about uncopyrightable material, and the like);
In addition, we found some interesting patterns that do not, by themselves, indicate concern, but which are of concern when combined with the fact that one third of the notices depended on questionable claims:
Over half-57%-of notices sent to Google to demand removal of links in the index were sent by businesses targeting apparent competitors.
Check out some of the VeRO horror stories at http://www.auctionbytes.com/forum/phpBB/viewforum.php?f=35-.
It is clear that VeRO must be changed to take the rights of sellers into greater consideration. However, until the DMCA is modified, it is doubtful that eBay would make any changes as doing so could make it liable for copyright and other types of IP infringement while the status-quo entitles it to safe harbor protection, albeit while subjecting sellers to a convoluted process.
I’m not surprised that eBay’s VeRO seems so ineffective, but not entirely because of its processes. Rather, it has a lot to do with the nature of the infringing work. Unlike Youtube, where it is possible to verify if that particular song really is by Prince or not, that’s not so much for eBay. All there is to go on is a picture that allegedly is of the product being auctioned. There is no guarantee that the product shown is the product sold. While there have been cases where the auctioner makes it clear that the item is a forgery like the above mentioned taped CD case, I think these are the exceptions. It is more likely that the auctioner would try as hard as possible to make the product seem like a legitimate, non-infringing copy, even if it means posting a stock photo of the product. It’s all about the financial incentive since a “legitimate” copy is worth more. So, how would a legitimately concerned copyright holders determine if the item is really infringing? What about requiring that all auctioners provide an item’s unique product number on most electronic items that would also be logged onto eBay’s internal database?
If you required eBay to provide a unique product number for electronic items, then how would it be verified? Would it be possible to cross-reference that information with the original companies that manufactured the products? I doubt that enough verifying information is available to ensure the quality of the products being sold by private individuals. Some companies, like Macrovision, seem to keep a tight enough hold on infringing products that they monitor their eBay distribution (or at least did in the past…they requested that a DVD player that unencrypted regional and copy-protection coding be removed from sale in 2000). Given that capacity, should the companies be taking the lead with monitoring what gets sold? And where does this regulation stop? If eBay monitors electronic items for authenticity, would they do the same for other potentially counterfeit items? Brand-name handbags and clothing?
A possibility would to have eBay share such information based on serial numbers or something akin to a product code for both electronic and non-electronic items with the companies. Registration would become vital to ensure authenticity. If it ain’t registered, it ain’t authentic- whether used or new.
Brian, I think the obvious but important distinction between eBay and the other ISP’s under DMCA is that eBay has more of an interest in the authenticity of the items exchanged on its site than the other ISP’s. As a result, they have no interest in protecting copyright infringers or granting fraudulent users a lenient counter-notice procedure. Whereas Google and P2P services may actually increase traffic and revenue by allowing infringing content to remain, when an eBay consumer discovers a counterfeit item, (returning…) he or she cuts directly into a large eBay revenue stream–sales fees and profit-sharing arrangements with vendors. Thus, pressure from copyright holders might not even be the primary impetus for eBay’s take-down policy. Their business model depends on a marketplace for high-quality goods that consumers want, and at this point consumers want the authentics.
On that same token, it’s so much harder for eBay to prove that they’re not directly profiting from the activity of users, as Google might argue, because eBay’s revenue does not come solely from advertisements, but profit-sharing on the actual items exchanged within their platform. Consequently, they would have little hope of hiding under the “automatic revenue generating” argument made in our Viacom debate.
Product numbers and serial numbers might be an effective policy for deterring counterfeits. But I’m concerned that it would cost both eBay and eBay sellers far too much. Why has the mechanism of peer-evaluation and quality control (eBay points/reputations) failed in this case?
I think you raise several good points, David. The main issue with the current peer-evaluation and quality control mechanism is that it is very easy to build up good feedback on eBay without actually being a good buyer or seller. There is a common practice of selling or buying very cheap items(that may not even be delivered)–such as ebooks, inexpensive memorabilia, coupons…–to quickly raise one’s feedback level. Though eBay has recently changed some of its policies in attempt to crackdown on this phenomenon–for instance, relegating electronically delivered items to a classifieds marketplace in which feedback cannot be given–this problem still persists. Similarly, people can create multiple accounts (or have their friends or family members use their accounts) and use one account to “purchase” an item listed on another account just so they can leave feedback. Furthermore–and this relates to some of your other points–i think some consumers know full well they are purchasing a counterfeit product and intentionally want the fake product. If someone can get a genuine-looking knockoff Prada purse for a fraction of the price of a real one or a counterfeit, but functioning, copy of Photoshop for $30 instead of $300, they may still be very satisfied with their purchase.
I think the registry of product and serial numbers is a good idea in theory, but am not sure how it would work in practice. How would eBay assemble this registry? Would all companies be willing to contribute to this registry, especially if they seek to suppress secondary markets (perhaps some people avoid eBay because authenticity concerns and buy new products, if there was a greater chance of products being genuine, perhaps they would flock to eBay)? Also, many products on eBay are sold in sealed boxes–how could sellers be expected to break the seals in order to find the serial number?