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Beware of blanket eBay take-downs

eBay’s VeRO System

eBay has a listings take-down programme called the Verified Rights Owner Programme (“VeRO”) which is available to rights owners in order to attempt to reduce the amount of counterfeit and infringing products sold on their platform.  Under this programme, the rights owner sends a ‘Notice of Claimed Infringement’, informing eBay that their rights are being infringed by a particular seller and requesting that eBay removes the relevant listing(s).  Following receipt, eBay considers the request and will ordinarily send an e-mail called a “Violation Notice” to the seller notifying them that the listing has been removed and providing the reasons for the removal.

The question arises as to whether the issue of a ‘Notice of Claimed Infringement’ constitutes a ‘threat’ which may be actionable if groundless?

This was considered in the case of Cassie Creations Limited v Simon Blackmore and Mirrorkool Limited [2014] EWHC 2941 (Ch).  In this case, both parties made cake stands and sold them on eBay.

Mirrorkool sent a ‘Notice of Claimed Infringement’ to eBay, which subsequently removed several of Cassie Creations’ products from its website. The ‘Notice of Claimed Infringement’ was based on an allegation of community design right infringement.

Cassie Creations believed the claim to be without merit and, after a period of time, once again offered their product ranges on the eBay website. Cassie Creations stated that it did this after a great deal of thought, given that multiple claims of infringement can lead to permanent revocation of a seller’s rights to use eBay’s services.

Cassie Creations subsequently sued both Mr Blackmore (the Director of Mirrorkool) and Mirrorkool for ‘unjustified threats’.  Mr Blackmore and Mirrorkool in response made an application to strike out the case on the basis that there were no reasonable grounds for bringing the claim and/or that the claim was an abuse of process.

At the interim Hearing the judge, Richard Spearman QC, sitting as a Deputy Judge of the High Court held:

  1. There is no material difference between design rights and trade mark law in this area.
  2. Whether something is a “threat” is an objective test, so it is not relevant if eBay construes the ‘Notice of Claimed Infringement’ as a threat.
  3. It does not matter (for the sake of determining whether the ‘Notice of Claimed Infringement’ is a threat) if the alleged threat is by the rights owner or a third party (e.g. eBay or a rights owner’s legal advisers).
  4. There was no reason not to follow the earlier decision in Quads 4 Kids v Campbell [2006] EWHC 2482 (CH).  In that case, Justice Pumfrey said that unsupported and unchallengeable allegations of infringement of registered rights of this description are potentially an exceedingly damaging abuse of registered rights” and there was arguably a threat in the notification to eBay”.  The test to be applied was whether or not a reasonable person such as the party allegedly threatened would have understood that he might have been subject to infringement proceedings at some point in the future.  Since Quads 4 Kids could potentially suffer damage as a result of being excluded from eBay and as Mr Campbell had not demonstrated an ability to compensate for such losses an interim injunction was granted restraining Mr Campbell from carrying out further acts to prevent the sale of Quads 4 Kidsproducts on eBay.
  5. Not much had changed in the VeRO system since Justice Pumfrey made his decision and it would be inconceivable for eBay to check each and every removal request.  As a result the question of whether or not a ‘Notice of Claimed Infringement’ was a threat was, as Justice Pumfrey said in Quads 4 Kids, a seriously triable point” and should be considered at a full trial.
  6. Consequently, the strike-out application by Mr Blackmore and Mirrorkool was rejected and the case proceeded to assess whether or not an unjustified threat of infringement had been made by issuing a VeRO notice.

Andrew Stone, an Associate in the Intellectual Property Group said: “While this case is still awaiting trial, it is clear which way the judge was leaning in the preliminary hearing.  Rights owners should be aware that the removal of a listing from eBay is likely to be treated by the courts in England and Wales as a threat of litigation against the seller and so they should not be removing items from such trading platforms unless they are confident that they infringe.  This is especially true when dealing with larger sellers, competitors and/or retailers on eBay as they are more likely to take action if their items are removed without justification.”