TradeMe, an online marketplace, has recently been named as a defendant in a case relating to the sale of counterfeit Ab King Pro exercise machines through its website.
In the past, it was generally assumed that a provider of online services would only be liable for information stored on a site under its control in New Zealand if it exercised editorial control.
This principle was codified in a number of overseas statutes including the Digital Millennium Copyright Act in the US, the European Community’s E-Commerce Directive, and the Australian Copyright Amendment (Digital Agenda) Act. These all state that, unless an illegal action was under the authority or control of a service provider, the provider will not be liable for information stored by users if, upon becoming aware of any illegal activity, they act quickly to remove or disable access to the information. The statutes also put an onus on the copyright owner to notify the provider of any infringement of which they become aware.
New Zealand has now introduced similar legislation to address the liability of service providers, in the form of the Copyright (New Technologies) Amendment Act 2008. Among other things, the Act requires providers to have, and “reasonably implement”, a policy for terminating accounts of repeat infringers. Although enacted, the Act is not likely to come into force until later in 2008 and will probably not apply to the bulk of TradeMe’s alleged infringing conduct.
Which way will the New Zealand Courts rule in the TradeMe case? A review of similar overseas cases may be of assistance.
eBay has been named as a defendant in a number of actions relating to the sale of counterfeit goods on its site, with varying results. In recent months in Germany and France, it was unsuccessful in claiming it merely stored information rather than acting as a broker when counterfeit luxury goods (including those of Rolex and Louis Vuitton) were sold on its site. It was held that eBay did not do enough to prevent the sale of counterfeit goods on its site. However, in mid-July 2008, a US court ruled that eBay did not have a legal responsibility to prevent users from selling counterfeit goods on its site and that immediately removing the infringing listings when notified of infringement by Tiffany was sufficient. A similar approach was taken in August, when a Belgian court held that eBay was not liable for the sale of counterfeit Lancôme goods on its site. A further four Lancôme cases (in France, Germany, the UK and Spain) are yet to be heard, and it appears the decision in Belgium will be appealed.
Although yet to go to trial, another case to watch is YouTube’s defence against claims of contributory intellectual property infringement. Viacom has claimed that YouTube contributed to infringement of its rights in uploading videos into its own software format, adding them to its servers, making them available for viewing on its website, and then sending streaming video content from YouTube’s servers to the user’s computer. The trial is expected in 2009 and may provide insight into a possible result for TradeMe if judgment is issued before the TradeMe hearing.
How then, will TradeMe’s site and actions measure up to those of eBay and YouTube? In its Terms and Conditions, TradeMe states that it merely “provides a venue” for the sale and purchase of goods, and that it is neither an agent nor an auctioneer. This, in itself, is unlikely to be enough.
It appears from overseas cases that the trend is to look at both the policies of the service provider in responding to notices of infringement and the speed in which notices are enforced. TradeMe’s alleged inaction in responding to notification of the claimed breach may well count against it.
Whichever way the New Zealand Courts decide the TradeMe case, the real problem may be outside the statutory provisions in New Zealand and overseas. As the New Zealand distributor of Ab King Pro said in a recent radio interview, the bigger headache for intellectual property rights owners is “that a seller can be closed down and start up another account two minutes later, irrespective of the company’s internal procedure to deal with knock-offs”.
It therefore appears that the real culprit is likely to go unpunished.
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James & Wells Intellectual Property
Tel: +64 3 961 2460
Fax: +64 3 961 2461
Email: racheld@jaws.co.nz
Website: www.jaws.co.nz |