Another online auction site sued

Online auction sites could be sued in Australia for selling counterfeit products, but the business doing the suing would need deep pockets, a leading IP lawyer says.

Online auction sites could be sued in Australia for selling counterfeit products, but the business doing the suing would need deep pockets, a leading IP lawyer says.

New Zealand based site TradeMe has become the second online auction site to face legal action for allegedly allowing vendors to sell counterfeit products.

Last month eBay was forced to pay more than $60 million to compensate fragrance companies for damage they sustained as a consequence of counterfeit perfumes being sold on the site. It is appealing the decision.

TradeMe’s opponent is seeking to defend a slightly less glamorous product, the New Zealand Herald reports; the Ab King Pro exercise machine.

The New Zealand importer of the Ab King Pro, Brand Developers, argues it has lost millions in sales because thousands of cheap knock-offs of the machine have been imported from China and sold on TradeMe.

The similarity of New Zealand and Australian law means the TradeMe case could prove a good test of whether a similar kind of case could work here, according to Wayne Condon, senior partner with IP and patent law firm Griffith Hack.

“Theoretically this could happen in Australia,” Condon says. “New Zealand law is pretty close when it comes to questions of negligence and IP law, so it could definitely provide some pointers.”

Condon says the two main legal avenues open to a business seeking to take action against an online site selling counterfeit products would be for colluding in a breach of IP laws or negligently failing to prevent a vendor selling the products.

But either way, Condon says, taking the legal action would not be cheap – and there would be no guarantee of success.

“Online auction houses are in a difficult position – in the case of eBay, it is selling billions of dollars worth of goods each year, so policing everything that is sold is a very difficult ask,” Condon says.

“It is worth being vigilant, and brand owners would want to be policing where products are sold and following up with vendors that could be selling counterfeits,” he says. “But legal action will be very difficult, very costly and there are significant hurdles involved.”

Read more on intellectual property