Trading in trademarked items calls for caution

By Wayne Jordan

An eBay seller recently asked eCommerceBytes [http://bit.ly/2lv5WBB] readers to help her understand why one of her listing was removed. The listing was for a used item that utilized a hook-and-loop fastener. The item description noted a “Velcro” fastener. Velcro is a trademarked term. The item may have used a Velcro fastener, but the seller didn’t offer any proof of that being the case. So, upon receiving a complaint from the Velcro rights owners, she was charged with a trademark violation and the listing was taken down.

Trademarked Terms Trigger VeRO

How many of us would have used the word “Velcro” if this had been our listing? In our everyday affairs, I suspect that most of us use the word “Velcro” to describe a “hook-and-loop-fastener.” I know I do. Of course, the Velcro trademark is not yet genericized, as the owners vigorously defend it. Using a trademarked name in any of the following scenarios is an eBay VeRO (Verified Rights Owner) violation that can get a listing pulled and/or an account cancelled:

• Claiming an item is authentic when it isn’t

Trademark stamp image

Photo courtesy Shutterstock

— Referencing a trademarked item in a comparison
• Listing a trademarked item that you aren’t authorized to sell

Although the VeRO program has a mechanism for sellers to respond to unjustified take-downs, it’s important to realize that eBay’s VeRO program is designed to protect rights owners, not sellers. I will review the seller’s response mechanism later in this column.

Diligence Can Aid in Avoiding Trouble

How many of us have used the following trademark-protected terms in our listings and/or advertising materials (an instructive list can be found on Wikipedia at http://bit.ly/2lv6sQ3):
Super Heroes
Frisbee
Bubble wrap
Crock pot
Formica
Matchbox
Rollerblade
Lava lamp

Common ‘Generics’ Among Trademarked Terms

Often, first-to-market products capture “top of the mind awareness” in consumers, and a trademarked name quickly becomes generic. Here are a few such trademarks; the trademark registrations are still valid, but enforcement has proven to be impossible:
Kleenex
Aspirin
Flip phone
Thermos
Videotape
Trampoline

The guiding ethic behind trademark law is that consumers have a right to know the source of the products they buy. Comparing a knockoff to a trademark isn’t fair to consumers; they may believe that they are getting an item that is comparable to the “real thing.” Courts have ruled that even when the physical specifications of a knockoff are identical to a trademarked item, non-tangible aspects such as warranties and customer service must be considered when making a comparison.

Tip: Compare Cautiously

Authorized sellers who market genuine items – new or used – are not guilty of trademark infringement. Does that mean that no seller has ever been accused of selling a genuine article as a fake? Of course not; anything can happen on eBay. The best protection for a seller of a trademarked item is to be careful about the comparisons they make, the language they use, and always offer proof of their claim.

To avoid trademark offenses, it’s important for sellers to be aware of the applications and limitations of both copyrights and trademarks. Copyrights are interpreted according to the First Sale Doctrine; trademarks are interpreted according to the Fair Use Doctrine. A simplified explanation of these doctrines follows (apologies to copyright lawyers for my simplified explanation):

Doctrine Primer

Get more valuable business insights from Wayne Jordan.

Get more valuable business insights from Wayne Jordan.

The First Sale Doctrine is what allows unrestricted commerce in used goods. A manufacturer or rights holder may control distribution of an item until the first sale is made. At that time, the owner is entitled to profits, royalties, and any other allowed payment. Note that this applies to a sale, not a licensing agreement. Digital goods are usually followed by licensing agreements in which an item is leased, not sold, to an end user. After the first sale, end users of non-digital goods may sell or dispose of their purchased items in any legal way they choose.
But…

You must have lawful possession of the item you are selling, which means you acquired the item from someone who had the right to sell it. If you are challenged, you must be able to prove that your item was legally obtained. So, always get a receipt when you buy something (yes, even at a yard sale) and be sure you understand where the item came from.

Additional Areas Requiring Attention

If a second-hand item you sell is trademarked, caution should be exercised when re-selling it. Under the Fair Use Doctrine, dealers can sell a trademarked item (Velcro, for example) provided it is genuine. When selling in categories where knockoffs are common, dealers are wise to offer proof that an item is genuine, both to inspire confidence in bidders and avoid a VeRO violation.

I should note here that using another seller’s photographs and/or descriptions is a copyright violation. Be very careful about using someone else’s images. Photographers are especially aggressive in protecting their images (as they should be).

Understanding eBay’s VeRO

Despite eBay’s VeRO policy, the platform is awash with trademark violations. Why are there so many? Because a rights owner has to catch an offender and file a complaint. There are simply too many listings on eBay to keep up with trademark violators, and some offending sellers may go for years without being caught.

[If you aren’t clear on how these issues apply to your eBay sales, eBay provides a VeRO tutorial at: http://ebay.to/2l8cmpi.]

What do you do if you are hit with a VeRO take-down request that you feel isn’t justified? There is an appeal process in place, but eBay leaves it up to the seller and the rights owner to work out an arrangement. If a rights owner doesn’t want you selling their items, then you won’t be able to sell them; don’t expect any help from eBay. EBay has no say in the matter. If a violation is reported, they are required by law to remove the listing. Of course this gets “sticky”: eBay won’t inspect your item, nor will they independently verify the rights claim of the alleged owner. They are simply the platform provider and have no stake in the matter.

Final Word of Caution

When a listing is removed due to a VeRO complaint eBay will send you an email listing the steps you must follow if you wish to challenge the take-down. It’s up to the seller to contact the rights owner. EBay has a fairly thorough explanation of the VeRO process at http://ebay.to/1KggeJb.

In these days of rampant collectibles fraud, copyright and trademark owners are aggressively protecting their brands. Unlike a couple of decades ago, owners no longer have to manually sift through listings to find offenders.

Sellers are advised to proceed cautiously when dealing with trademarked items.

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