eBay seller Timothy Vernor filed a lawsuit against Autodesk Inc. last month. Vernor claims the software maker used the digital millennium copyright act to have his listings for Autocad Release 14 software removed from eBay on five occasions. Vernor said eBay restricted his account for one month as a result.

Vernor is representing himself in the lawsuit. He said if he loses, he would likely be forced to pay Autodesk legal fees, which could be in the hundreds of thousands of dollars.

Scott Pilutik studied eBay's VeRO program, which is set up to handle complaints from intellectual property rights-holders, last year as a law student. In his article published in the New York State Bar Association's "Bright Ideas" in the Spring, he wrote, "When an eBay seller receives a VeRO takedown notice and fails to successfully argue the legitimacy of the sale to either eBay or to the rights owner, its sole recourse, aside from simply eating the loss and moving on, is to sue the rights holder."

Pilutik said this rarely occurs partly because sellers are legally and financially mismatched against the more leveraged rights holders. "These realities lead to rampant overreaching by VeRO members."

Vernor said he is unaware of other eBay sellers who have sued eBay VeRO members aside from Michael Meadors and Karen Dudnikov. According to Pilutik's article, eBay sellers Meadors and Dudnikov have sued and forced favorable settlements from Disney, M&M/Mars, Major League Baseball Properties, Shabby Chic, Robert Yates Racing, United Media (Peanuts), Vittoria North America, Wiggles Touring Pty Limited, Sanrio, Weight Watchers, and Fleurville. Pilutik wrote, "despite their impressive list of victories, Meadors and Dudnikov continue to receive VeRO takedown notices and continue to file federal actions to force reinstatement of their eBay listings."

Vernor said he believes eBay should have gone after over-reaching VeRO members. "eBay's losing money too - we're supposed to be partners. If eBay were to fund the legal fight for some of this to make it clear that if you are illegally taking listings down, then you're going to end up paying." Vernor believes eBay is losing millions of dollars from many sellers who are frustrated and walking away.

While eBay sellers are unhappy with VeRO, many manufacturers and retailers are also unhappy with the program. A list of high-end designer companies including Tiffany, Louis Vuitton and Christian Dior Couture have filed lawsuits against eBay, frustrated that counterfeit items have not been eliminated from the site.

Late last year, eBay launched a major anti-counterfeiting initiative described in a November 29th AuctionBytes Newsflash article (http://www.auctionbytes.com/cab/abn/y06/m11/i29/s01). When asked at the time whether the initiative was in reaction to litigation, eBay's response was that the move was designed to ensure a good buying and selling experience on eBay that would bring long term value to the marketplace.

Michael Meadors claimed that eBay may get into trouble if it makes decisions about trademark violations independently of rights-holders. "eBay has started enforcing people's trademarks without their knowledge" and referred to a case in which eBay shut down one of Tabberone's auctions of Major League Baseball Property's (MLBP) products even though Tabberone has an agreement with MLBP.

Meadors and Dudnikov, who sell on eBay under the User ID Tabberone, moderate a forum about eBay VeRO issues on the AuctionBytes discussion boards. Neither is a lawyer, but they have become self-taught experts, having represented themselves in all of their battles with corporations.

Pilutik's article is available in PDF format (http://www.auctionbytes.com/eBays_Secondary_Trademark_Liability_Problem.pdf). In the article, Pilutik wrote, "eBay sellers' listings are subject to what amounts to arbitrary removal by rights owners, who have little incentive to tread cautiously so long as the consequences of such overreaching remain so remote," and he includes suggestions on how eBay can improve the process for its sellers.

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Editor's note: Pilutik's article was published in Vol. 16, No. 1 of Bright Ideas (Spring/Summer 2007), a publication of the Intellectual Property Law Section of the New York State Bar Association. More information on eBay's VeRO ("Verified Rights Owner") is available on its site at http://pages.ebay.com/help/tp/programs-vero-ov.html.