Turkey: E-Commerce's Effects On Trademark And Stakeholders

Last Updated: 2 March 2019

1. INTRODUCTION

Changes in the recent years in the intellectual property law can be seen due to the improvements in e-commerce and internet in various aspects. One can also mention that intellectual property law is a complicated one when compared with the different areas of law. The reasons can be stated by pointing out the abstractness of the particular area of law and difficulties in identifying the intellectual property rights infringements.

The developments did not only bring new aspects and discussions to the legal world but also put the companies and individuals into a situation which is totally tough to cope with. Huge corporations are already affected by the growth of online commerce, yet small or medium-sized establishments have taken a major hit compared to the big ones since it is harder for them to be aware of the issues created by the rise of e-commerce. In this sense, they need to make an effort to sort out the problems in order to use the most of their budget for advertising or expanding their business. On the other hand, small or medium-sized producers may not even know that their intellectual property rights are infringed in some part of the world. Problems of similar topic for the biggest establishments can be seen in the situation of feeling not safe even though everything is done to prevent infringements. This questioning is a big part of this article since the cases examined are related to eBay and its trade mark infringements; such as Rolex v eBay caseand Louis Vuitton Malletier v eBay case, Tiffany v eBay case. eBay is not the only company in the e-commerce area and will not ever be since there are already Amazon, Alibaba, Taobao and many of them.

It appears that before the mutual trust is obtained in several specific intellectual property areas, it is shaken again due to the developments in technology. Furthermore, specific infringements in online commerce include dissimilar type of illegal acts, and selling counterfeit goods,sales of parallel import goods and infringement of trade mark contracts, keyword ad triggering, search engine problems, meta tags, cybersquatting and domain and Internet Service Providers (ISP) problems can be given as some examples to that issue.1

As can be seen, the area of trade mark infringements in online commerce and stakeholders' damages is quite a broad area, and hardships in the enforceability of their rights make it wider. In this article, a brief background for the purpose of trade mark rights, the definition of counterfeiting and cases against eBay in different jurisdictions, France, the USA and Germany, are investigated in order to demonstrate intellectual property right holders' damages.

2. PURPOSE OF TRADE MARK RIGHTS

In this part, the aim of the specific intellectual property right is analysed because of that it is crucial to understand why it is being used currently all over the World and it creates the grounds of this work.

Although the first thing comes up minds when a trade mark is mentioned is the protection of stakeholders' rights, it can be seen with the changes in business and principles of advertising that the main objective of the trade mark right is preventing customer confusion in today's world.2 Nevertheless, definition and prevention of customer confusion are not that straightforward, and severe developments in internet and technology make the trade mark infringements almost impossible to be averted, especially in the global world.

Even this brief explanation of trade mark rights' characteristic and purpose indicates that the stakeholders' damage is inevitable. After regarding different striking cases all over the world, it will be much more obvious and visible in the next chapters.

3. SEVERAL CASES IN VARIOUS JURISDICTIONS

This part aims to show the three different cases, which are mentioned above, in order to understand the idea for stakeholders' damages. In addition, because of that this cases are focused on one particular infringement in one specific auction website, explanation of counterfeiting is provided under this chapter as well.

  • Tiffany v eBay Case

There is a case in the United States, called Tiffany v eBay case  3,  and that is one of the most crucial judgment for this subject, and as a result of that this article is focused on the damage, the cases will be provided with their results mostly instead of the story of them.

In Tiffany case, it can be explicitly seen either at the beginning or the end of the case that stakeholder's damage is unbelievable regarding that 73% and over 46,000 counterfeit goods were on the website and the platform is one of the most well-known auction website, which has risen by using the benefits of e-commerce. Sale of counterfeit goods is not a result of the increase of online auction areas, it was already existing before that trend, but this kind of striking damages and numerous counterfeit goods would not be expected to be seen previously, and this hearing also has common effect if it is regarded that there are innumerable users of eBay all around the world.4

The conclusion of the hearing was not in favour of Tiffany. On the other hand, even if it is deemed that it was in favour of the company, the compensation would not be enough to cover the damage regardless how big the compensation is.

Stating counterfeiting, it is also critical to give a definition about it. Counterfeiting described as creating a copy of a trade mark intentionally by aiming the new product to be seen identical in appearance to the legitimate one.5 With the increase of the internet use brought about more hardship to track non-original goods and liable people or establishments for the goods, especially when it is considered that visual tricks are much easier to use in the cyberspace. It is also accepted that selling imitation goods has disastrous economic results not only for trade mark owners, but also trade mark products.6

  • Louis Vuitton Case

Louis Vuitton (LVMH) case is another significant case because this one displays the importance of reputational damage when the judgments is ended in favour of the victim of counterfeiting.

This hearing is made in Paris with the application of LVMH because of the sale of counterfeit goods on eBay.7 The discussion in this case gathers around the action of eBay and requests of LVMH such as injunctions to stop the sales and banning them all for the future from the website. These demands create issues for the famous company to be honest. First of all, it can be mentioned as a problem that loss of customer trust. Once the rumours start between the costumers, they may hesitate to buy this famous and expensive brand's product due to the worry about selling them in the future or using them as an investment. Also, customers may get worried about the future of their product during the legal proceedings and feel restricted on the contrary to the first sale doctrine.

The compensation can be seen in the case as 39 million euro and litigation expenses. It has to be underlined again and again that it is only one auction website, and the infringement is only in one particular intellectual property law area, which is trade mark. Moreover, selling counterfeit goods is a very specific topic in trade mark law.

There are lots of websites and there is no borders anymore in internet world. Others may be open to using the sale of imitation goods even if they do their best to stop infringements because the purpose of the website can only be providing place to their customers to sell their products. After thinking all possibilities, variations and various types of trade mark rights violations in relation to online commerce, the large impacts of e-commerce and trade mark infringements can be estimated. On the other hand the frustrating part is that beside of the trade mark holders' damages, service providers may have a enormous damage too by spending huge money and paying compensations to big businesses.

  • Rolex v eBay Case

The last example is the Rolex v eBay case8, which is heard in German courts.

It is not that possible to keep this case separated from the others due to the really similar results and problems. In this case, the effort of the service provider can be seen as well. eBay has programmes and systems to prevent counterfeiting on their business area, such as VeRO programme, fraud engine system and monitoring services, but they are found by German courts inadequate to protect Rolex from the illegal actions.9

These cases show dissimilar approaches and the bases for the thoughts gather around the United States, German and French approach to the situation even though findings, illegal actions, damages and demands were mostly similar to one another. On the other hand, one of the most critical features of all of the cases that the companies are all different giants in different sectors in business, but the complaints can be found the same to each other. An indication can be given with the point that stakeholders lost their authority to use their rights and enforce them against infringers and this causes them big damages in different ways as a consequence of infractions.

CONCLUSION

It is attempted to be demonstrated in this article that whether rising e-commerce and more common use of internet affect stakeholders and enforcement power of their intellectual property rights in the light of various cases, Tiffany case, Louis Vuitton case and Rolex case.

As it can be seen in all of the cases, millions of euro and thousands of counterfeit goods are the subject of the hearings. On the other hand, even though Tiffany proved that 73% of the products are counterfeit on eBay and carry their brand's name, they could not even get any compensation. It is more than 46,000 products, and this detail shows the concrete damage.

Even if the cases are resulted with a compensation in favour of claimant companies, reputational and trust-based damages are still inevitable. Beside of moral damages, this brings more monetary damage as well, which can be seen in the Louis Vuitton case.

In the Rolex case,the court came to a conclusion in favour of eBay and it resulted more damage for the plaintiff company. These explicitly show that the weakening effect of online commerce on stakeholders' rights and enforcement of them.

Additionally, the most injured concept, in my opinion, is the preventing customer confusion itself as a result of the changes in commercial life and the factors in the cases because it is the essential purpose of trade mark rights as it is explained, but one can say that customers may be more confused when their awareness about online counterfeiting problem is increased.

Small or medium-sized corporations have to deal with more complicated problems in some stages on account of that companies may need to make huge investments in order to chase and prevent trade mark violations. This can make taking a step against the unlawful acts almost impossible for them. Over and above, corporations in these categories may not even be aware of the infringements when others use their signs, such as logo, name and products.

Last but not least, one specific category of trade mark infringement on one particular auction website in e-commerce is investigated in this work, and even this extremely specific topic and examples present unbelievable damages all over the world. When it is considered that there are maybe tons of different kind of intellectual property rights infringements and millions of websites, intimidating effects of e-commerce on stakeholders' rights can be explicitly seen as a result of the modern world.

Footnotes

1 King&Wood Mallesons, 'Common Issues of Trademark Infringement in E-commerce and Enforcement' (King & Wood Mallesons, 4 August 2014)  http://www.kwm.com/en/cn/knowledge/insights/china-bulletin-2014-08-02-20140804 accessed 7 April 2018.

2 Daniel Devoe, 'Applying Liability Rules to Metatag Cases and Other Instances of Trademark Infringement on the Internet: How to Get to No Harm, No Foul' (n 2) 1228.

Tiffany Inc. v eBay Inc.576 F. Supp. 2d 463 (S.D.N.Y. 2008).

4 Fara S. Sunderji, 'Protecting Online Auction Sites from the Contributory Trademark Liability Storm: A Legislative Solution to the Tiffany Inc. v. eBay Inc. Problem' (2005) 74 FORDHAM L REV. 909, 910-11.

5 William N. Walker, 'A Program to Combat International Counterfeiting' (1980) 70 Trademark Reporter 117.

6 Rakoff and Wolff, 'Commercial Counterfeiting and the Proposed Trademark Counterfeiting Act' (1982) 20 AM. CRIM. L. REV. 145.

SA Louis Vuitton Malletier v eBay [2008] Tribunal de Commerce de Paris.

Rolex v eBay [2007] I ZR 35/04 (Ger).

9 ibid

September 11, 2018

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