Internet auction site eBay has defended the way in which it handles reports of counterfeit goods, saying that it has delisted millions of items and suspended tens of thousands of seller accounts last year. However, its actions may not be enough to stop a lawsuit brought by a luxury goods retailer, which maintains that eBay needs to do more to stop online auctions of counterfeit products.

Ebay's comments relate to the Tiffany v. eBay lawsuit (PDF), which will soon be heard by the U.S. Court of Appeals. At the heart of the dispute is a disagreement over which party should bear the responsibility for identifying counterfeit products offered in eBay listings.

Tiffany brought the suit against the online auction site. The luxury retailer (and some other companies involved in the case as amici curiae) believe that eBay should be responsible for policing the site. This is a daunting task -- the site has approximately 26 million live listings worldwide at any given time, and sees about 2.7 billion live listings globally over a year.

EBay spokesperson Nicola Sharpe spoke with The Industry Standard about eBay's policies regarding sales of counterfeit items, and the tools the company has put in place to help protect consumers as well as help rights owners protect their brands. The Verified Rights Owner (VeRO) program cited in the decision was instituted in 1998, and gives rights owners tools to find and report instances of counterfeit item listings found on the site.

Sharpe notes that 100 percent of reported listings are removed, with 70 to 80 percent removed within 12 hours. Site policy has zero tolerance for sellers who list counterfeit items, and will also suspend any seller who lists a counterfeit item more than one time. Background information is also used to prevent sellers from creating a new profile and re-listing items. Sharpe reports that 2.1 million listings were removed in 2008 based on VeRO reports, and 30,000 sellers suspended.

As Sharpe, explains, eBay never has physical possession of the items in question, and with the number of listings processed through the site annually, policing counterfeit goods would be impossible. The company's Trust and Safety Department is dedicated to site safety, and includes interaction with law enforcement, and dealing with online fraud as well as issues surrounding counterfeit goods. Sharpe shares eBay's take:

"Collaboration is key. We aren't the experts, obviously, and need to partner with rights owners."

In the past four years, participation in eBay's VeRO Program has increased from approximately 16,000 rights owners to 31,000 currently. Work is currently underway to improve the speed in which reported listings are removed, as well as improve the online tools available to rights owners.

The Internet has provided companies with a global marketplace available 24 hours a day, a boon for sales, but also a detriment to enforcement of product authenticity and trademark ownership. The immediacy of online sales demands a new model for companies to manage rights.