johnnymk
01-31-2006, 03:22 AM
Editor's Note — By Antone Gonsalves:InternetWeek
EBay's Business Model Challenged
Over the last 10 years, the Internet has sparked many new business models, with some of them waiting to be tested in the courts. Google is having its view of copyright law scrutinized with the pending lawsuit of writers and publishers, while also challenging the Bush administration's right to search data that could violate the privacy of the search engine's subscribers. Then of course there was Napster and Grokster, which found out quickly that building a business on the theft of other's people's property is unlikely to find favor in the courts.
Among some other potentially significant cases that could shape law in the Internet age is Tiffany & Co.'s lawsuit against EBay. The jeweler is challenging EBay's argument that it's only a neutral marketplace that brings buyers and sellers together. The company claims it's not responsible for the quality of goods sold.
While that argument has worked in several lawsuits that EBay has won, it may not stand up in Tiffany's suit, which accuses the online auctioneer of failing to do enough to keep counterfeit products off its site. New York-based Tiffany claims at least three out of four items sold on EBay as Tiffany jewelry is fake. It also says EBay, despite knowing about the problem, will market sellers offering Tiffany products, without first determining whether the goods are authentic. In fact, Tiffany claims many of the items that have been advertised on EBay's homepage, particularly during Mother's Day, are counterfeit.
EBay denies any wrongdoing, and argues that it's impossible for it to police all 78 million items offered on its site on any give day. The company fears that if it gives in to Tiffany, then that would open the door for more lawsuits by other manufacturers.
Tiffany's lawyer believes the case could go to trial by the end of the year, and experts say a ruling against EBay would force the company to change its business model, a drastic move that could have negative consequences for the auctioneer.
As a retail platform, the Internet is still young. But with Internet retail about 10 years old, the industry is reaching a time when our legal system will be looking more closely at the new business models and deciding whether they should continue as is, or change.
EBay's Business Model Challenged
Over the last 10 years, the Internet has sparked many new business models, with some of them waiting to be tested in the courts. Google is having its view of copyright law scrutinized with the pending lawsuit of writers and publishers, while also challenging the Bush administration's right to search data that could violate the privacy of the search engine's subscribers. Then of course there was Napster and Grokster, which found out quickly that building a business on the theft of other's people's property is unlikely to find favor in the courts.
Among some other potentially significant cases that could shape law in the Internet age is Tiffany & Co.'s lawsuit against EBay. The jeweler is challenging EBay's argument that it's only a neutral marketplace that brings buyers and sellers together. The company claims it's not responsible for the quality of goods sold.
While that argument has worked in several lawsuits that EBay has won, it may not stand up in Tiffany's suit, which accuses the online auctioneer of failing to do enough to keep counterfeit products off its site. New York-based Tiffany claims at least three out of four items sold on EBay as Tiffany jewelry is fake. It also says EBay, despite knowing about the problem, will market sellers offering Tiffany products, without first determining whether the goods are authentic. In fact, Tiffany claims many of the items that have been advertised on EBay's homepage, particularly during Mother's Day, are counterfeit.
EBay denies any wrongdoing, and argues that it's impossible for it to police all 78 million items offered on its site on any give day. The company fears that if it gives in to Tiffany, then that would open the door for more lawsuits by other manufacturers.
Tiffany's lawyer believes the case could go to trial by the end of the year, and experts say a ruling against EBay would force the company to change its business model, a drastic move that could have negative consequences for the auctioneer.
As a retail platform, the Internet is still young. But with Internet retail about 10 years old, the industry is reaching a time when our legal system will be looking more closely at the new business models and deciding whether they should continue as is, or change.