Knife Maker Sues eBay Over Trademark Infringement

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eBay Inc. (NASDAQ: EBAY) has gotten in hot water in the past for failing to stop the sale of counterfeit products that infringe on legal patents or trademarks. Last week knife maker Spyderco filed a lawsuit in a Colorado federal court seeking injunctive and monetary relief from the online auction site for “acts of counterfeiting, trademark infringement, and unfair competition” under both federal and Colorado state law.

The company claims that eBay has ignored reports by Spyderco and other companies of “thousands of intentional and unlawful listings … by more than three hundred [eBay] registered sellers … of obvious counterfeit Spyderco products ….”

Since 2009, according to the court filing, Spyderco has sent eBay more than 500 notices of infringement by at least 300 registered eBay sellers identifying “thousands” of Spyderco products. The company alleges that “eBay intentionally turns a blind eye to the infringing activity.”

According to the court filing:

eBay expressly acknowledges and agrees that unauthorized copies or Fake Products that are advertised and appear on its website may infringe on the manufacturer’s trademark. … Notwithstanding eBay’s knowledge of these claims and practices by its sellers, and the fact that “[eBay has] received significant media attention relating to the listing or sale of illegal or counterfeit goods, which could damage [its] reputation, diminish the value of [its] brand names, and make users reluctant to use [eBay’s] products and services,” eBay publicly admits that it has resisted modifying its business practices because such changes could possibly increase costs, lower revenue, make eBay’s websites and mobile platforms less convenient to customers, and require eBay to spend substantial resources to take additional protective measures or discontinue certain service offerings in order to combat these known and acknowledged user practices.

According to The Counterfeit Report, eBay last month settled another counterfeit case without revealing the settlement terms. The editor noted, “The lawsuits are likely little more than an annoyance to the e-commerce giant, who makes billions in profit, in part from each sale of counterfeit items.”