US Supreme Court Weighs Copyright Issue on Foreign-Produced Products

The US Supreme Court heard arguments Monday in the case of Kirtsaeng v. John Wiley, a landmark case that could determine whether foreign produced items may be imported into the US and sold without the manufacturer's permission.

Supap Kirtsaeng, a native of Thailand studying in the US, arranged to have family members purchase textbooks in Thailand where they are significantly cheaper than the US versions of the same texts and ship them to the US. He then resold them on eBay. Later, publisher John Wiley and Sons sued Kirtsaeng for copyright infringement and was awarded $600,000 in damages.

Supporters of Kirtsaeng believe his sale on Ebay was protected by the first sale doctrine which limits downstream distribution rights of publishers once an initial legal sale of the item has been made. Supporters of Wiley believe publishers have the right to prevent importation of foreign-made items into the US.

The first sale doctrine is derived from a 1908 High Court ruling in Bobbs-Merrill Co. v. Straus and later codified by Congress in Copyright Act of 1976, 17 U.S.C. § 109(a) "Notwithstanding the provisions of section 106 (3), the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord."

The case will ultimately turn on how the Court interprets "lawfully made under this title". In 1998, the Court decided in Quality King Distributors Inc., v. L'anza Research International Inc. that items made in the US but exported and sold overseas could be imported into the US without the manufacturer's permission.

One of the points made in the opinion of the Quality King case that lower courts seem to be following is that there is a category of products that are “lawfully made” (i.e. not piratical ) but not “lawfully made under this title.” In other words "That category encompasses copies that were “lawfully made” not under the United States Copyright Act, but instead, under the law of some other country."

However, in spite of this, and that the opinion written by Justice Stevens was delivered for a unanimous Court, Justice Ginsberg wrote a concurring opinion that "This case involves a “round trip” journey, travel of the copies in question from the United States to places abroad, then back again. I join the Court’s opinion recognizing that we do not today resolve cases in which the allegedly infringing imports were manufactured abroad."

Another similar case, COSTCO WHOLESALE CORPORATION, PETITIONER v. OMEGA, S. A., came before the Court in 2010. In this case, watches manufactured by Omega outside of the US were imported by Costco. The trial court found Costco did not violate the copyright. The Ninth Circuit reversed the decision on appeal. The case finally made it to the US Supreme Court where Justice Kagan recused herself due to having prepare a brief in the case earlier for the Justice Department. The Court was evenly split 4-4 in a Per Curium decision, leaving the issue unresolved. As Per Curium decisions are unsigned, the was no guidance on which justices favored which sides of the dispute.

In the current case, all nine justices will be participating in the ruling with a decision expected in June. Whatever the outcome of this case is, there is expected to be intense lobbying by the losing side for Congress to tilt the issue in its favor.

Court rules eBay violated small firm's patent

The U.S. 4th Circuit Court of Appeals has found the eBay infringed the patent of MercExchange Inc. of Great Falls, Virginia and upheld a $25 million judgment against the auction giant. The court was reviewing a previous ruling by a lower court in May 2003 that stemmed from a September 2001 lawsuit by the Virginia-based company over lost licensing fees.

The court upheld a ruling that eBay's Buy It Now which allows sellers to sell at a fixed price feature infringed a MercExchange patent involving no-haggle sales. The court, however, nullified a second patent involving an online price comparison tool.

In the initial case, the lower court found eBay had infringed both patents and ordered the payment of $29.5 million in damages and licensing fees to MercExchange president Thomas Woolston. The invalidated patent, however, caused the higher court to throw out $4.5 million of the initial judgment.

eBay's Buy It Now feature accounts for about 31% of its total worldwide sales. The ruling only applies to U.S. sales, who eBay does not separately report.

The appeals court also lifted a ban preventing MercExchange from getting a permanent injunction against eBay. Woolston's attorney's plan to get a permanent injunction blocking eBay from using the Buy It Now feature and to add $100 million in damages to cover the two years since the initial judgment.

Although Woolston initially had hoped to get eBay to pay him damages and to agree to license his invention, but his lawyers say that now they are not sure he will agree to a deal with eBay "given the way they've treated him". He is currently working with Chicago-based Ubid.com and sees the ruling as a victory for inventors and small business owners. He sees this as an opportunity to "build a better, faster eBay".

In the mean time, eBay plans to continue to fight the lawsuit. eBay has asked the US Patent and Trademark Office (PTO) to look into MercExchange's claims. The company says that the PTO has found "that substantial questions exist regarding the validity of MercExchange's claims. The Patent and Trademark office has already initially rejected all of the claims of one of MercExchange's patents".

eBay People's Court case 03/15/05

The case involved a buyer (Plantiff) who had purchased what was proported to be a World War II German helmet. The buyer is a WWII collector and claimed it was not a German helmet, but was a modified Spanish helmet. Aparently Spanish helmets are worth about 25 cents, but the buyer paid around $325 for it.

The Plantiff said it had too many rivets to be German and contained dimples where a Spanish ensignia would have been placed. He also brought in what he claimed was a genuine German helmet.

The Defendant's response to the buyer's lawsuit: "Moron".

The Defendant claimed her father (who was her witness) had bought it for a friend of the family off eBay, but the friend then didn't have the money to pay for it, so she put it on eBay for her father. She had listed that the headliner appeared to be newer and that the helmet appeared to be authentic (or something to that effect).

The Judge's decision:

The judge made several calls including to the Holocaust museum and to Sotherby's who referred her to someone who admitted he was not an expert and whom the Plantiff had consulted a few weeks before the case. He did not think it was genuine.

The judge (who said she found out more about German helmets than she ever wanted to know) pointed out three things in her ruling. One is that the emblem on the side of the helmet appeared a lot newer than the genuine helmet the Plantiff brought in. Second was that the rivets appeared buffed down and she said there is a whole industry to try and make Spanish helmets appear as genuine German helmets. The third and most damning piece of evidence was the dimples which no authority says are supposed to be on a German helmet.

Judgement for the plantiff. The helmet went back to the defendant. The judge threatened the seller not to resell it as a German helmet because "I will find you". Also, legal consultant Harvey Levin said too that now that she knows it's not genuine, it would be fraud.

When asked what they would do with the helmet, the answer was give it back to her father's buddy.

Now here's an idea: eBay auction "People's Court World War II helmet" I mean, how many helmets have ever been at the center of a People's Court dispute?

Buyer turn offs

Over on the Seller Central board on eBay's Community forums, there is a thread called "What is the biggest buyer turn off in your opinion?" Here are some of the things mentioned as turning off perspective buyers:

Lack of good pictures/descriptive information or stock photos. Be sure to take clear photos that accurately represent the item. Provide as much information as possible that a buyer would need to make a decision to purchase your item.

Tacked on fees for bank conversions Be sure to list up front all fees within your listing.

Outrageous Shipping Costs Most buyers are not fooled by low priced items and high shipping charges. Not only is doing so against eBay's User Agreement, but it will keep buyers from bidding on your auctions. Many buyers mentioned this one.

Not receiving an invoice or an email stating item was shipped Always maintain a reasonable level of contact with the buyer to let the know when the item will be shipped and provide tracking information, if applicable to allow them to know when it will be arriving.

No stated shipping and handling costs Always make all costs clear to buyers, as if you don't make online shopping convenient to buyers, they will take their business elsewhere. This is one of the most frequently mentioned complaints.

Flat rate shipping and handling I can understand why this one was mentioned by one buyer, however I generally use a flat-rate with a small handling fee included (not usually more than about $2) based on the longest distance UPS Ground for my ground packages, but for lighter USPS ones, I use a shipping calculator. On the occassions where shipments may be combined, I am happy to do so, and pass the savings on to the buyer.

Reserve auctions This is another major turn off for many buyers. As a seller, I do use reserves to stimulate interest, but I state my reserve within the auction listing.

Negative Terms of Services Try to say what you have to in the most positive way and remove items that are unnecessarily adversarial.

As is or All sales final in Terms of Services At the very least, you must accept returns on items which are damaged or defective.

Sob Story People are buying to purchase an item, not to support a sick child and will be turned off if you make your personal problems a part of the auction.

Bad feedback and unprofessional replies to bad feedback Try you best to resolve problems in a way that will avoid negative feedback to begin with. If you do receive negative feedback however, carefully consider your response. Respond only with facts and don't resort to name-calling and personal attacks. You cannot change your remarks once they are posted.

Long Terms of Services Try to condense what you say into as few words as possible. Buyers will hit the back button if you write a novel.

Poor grammar Carefully check what you write for spelling, grammar and other errors. These make the listing look very unprofessional.

TOS states "No 0 FB bidders" I personally believe sellers should have the right (especially on high-ticket items) to sell to whom they wish, but it might not serve you well to block out buyers simply because they have no feedback.

Seller has "Private" FB Immediately, this is a red flag. The best thing to do is to try to keep your feedback good to begin with and where necessary, respond to negative feedback professionally.

Sellers who don't ship quickly Although Paypal allows 7 days to ship the item and federal law allows 30 days, it is best to ship the item within one to two business days and if you cannot do this, imform the bidders in your listing. Buyers buy online because it is convenient, but it is not conenient to have to wait extended periods of time for your item.

Keyword spamming Only use keywords that actually describe the item being sold and no more.

Crude, rude or lewd user ID Your business name provides an important part of your identity. You won't be taken seriously you choose an immature or offensive name.

Wave files that start playing as soon as I click on an item Many bidders are on dial-up and it takes a long time for audio and video files and graphics to load. Try to limit the file size and screen size of your pictures to reduce loading time and to make your listing more navigible and in general, any web page should not open with music or sound unless the user was expecting it. This adds to the download time and is distracting for the reader. And this goes ten times for unnecessary video.

Also consider the color scheme and background and whether it will be easy to read. Text on a solid background with contrasting brightnesses is much easier than text on a photo.

Blatantly false claims -- like claiming that "nickel silver" is a kind of silver Check out all of the claims made in your auction and be honest with your bidders. If you can't substantiate a claim, don't include it.

New fees in effect

Well, the new fees took over yesterday and the world hasn't ended. As I said in a previous entry, I would not officially be participating in a boycott and that any lack of listing would merely be an accident. Valentine's Day's 5 cent listing sale has certainly helped and I did get a lot of items listed. Some were fixed-price listings with only a BIN price and some were regular auctions.

In most cases (except for a sound card which I listed at $7.99 with a $9.99 BIN), I used a reserve on the auctions. Start them low, like for a penny or 99 cents and use a reserve and mostly I reveal the reserve. The only reasons to not use a reserve are it usually costs more to list with a reserve (The insertion fee is based on the reserve price, not the starting bid, in a reserve auction. Also there is a refundable listing fee which is usually $1 or $2 per category at the reserve prices I use.) and some buyers don't like bidding on items with a reserve price. But the fact I typically reveal the reserve within the auction, and I would reveal it by email to any bidder, if they ask, tends to reduce the aversion to bidding on a reserve, except for the buyers who would have wanted to bid a lower price than I would have been willing to accept anyway.

Also, since all listing fees were 5 cents for all listings, there was no additional insertion cost incurred by using a reserve; only a reserve fee which is refundable if the item sells. And they will sell if the reserve is met (or I issue a Second Chance Offer (SCO) which is accepted) and if it doesn't meet the reserve price, I probably wouldn't have wanted to sell it anyway. So reserves can actually increase the sale price. Additionally, when a reserve is used, the BIN price does not disappear until the reserve is met.

Also took the opportunity to list three items on February 17 in my store for 120 day listings, since eBay has said that items listed in stores before the new fees take effect will be charged the final Value fee (FVF) according to the old fee structure (except Good Til Cancelled (GTC) listings which are renewed every 30 days) and two out of the three items I listed have a high price, so the savings in FVFs will be worth it.

BTW, I did get a $10 credit from Overstock auctions for logging in yesterday and clicking the banner, so I will be giving them a try soon too.

eBay listing sale

Ever since eBay announce in January that its new fees would take place, there have been a number of disgruntled sellers, many leaving eBay for good, or at least shutting down their stores. Several new Yahoo Groups were formed, including Greedbay and overstockers (which had previously been something else). People have posted protest auctions including one with a resignation letter by CEO Meg Whitman and a pen, which was shut down at least twice, only to emerge a third time, though I don't know the final disposition.

I joined those two above mentioned groups and I also signed a petition that had ~12,000 signatures on at the time I signed it. For a time, the media's attention was drawn to the story and USA Today wrote an article quoting members of Greedbay and some of the members were passing around the reporter's email address trying to keep the story alive.

Many have planned a boycott of eBay from February 18 to February 25. Although I applaud their actions and have started to look to other venues, including Ioffer.com and Overstock which seems to be the most promising, I am more pragmatic about it and know that eBay is for now still king of the hill and I won't be closing my store or officially participating in the protest. If I don't list, it would only be because I was not listing anyway, rather than that I was officially participating in a protest.

Apparently the loss of sellers, bad press and falling stock prices have cause eBay to take notice as president Bill Cobb send out a letter to eBay members claiming to have spent a lot of time listening to members, especially about the fee increase (Duh, they were pretty brutal. Like eBay is surprised there would be this kind of reaction?). He defended the increases saying "While we stand behind our decision to increase final value fees on Store Inventory Format listings - because they make sense for items that list with insertion fees of two cents - I know this increase has been difficult for some of our sellers" and offering tow minor concessions to sellers: the month of May will be free to all sellers who operated a store in April and $0.25 insertion fees for items listed $0.99 or under. And tomorrow PST (it is already today in my time zone), 5 cent listings on most insertions.

The 25 cent concession is pretty feeble since many items on eBay only get one bid, thus selling at the opening bid and thus cannot be listed without a higher opening bid or a reserve, which would mean they would not be eligible for this reduction and one month alone hardly make up for a drastic monthly store increase (In fact, I think I was supposed to get a free month when I signed up in May, but they started charging me on June 1, I think, only a few days after I signed up. Not a month later.) The combination of monthly and final value fee increases was what was so brutal. One or the other alone might not have been so bad. And also, this is where I believe eBay is acting as a monopoly, as in a competitive environment, they would not have been able to raise fees so drastically. Clearly, they think they have a monopoly.

But at least Bill Cobb did say eBay will offer long overdue phone support to store owners. Apparently, members who had the phone numbers were not supposed to share it as eBay in its classic paranoia didn't want anyone to call them. Also, they have promised real email support, not just canned answers.

Also the 5 cent sale will help as I had planned to list some items last night (2/13), but decided to wait until today.

Introduction

Hello, I'm John from the Dallas-Fort Worth area of Texas and this is my first entry in my blog. I am a former software development engineer, having graduated with both a B.S. in Physics and a B.S. in Computer Science Engineering (CSE) at the University of Texas at Arlington (UTA, "Get 'em Mavs").

For about the past year, I have been selling items on the internet. Initially to other members of FatWallet.com as a courtesy (I didn't do it for the money) and then I started on eBay. Initally, it was with motherboards and CPUs and a few camcorders, but I have done some software and many digital cameras, especially around Christmas. People like digital cameras and it is a good product to sell.

I have also begun to branch out, listing on Ioffer.com and my first auction today on Yahoo.ca. I also intend to stop by Overstock.com, aka the Big O or "Over there" on February 18 for the free $10 credit.

Thanks for taking the time to check out my blog, and to any interested in learning more about eBay, check out eBay's Seller Central forum or join us at the Yahoogroup Ebay Establishings.