Inside track: eBay

It all began with a broken laser pointer. In September 1995 28-year-old software developer Pierre Omidyar wrote the code for AuctionWeb, an online marketplace platform that would soon become known as eBay. As a test, Omidyar put up its first listing, for a broken laser pen; days later, the device sold for $14.83. Surprised at this high prize for what was a fundamentally pointless item, Omidyar asked the winning bidder whether he understood that it did not work. “I’m a collector of broken laser pointers,” came the reply.

eBay’s rise from these humble beginnings was meteoric. By the start of 1997, it had already hosted 2 million auctions. A year later, it had over 500,000 users and was preparing to go public. In 1999 eBay launched sites across Europe as it sought to scale up internationally. Acquisitions of PayPal, Gumtree and Skype at the turn of the century further showcased its growing ambition. Today, eBay has cemented its status as one of the ubiquitous brands of the internet age, with 157 million active users across 14 international websites.

However, this phenomenal success was not wholly unqualified. Rights holders have been a thorn in eBay’s side since the outset, claiming that the site has been knowingly profiting at their expense through the sale of fake goods. The site has been dogged by a string of lawsuits over the past two decades; the highest profile was an action brought in the United States by jeweller Tiffany, which contended that eBay was liable for counterfeiting that took place on its platform. eBay’s response was that it could not prevent every single illicit listing on its sites and took appropriate steps to remove them when notified – a defence which ultimately proved persuasive at the Second Circuit some six years later.

Since then, eBay has made further strides in its efforts to crack down on counterfeits, through innovations such as sophisticated automated algorithms that can detect fraudulent listings and the continued development of its reporting tools. The latest statistics suggest that these initiatives are bearing fruit: in 2014, for example, eBay reported that fraudulent activity on the site had reached “an all-time low”, falling by 50% since 2007.

eBay’s Utah campus

Stepping up to the mark

These advances in the anti-counterfeiting arena are in no small part thanks to the initiative and dedication of eBay’s director of global intellectual property, Amber Leavitt. Leavitt’s own professional journey began with a conversation with her father while she was in law school: “My dad is an engineer with some patents of his own and he encouraged me to take a look at IP law. I did, and quickly fell in love with it. In fact, I would probably be a prosecutor somewhere now if it wasn’t for his advice.”

After graduating in 2006, Leavitt began working as an associate at regional firm Workman Nydegger in Salt Lake City. Her practice initially focused on patent prosecution and litigation. However, when domain enforcement and trademark transaction instructions began flooding in, she was drafted in to assist and soon discovered a strong affinity with this type of work; finding these briefs “much more interesting”, she began shifting her practice in that direction.

The opportunity at eBay came about “by chance”, says Leavitt. In early 2010, while still at Workman Nydegger, she received “a random phone call” from a senior member of eBay’s legal team inviting her to apply for the newly vacant position of director of global intellectual property at the company’s offices across town. “I wasn’t necessarily looking for another job, but I was really interested in working for eBay because of the diversity of iconic brands that it owns, the global nature of the role and the chance to work on some of the very interesting IP-related issues that an internet company has to contend with,” she explains.

eBay’s global IP department was already well established when Leavitt arrived in June 2010. However, one key priority which she championed from day one was greater participation in IP strategy from an earlier stage, especially on marketing campaigns and branding initiatives. “Legal typically has the reputation of being the ‘No, you cannot do that’ group,” she explains; “so it is nice for us to be one step ahead and be more of an enabler.” While Leavitt has promoted close collaboration with other functions, she acknowledges that engagement with the C-suite is still limited – although that may be no bad thing: “I find when it comes to trademark and copyright practice, if all is going well then you are the unseen force keeping everything going. This means that the IP department’s communications with the senior leadership of eBay is usually when something is going terribly wrong. We find, therefore, that we don’t want to have too much interaction with that level of the company!”

Leavitt leads a team of 12 individuals, a headcount that has remained stable in the five years she has been with the company. “Around half of the department are located in the US and the rest are scattered across Europe and Asia-Pacific,” she says. “So I spend a lot of time coordinating with our IP attorneys, paralegals and legal assistants across all the jurisdictions we conduct business in.” The small size of the division may come as a surprise, given their stewardship of a brand valued at more than $14 billion in Brand Finance’s 2015 Global 500 list. But Leavitt states that it has “traditionally been a very lean team”, adding: “I’m sure the company likes it, as it shows we are being efficient in what we do. However, the number of challenges continues to increase, so we have had to adapt and be smarter about how we approach problems.”

One tactic adopted to cope with these constraints is the judicious use of outside counsel, whom Leavitt describes as “an extension of ourselves”. eBay typically outsources routine trademark prosecution and maintenance, as well as escalated enforcement matters – such as Uniform Domain Name Dispute Resolution Policy proceedings and other disputes – and oppositions before the various trademark offices. Leavitt explains that she looks for “a rare characteristic” when engaging external counsel: “You can give any lawyer a situation and they will be able to tell you what the potential legal risks are. When counselling a business, however, we understand there are legal risks – but what are the practical risks? What can we do to enable the business to go forward, while mitigating the risk as much as we can? It’s fairly non-traditional, because lawyers are trained to advocate one way or another; but what many businesses care about when they seek advice from external counsel are the practical risks – what is really going to happen if we do this? I’m sure there are clients out there that want all the legal risks – and yes, we care about that too – but we need to have the practical risks, as that is the information we are going to have to pass on to other parts of the business.”

One project on which this kind of pragmatic, business-focused guidance proved invaluable was eBay’s recent expansion into Russia. In laying the groundwork for the company to enter the country, the IP team had to address the issue of intermediaries that were operating in Russia and using eBay’s marks without permission. However, those intermediaries were also facilitating business on the site, so their infringements were not necessarily malicious. The team worked closely with a lawyer in Russia who shaped the strategy on how to tackle the problem. “Depending on the type of business and infringer we were dealing with, he accounted for the cultural nuances that you might not be familiar with if you were not a native Russian,” Leavitt explains. “He adapted the communications accordingly and we had a really high success rate because we did not send a standard ‘stalk letter’ to everyone. In the long run, it ended up saving us a lot of money.”

It is nice for us to be one step ahead and be more of an enabler

The AuctionWeb homepage from March 1997. This design was used for a further six months

eBay’s homepage today. The last major redesign of the homepage was in October 2012

Looking after yourself first

Russia is just one of the far-flung locales in which eBay must defend its rights: its trademark portfolio comprises more than 1,200 active trademarks, having been significantly expanded in 2012 when the company ramped up coverage across Europe, Africa and the Middle East. “There is real breadth and depth in our portfolio,” Leavitt says. “We own numerous international classified brands, so we are dealing with a lot of different jurisdictions and local laws. That means that implementing any uniformity or consistency in our overall approach to portfolio management is an interesting task, to say the least.”

Perhaps the most significant portfolio-related initiative that Leavitt has been involved with since joining the company was its well-publicised rebrand in 2012. The website had used the same logo for over a decade (see box-out, p16), and the refresh was designed to reflect a “more modern, streamlined” company. Encouragingly, the IP team were “front and centre” of the initiative from the very beginning of the process. “I remember my trademark paralegal and me sitting in a conference room with one of the company’s senior vice presidents,” she recalls. “He told us that at that time, we were the third and fourth people at the company who had seen what the new logo was going to look like. We wanted to make sure we had complete trademark protection, but also had to make sure we did not reveal anything before the official announcement. The timing was the really tricky thing. We had to make sure that we got an application filed in a more discreet jurisdiction, where the actual design itself wasn’t revealed until after the announcement. We were then able to rely on the various treaties, such as Madrid, to claim that priority date and file in a more strategic global way.”

When it comes to the day-to-day challenges, meanwhile, as for many IP teams, these primarily relate to the online space. And the picture has only grown more complex since the start of the ongoing generic top-level domain (gTLD) expansion. “The whole process involves some fortune telling in trying to make an educated guess as to what strings will be targeted,” admits Leavitt. “But unfortunately, we have found there is no rhyme or reason as to what gTLD strings third parties will register using our brands.” Unlike many other internet titans, such as Amazon and Google, eBay decided against applying for a gTLD string of its own in the first application round, “for various internal reasons”; a decision has yet to be made on whether to apply in the next round, which is expected to begin in 2018.

Further complicating the issue is the willingness – or otherwise – of registrars to help when infringements are discovered; many will refuse to reveal the contact information of an offending domain registrant without a court order. “Given the volume of infringing sites we enforce against each year, we could not possibly file a legal action every time we needed to reveal the contact information for a registrant with masked contact information,” stresses Leavitt. What is more, an “increasing number” of registrars will also refuse to disable “obviously infringing” sites. “This has increased costs and created an additional – and arguably unnecessary – step in the enforcement pathway,” she adds.

Tools of the trade

eBay’s approach to offences on its platforms stands in marked contrast to this recalcitrance. Given their experiences at the sharp end of infringement, Leavitt’s team are passionate about ensuring that their own complaints procedure is as pain and hassle free as possible. The most established of eBay’s third-party protection mechanisms is its Verified Rights Owner (VeRO) programme. Launched in 1998, it provides rights holders with a user-friendly system to report allegedly infringing listings on the eBay auction platforms. To date, over 40,000 companies have signed up as members of VeRO, ranging from Fortune 500 enterprises to small family outfits.

Despite the rapid growth of the programme, Leavitt reveals that the rate of VeRO reports submitted has actually “decreased over time”, when considered as a proportion of the total items listed on eBay. One key reason for this is the introduction and ongoing refinement of algorithms that can automatically detect and remove allegedly fraudulent listings or accounts. Another is the changing habits of infringing sellers, with many now moving to less regulated online marketplaces, social media platforms or the more anonymous parts of the Web (eg, the Darknet).

Development of the VeRO system has nonetheless continued unabated, including the addition of VeRO-related telephone support and the ability to submit notices of claimed infringement using DocuSign. The improvement that brand owners may have found most noticeable is the quicker response rate once reports are submitted: in 2014 over 92% of listings reported through VeRO were removed “within 12 hours” and over 84% “within six hours”. These advances are reflected in the perceptions of rights holders: while eBay consistently topped the tables as the most challenging online marketplace for trademark counsel in our annual Global Trademark Benchmarking Survey, it has now dropped to third place, overtaken by Chinese counterparts Alibaba and Taobao (World Trademark Review, issue 55). “No other site is as quick to respond,” enthused one respondent to this year’s survey.

Each report submitted is reviewed by the VeRO customer service team, whose members are based across the United States, Europe and Asia-Pacific. A law degree or IP background is not needed to join, as those who make the cut receive regular ongoing operational and substantive training from both the customer service and IP legal departments. Staff turnover is low, Leavitt notes; in fact, some of the most experienced employees at eBay have been working exclusively on VeRO over the course of their careers. Leavitt jokes that, having seen every issue imaginable, “many probably know a lot more about IP law than most IP attorneys”.

While much thought and effort has gone into the development of the VeRO programme, unfortunately the same cannot always be said of how brand owners use it. “That can create a lot of headaches on both sides,” admits Leavitt. “It primarily occurs with smaller, less established brands which don’t understand that VeRO is intended to address concerns of alleged IP infringement and not to enforce distribution, max pricing or contractual issues. The team want to help, but can’t if what is being reported is beyond the purview of what they can actually do.”

However, other brand owners now have a sophisticated understanding of VeRO and how it can help them, and many are also engaging with the programme through its homepage at vero.ebay.com. The site was set up as a portal through which brands can offer advice to both buyers and sellers. Approaches vary, from warnings about terms and logos that cannot be used on products sold on eBay to exhortations that buyers purchase only from official retail channels. For her part, Leavitt recommends a measured, informative approach: “Some brands put up a broad statement, saying ‘Don’t buy online because nothing is authentic’, which is a little extreme. The more effective pages on the VeRO homepage are the ones that provide more objective examples about what specific things should cause a potential buyer to be suspicious of an item. I understand the proprietary concerns about not putting up too much information due to counterfeiters becoming increasingly sophisticated, but it’s always good to err on the side of giving consumers more information so they can make smart purchasing decisions.”

A call to arms

The success of its VeRO programme has made eBay something of a poster child in the vast e-tail environment and the trademark teams at other online platforms now look to it as a beacon of best practice. “Even though we are competitors on paper, we meet and speak very often to share ideas,” reveals Leavitt. “I take the fact that many of our counterparts look at us as the gold standard in terms of the efficiency of our VeRO programme very seriously. I’ve been told by several peers that they have actually modelled their own notice-and-takedown programmes on VeRO.”

One such counterpart is Chinese online retail giant Alibaba, which recently pledged to revamp its notice-and-takedown procedure in response to stinging criticisms over the extent of counterfeiting on its platforms. Leavitt is aware that Alibaba has “watched us and will take our lead or even copy what we do”, adding that the two companies have also “shared feedback” on the procedures that should be in place.

“The folks working on these specific issues really do want to do the right thing,” she continues. “I think about how much these companies are vilified across the board, but people need to realise we are all trying our best. They forget that we too are brand owners and we deal with many of the same types of infringement challenges. So we get it, and we should all be working together to tackle these issues.”

Indeed, collaboration is a central tenet of eBay’s philosophy, as reflected by the number of partnerships it has forged with industry associations in recent years. The highest profile is an alliance with the Council of Fashion Designers of America (CFDA) brokered in 2013; as part of this initiative, 90 council members – including household names such as Ralph Lauren and Tommy Hilfiger – designed a one-of-a-kind canvas bag emblazoned with the tagline “You Can’t Fake Fashion”. These were sold on eBay, with all proceeds goings to the CFDA, while also raising awareness of the counterfeiting problem among the wider fashion community. Meanwhile, in June this year eBay’s French website joined forces with the Union of Manufacturers (Unifab), which brings together more than 200 French companies with a focus on the protection of intellectual property; the collaboration resulted in the opening of a permanent exhibition at the Museum of Counterfeiting in Paris. Most significantly, eBay is also a signatory to the European Commission’s Memorandum of Understanding on the Sale of Counterfeit Goods via the Internet.

But while eBay has been making great strides in promoting direct engagement with the issue of counterfeiting and how best to address it, the same cannot be said of all other stakeholders. “I think what has been the most helpful for us is forming a relationship with brand owners themselves,” she explains. “But – in the United States at least – we are a very litigious society, so a common reaction when discovering a wrongdoing is to send a nasty communication. I think it is important for brands and online platforms to take a more practical approach to problem solving. That involves picking up the phone and calling when issues arise, rather than engaging in an exchange of letters sent by outside counsel.”

eBay’s counterparts should also be developing the systems needed to facilitate and encourage such direct communication, she suggests: “At eBay, we are at a point where we have excellent relationships with many brand owners, but it has taken years to reach that point. I would love to see more of that taking place between third-party brands and the other marketplace platforms. It would be more efficient for everyone. It is in the retail platforms’ best interests to not have allegedly counterfeit items on their site, because it damages their brand value and perception. Brand owners, on the other hand, would surely like to spend less money on outside counsel in continually enforcing this issue. It would be a win/win situation.”

In the meantime, the battle goes on. Acknowledging that – at least for the time being – there is unlikely to be any let-up, Leavitt concludes with a call to arms: “Things will continue to be challenging in the future as the bad guys get more sophisticated, whether they be domain hackers or the manufacturers of counterfeit products. This means that we have to continue to try and proactively identify trends and keep up with the infringers.”

Personal dimension

What is the most challenging aspect of your job?

One challenging aspect is the broad range of issues that I deal with on any given day. You can imagine that overseeing the external enforcement of our own brand, as well as managing the internal processes to deal with protecting the brands of others, is a tricky proposition. The volume of issues that come across my desk is pretty significant, so I have to spend the first part of my day triaging the different matters and reconciling any new issues that have come up.

It is also a challenge overseeing matters across numerous time zones – not just because of obvious issues with time differences, but also because of the variances of law from one jurisdiction to the next. You have to take into account the specific needs of the business in any given region; plus there are all the different legal factors and cultural nuances to be taken into account.

What is the most rewarding aspect of your job?

This is going to sound super-cheesy, but I really do believe in the fundamental core of what eBay stands for. We enable ordinary, everyday people to do some pretty cool things – from starting small businesses to finding unique items from their childhood sold by someone on the other side of the world. This means that the way I look at my job, and my overall perspective, is that I like to think I’m helping to protect our brand value and helping to make our site safer every day, so that eBay can provide those different types of opportunities for its users. So that is the most rewarding aspect: the sheer amount of people we impact on a day-to-day basis.

If you weren’t a lawyer, what career path would you choose?

I would be a resident wellness guru on a resort on a tropical island. One of my good friends literally does that, as she works as a registered dietitian in Bali. I look at her and think, “We got it wrong!”

What hobbies do you have outside of work?

I’m really into outdoor stuff – I enjoy skiing, hiking, mountain biking. I also have three little kids under the age of six, so they’re my main hobby!

What is your favourite holiday destination?

Any of the islands of Hawaii, hands down. I love it there because the time zone is so far removed from everything that you really are able to relax and unwind.

If you could retire anywhere in the world, where would you choose?

I would be a park ranger for the US Forest Service in Grand Teton National Park in Wyoming. It’s just outside Jackson Hole and really is one of the most beautiful places on the planet. There are so many wonderful outdoors things to do in the area.

If you could go back in time and give advice to your 18-year-old self, what would it be?

This is a very superficial answer, but I would say: “Wear more sunscreen!” I’m regretting that now!

What advice would you give to someone starting a career in intellectual property?

Work hard, take constructive criticism to heart and be open to learning new things. Intellectual property is a field that is always changing and evolving, so you have to have humility and realise that you’re never going to know everything – it’s a constant process.

A history of eBay’s logo

1. eBay.com was launched in September 1995 with the original name AuctionWeb. The original company logo was called the “Death Bar” by staff, due to its imposing colour palette.

2. A navy blue logo was used for a short time in 1997. Jim Griffith, one of the first customer sales representatives at eBay, described the logo as “one that didn’t last more than a week”. He also asked: “Can you imagine what eBay might have become with such a boring old logo?”

3. Later in 1997, advertising agency CKS Group was asked to come up with a completely revamped corporate identity for eBay. The resulting imagery matched the “friendly, open and accessible” look that the eBay team was seeking. Designer Elissa Davis explained: “The overlapping colours were designed to convey the sense of community on eBay.” The logo subsequently became globally recognisable and defined the brand for more than a decade.

4. In 2012 eBay revealed a modernised new logo. At the time of the announcement, chief executive David Wenig said: “The eBay logo is known the world over, so changing it was not a decision made lightly. The time felt right.”