We are all familiar with the many issues involved with the global trade of pirated goods. Groups such as the U.S. Chamber of Commerce and the International AntiCounterfeiting Coalition estimate global counterfeit sales to be $650 billion per year or 5%-7% of all world trade.

That being said, most of the news we see points fingers at online trade marketplaces like eBay and Alibaba.com for not only supporting but also promoting such illicit trade despite their efforts to control such content.

The most prominent case today is eBay vs. Tiffany & Co., whose rulling, expected this year, could dramatically change how all online trade marketplaces define their businesses and what they are liable for. Read the following carefully as it could lead to big problems for these businesses.

…numerous retailers have brought lawsuits against eBay claiming that it is responsible for third-parties selling counterfeit merchandise. Rolex, Louis Vuitton and several other luxury brands have challenged eBay in Europe seeking injunctive relief and damages for counterfeit goods that have been sold on its sites. A claim filed by Tiffany & Co. on similar charges is awaiting a judge’s ruling in federal court in New York.

With a ruling expected shortly, the Tiffany case could set a precedent for how, precisely, eBay’s business is defined, according to Geoffrey Potter, an attorney who runs the counterfeit-law practice at Kramer, Levin, Naftalis and Frankel in New York.

In arguing its case, eBay has claimed that it does not operate either an auction house or a flea market, designations which place responsibility on the business to ensure the legitimacy of the merchandise sold under its aegis.

eBay has argued that it is unfeasible to police such a large marketplace. A decision in favor of Tiffany could impose sweeping requirements on eBay to physically inspect the merchandise passing through its sites, a contingency that would cut deeply into eBay’s transaction margins.

“A loss is a very bad thing for eBay,” Potter told InternetNews.com. “A loss where they have been found to have the obligation to police the auction for trademarked goods would have a tremendous impact on their business.”

An increasing trend that started a few years ago now blames online marketplaces AND large scale, industry leading, offline trade events. If you attended Deustche Messe AG’s CeBit in Hannover, Germany last week, you enjoyed one of the world’s largest and most important technology events as well as a massive police raid!

…more than 180 police and customs officials took part in the bust, which affected 51 exhibitors at CeBit in Hannover, Germany. Of the accused, 24 were from China, 15 were from Taiwan or Hong Kong, nine were from Germany, and the others came from Poland, the Netherlands, and Korea.

The bottom line is that pirated goods will continue to be manufactured and traded globally. It will never stop as long as there is demand.

The owners of these brands can only hope to contain some of the flow of these goods through continued cooperation with legal authorities, online trade marketplaces and trade show organizers.

Online trade marketplaces need to continue to educate their content/editing departments to insure they know what a brand is, looks like and the consequences if that product image makes its way online (especially if Tiffany wins their case).

Even if educated, I still doubt anyone can differentiate between a ‘real’ and a ‘fake’ by simply viewing an image!

Trade show organizers seem to be making aggressive moves at involving federal/local authorities, customs and brand/patent owners to insure exhibitors comply with global patent rights.

Be careful out there! If it looks like you are getting a bargain on a shipment of iPhones, then prepare yourself for some CeBit-like fun!