Why businesses should be wary of going after eBay fakes

I came across this article in The Times Online (UK) while watching the rugby finals (proves that I'm not a rugby fan at all, but its the final!) which I thought would make an interesting read (find article at: http://business.timesonline.co.uk/tol/business/law/article2630267.ece)

As the law current stands, middle men or intermediaries such as eBay, Facebook and internet service providers (ISPs) are generally immune from prosecution provided they remove infringing material from their sites as soon as they are notified of any potential infringement. This means the onus is on businesses to police their own intellectual property rights.

It may, however, seem surprising that IP owners who request intermediaries remove "infringing" products or material from their sites can themselves be sued for an injunction and damages by the person or company they have accused. This is what is known as the “groundless threats” provisions.

The rationale is this: an accusation that a business has infringed IP rights may result in that business ceasing to stock and sell the allegedly infringing item without fully investigating the legal position and any defences it may have. The business as a result may lose revenue, while public allegations may damage its reputation in the market. The allegations may be made by a competitor or in bad faith; and even if they are made honestly they may have no legal basis. In the UK, the law on patents, trade marks and designs makes such allegations actionable.