eBay has filed suit against Digital Point Solutions, best known as the owner of one of the more popular web site owner communities, and others over an alleged cookie stuffing scheme.

According to the filing lodged in the Northern California District Court, Shawn Hogan and Digital Point Solutions, Todd Dunning and Kessler’s Flying Circus, and Brian Dunning and Thunderwood Holdings defrauded eBay in a “cookie stuffing” scheme that made it appear that their companies should be paid commissions on eBay affiliate sales.

The scheme worked like this: users were automatically redirected to eBay without clicking on an eBay advertisement, resulting in an affiliate cookie being place on each users computer marked with the defendants affiliate code so that for future purchases they received a cut.

The complaint alleges that the defendants tried to hide their scheme, using “deceptive means to prevent it from discovering the fraud, and to conceal it.” eBay is demanding “compensatory, treble and punitive damages.”

It’s not clear whether users on Digital Point itself were redirected under the scheme, but it would appear from the filing that there was a direct relationship at least on some levels.

In one way, it’s so simple as to be brilliant, but did they really think they could get away with it, or better still that eBay wouldn’t notice?

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Yesterday, eBay secured an important legal victory after New York District Judge Richard Sullivan ruled the online auction service actually did do enough to thwart the sale of counterfeit jewelry.

The battle between Tiffany and eBay started four years ago in the US District Court for the Southern District of New York, and has ended with a decision stating it’s the responsibility of manufacturers to police counterfeit goods sold through eBay.

All of Tiffany’s trademark infringement charges were denied by Judge Sullivan. In its suit, Tiffany focused on trying to hold eBay responsible for alleged “liable for direct and contributory trademark infringement, unfair competition, false advertising, and direct and contributory trademark dilution, on the grounds that eBay facilitated and allowed these counterfeit items to be sold on its Web site,” its 66-page filing read.

The legal case between the two companies marked the first time eBay has faced counterfeiting allegations in the United States. In France last month, high fashion manufacturer Moet Hennessy Louis Vuitton (LVMH) won a judgment of $63 million for eBay’s failure to thwart the sale of counterfeit goods. And in Germany in April, a judge ordered eBay to create new guidelines to help stop the sale of counterfeit Rolex watches.

A possible eBay defeat here had analysts worried that multiple other companies would have followed suit.

“This decision validates that eBay has always been committed to fighting counterfeits in a way that goes beyond what the law requires,” eBay Senior Vice Counsel Rob Chesnut said in a statement. “We see this as an important victory for our global community of buyers and sellers.”

Tiffany is expected to appeal the decision.

EBay states it swiftly removes listings once notified about trademark infringement, and allows both companies and eBay shoppers to flag suspicious listings. Its opinion is that luxury goods manufacturers are more focused on eliminating a fair marketplace by continuing to control the sale of their goods through conventional retail channels.

The auction service reportedly has a $20 million yearly operation that involves 2,000 employees who are responsible for tracking down sales of counterfeit items. Even with its operation, the company will continue to face legal problems, especially in Europe, where infringement laws are a lot more flexible than in US courts.

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eBay has won a major legal victory today, after a federal judge ruled that Tiffany was not able to prove the online auction company was responsible for the sale of counterfeit Tiffany jewelry on its Web site.

The 2004 lawsuit brought by Tiffany in U.S. District Court in New York and the ruling in eBay’s favor could influence how business is done online.

Tiffany claimed that eBay ignored the sale of fake Tiffany silver jewelry on its site. eBay said the jeweler did not participate in eBay programs that help brand owners prevent fraud.

“The Court concludes that Tiffany has failed to meet its burden in proving its claims,” wrote U.S. District Judge Richard Sullivan in his opinion.

“Tiffany has failed to demonstrate that eBay knowingly encouraged others to dilute Tiffany’s trademarks,” he wrote. “Rather, to the extent that eBay may have possessed general knowledge of infringement and dilution by sellers on its Web site, eBay did not possess knowledge or a reason to know of specific instances of trademark infringement or dilution as required under the law.”

eBay said in a statement,”The ruling confirms that eBay acted reasonably and has adequate procedures in place to effectively address counterfeiting. The ruling appropriately establishes that protecting brands and trademarks is the primary burden of rights owners.”

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eBay Australia has officially dropped its proposal to move to a PayPal only system in the country.

eBay’s decision comes after sellers expressed their anger last week at a conference held by the Australian Competition and Consumer Commission (ACCC) on the company’s plans to only accept PayPal on the site.

The new plan would have forced sellers to pay fees to PayPal Australia on top of the fees they pay to eBay.

After the conference, eBay said it would continue to allow sellers to accept other payment methods, but they had to offer PayPal as an option.

“We have decided to withdraw the notification to stop any further confusion and disruption among the eBay Community,” eBay said in a statement. “eBay regrets any uncertainty that this process has caused among the community and believes that this decision will remove further doubt.”

eBay had argued that its PayPal service was more secure than other payment methods and that it would reduce fraud. “eBay’s goal has always been to provide members with a safer experience. Under the current circumstances, we will continue to look for ways to do that while still offering a variety of payment choices.”

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eBay users everywhere were pleased when the company gave up on making PayPal the only allowable payment option in Australia. But Hitwise has taken a look at the company’s standing on that continent, underlining what was (and may still be) at stake within its borders.

eBay does pretty well as a part of Hitwise’s Shopping & Classifieds category, receiving about 29 percent of all hits. Sandra Hanchard notes, “Visits to the online Auctions industry are in fact particularly high in Australia. Auctions websites accounted for 38.11% of visits to all Shopping & Classifieds websites in May 2008 in Australia, compared to 21.35% by U.S. Internet users.”

Then, within that Auctions subset, eBay cleans up. eBay Australia, eBay.com, eBay UK, and eBay Motors own the first, second, fifth, and sixth spots, respectively, on a list of the top ten Australian auction sites. And eBay Australia alone has a market share of 72.69 percent.

So if eBay had gone through with its PayPal-only plan, it would have either profited off its huge audience or sent said audience to the dozen nearest competitors. Given the anger expressed over eBay’s plan, competitors may actually wish the thing had been implemented.

There’s still the chance that eBay did some permanent damage to its reputation, though, as Hanchard found that a new rival and an old one are doing surprisingly well. She states, “Trading Post Online debuted at 3rd position (week ending 14/06/08) when it launched its auctions service and accounted for 3.78% share of visits during the week ending 28 June 2008. Oztion Auctions followed with 2.53% market share, reaching its highest point ever during the week ending 28 June 2008.”

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PayPal has revised its policy concerning international transactions under Section 4.3 of the PayPal users agreement that goes into effect July 9, 2008.

PayPal spokesman Michael Oldenburg told WebProNews that eBay was not requiring all international shippers to accept PayPal. The policy states that if eBay sellers accept PayPal, they are required to accept it for all transactions, for domestic and international payments.

Specifically under section 4.3 of the PayPal user agreement sellers who offer PayPal as a payment method in their eBay listings must follow these requirements:

a. Accept PayPal if the eBay listing includes PayPal as a payment method.

b. Accept all PayPal funding sources from a buyer, including but not limited to eCheck and credit cards.

c. Have a Premier or Business account or be willing to upgrade to a Premier or Business account upon receipt of a payment.

d. Accept international PayPal transactions if the eBay listing offers shipping outside the US.

e. Sellers may not charge a surcharge for accepting PayPal as a payment method.

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With a new application framework entering open beta early next year, eBay is working to build a kind of ‘open’ market for both developers and vendors to earn money, as a key eBay developer told Techachino Tuesday.

A private beta of eBay’s Project Echo will commence in Q4 2008, limited to participation among five ISVs including research tools provider Terapeak and CRM service provider Hosted Support. That will be followed by an open beta early next year and commercial availability by mid-year. This news Tuesday from Kumar Kandaswamy, senior director for platform strategy of the eBay Developers Program, in a briefing for Techachino.

“There’s been a lot of talk in the industry about ‘opening up’ this and that,” Kandaswamy said. “But we have two points of differentiation. One is simplicity. The other is that developers can make real money with us.”

Project Echo’s public beta will be open to all interested developers, the senior manager told us, with just a couple of provisos: “First, all [developers] must be willing to provide 30-day free trials of their products, both during and after the beta. Second, they must clearly call out the subscription price of their software for sellers.”

Through Project Echo, developers will be able to integrate their existing applications directly into Selling Manager and Selling Manager Pro, two eBay applications that already count some 700,000 eBay sellers as subscribers, Kandaswamy told us. That should enable sellers to subscribe to and start using their tools directly on eBay’s site.

Historically, sellers interested in trying out new third-party applications have had to go to a special section of the site known as Solutions Directory, and then click over to the ISVs’ sites.

Kandaswamy also acknowledged that eBay faces growing competition from other Web sites in luring application developers.

eBay is accessed by literally millions of buyers and sellers worldwide, according to the strategy manager. At the moment, there’s a push within the company for the creation of new and sophisticated tools that can help sellers do a better job of marketing their wares.

But eBay has already attracted some 70,000 third-party developers since the launch of the Developers Program eight years ago, he noted. Moreover, much of eBay’s traction with developers has happened over the past year, with 50,000 of those developers hopping aboard just since then.

A total of 4,800 of the 12,000 third-party applications built for eBay have been created over the past 12 months, he elaborated.

One of the latest third-party applications built for eBay assesses the buying behavior of individual buyers, in order to make recommendations to sellers about which buyers they should target. Another leverages current market data to help guide sellers in making decisions about which products in their inventories to focus on, and what prices to charge, Kandaswamy said.

He credited the recent expansion of eBay’s development environment for much of the growth in application development activity.

Instead of being limited to .NET and PHP, as in the past, eBay developers can now work in JavaScript, Flash, and Flex, as well. Meanwhile, eBay has also added integration interfaces for SOAP and XML.

Aside from a Web-based SOA platform for application integration, Project Echo also calls for the “opening up” to third-party developers of several APIs — including “eBay Client Alert” — that were previously available only to internal developers.

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Companies generally don’t comment on rumor or speculation—that’s the blogosphere/news media’s job. The speculation du jour, which seems very likely born of non-buyer’s remorse, is that Microsoft is eyeing—or should eye—an acquisition of eBay or, at least, PayPal and/or Skype.

Acquisition rumors not that crazyeBay Logo
Or not. But it wasn’t that long ago, when it was becoming abundantly clear Google was busting the search block, that analysts and investors started pushing Microsoft to make a bid for Yahoo just because it made a lot of sense. As soon as MS got its ducks in a row* with the Office update and the release of Vista, that’s pretty much what they did.

And we know how well that worked out: Microsoft’s still got its $44 billion and Yahoo has a few months worth of ’splainin’ to do. Lots of questions remain about Microsoft’s next move, which could be another Yahoo bid once share prices sink below $20 again, or it could be, according to Stifel Nicolaus analyst Scott Devit, buying a stake in PayPal or Skype.

Driving the speculation are MSN’s cash back display ads popping up on eBay, where fixed-price items qualify for the program.

And that’s it, really. That’s what appears to be driving the speculation. But Devit’s not the only one tossing around theoretical good ideas. Berstein Research’s Jeffrey Lindsay takes another route, crediting a “Microsoft-like suitor” as a potential eBay acquirer, who would then spin off PayPal and/or Skype.

ZDNet Editor in Chief Larry Dignan doesn’t think that idea is so off base, and makes a case that an eBay buy would be a better deal for Microsoft than Yahoo, if Microsoft just had to spend some money. With a higher market cap, more revenue, better price to earnings ratio and a current share price of $28.50, Dignan might be right.

Given eBay sellers recent rows with the auction giant, new ownership could be welcomed. Stranger things have happened, including speculation Google is negotiating a buyout of Digg.com. Try and make sense of that one.

Microsoft appears to have abandoned any hopes of owning Yahoo, but with the right collective acquisition focus, the Beast of Redmond could grab a pretty good chunk of the online market without Yahoo. Buying Ask, for example, would add some more search share as Microsoft figures out its own brand; eBay would put them in charge of online auctions; and why not just go ahead and buy all of Facebook, just to round off their edges?

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eBay is requiring global sellers to increasingly accept its PayPal payment service. In the U.S. eBay is forcing sellers who ship internationally to accept international PayPal transactions under Section 4.3 of the PayPal users agreement that goes into effect July 9, 2008.

All sellers in the UK are required to accept PayPal in all of their listings and eBay is challenging government regulators in Australia over its plan to move to a PayPal only system in that country.

The requirement of accepting PayPal in the UK does not allow shoppers there to view international listings. According to an AuctionBytes reader, “What eBay appears to have done is to prevent every listing that doesn’t offer Paypal being copied onto the ebay.co.uk servers. So if you do a Worldwide or EU search from ebay.co.uk, then it no longer shows those international listings that don’t offer Paypal.”

“So if you’re a German seller who only offers Bank Transfers, or a US seller that only offers Money Orders & Cashier Checks, then potential buyers in the UK will never ever see your listings.”

eBay is also introducing policies that require sellers to have a single payment policy for all sales, both domestically and internationally.

eBay sellers who sell internationally prefer to limit payment methods on foreign transactions due to geographic reasons and to reduce risk.

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Skype’s not doing too badly these days. As it stands, though, Skype has little to do with eBay’s core business, and so it may get sold in the relatively near future.

“What we’re testing this year are the synergies,” said John Donahoe, eBay’s new CEO, to the Financial Times. “If the synergies are strong, we’ll keep it in our portfolio. If not, we’ll reassess it.”

This decision is interesting, to say the least; after many, many problems, Skype’s revenue has shot up, and its user base is huge. John Oates observed that eBay appears to be “[i]mplementing [a] buy high, sell low strategy.”

eBay itself, in contrast to Skype, is still having some problems following its fee adjustments, and a decision to limit payment options in Australia has set off a fresh round of protests (in addition to an investigation).

It’s difficult to guess whether Donahoe is following some long-decided plan of action, or is just trying to make an impact as a new leader. Either way, all business considerations aside, he loses points for using the “Office Space”-style word “synergies.”

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