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Online auction leader eBay (Nasdaq: EBAY) said it filed a trademark infringement suit against upstart rival BidBay.com on Monday.
eBay's suit, which was filed in U.S. District Court in San Jose, California, alleges that BidBay and its founder, George Tannous, have imitated eBay's brands to leverage eBay's reputation and are using eBay's trademarks as attention-getting devices for their own marketing.
"We've had a number of cases of users writing in to inquire about the connection between eBay and BidBay," Jay Monahan, eBay's associate general counsel for intellectual property, told the E-Commerce Times.
The suit was filed now because BidBay has "recently made the site look more like eBay," Monahan said. "We had no choice but to file suit."
BidBay To Countersue?
Tannous told the E-Commerce Times that the suit is "pretty much absurd" and that BidBay intends to file a countersuit against eBay. Tannous added that BidBay had not yet been formally served with eBay's suit.
Tannous speculated that the timing of eBay's suit could have something to do with the fact that BidBay's initial public offering (IPO) was close to being approved by the U.S. Securities and Exchange Commission (SEC).
"I don't know why they're running scared from us," Tannous said.
Pop-Under Chaos
According to Monahan, BidBay has been capitalizing on the goodwill of the eBay trademark through its choice of name and its color scheme, as well as with pop-under ads that open BidBay's home page when an Internet user is looking at an eBay auction.
BidBay hosts photos for some eBay auction users and, according to eBay, when users browse an auction containing photos hosted at BidBay, BidBay's home page will open in another window.
Tannous said that the pop unders are "none of [eBay's] business," and that when people choose to have their images hosted by BidBay, "we can do whatever we want."
In addition to trademark infringement, eBay's suit also accuses Tujunga, California-based BidBay of trademark dilution and unlawful business practices.
Cease Letter
The suit should come as no surprise to BidBay, because the site has been under fire from eBay lawyers since shortly after its launch in January 2000. In a letter dated a few days after BidBay's launch, eBay notified Tannous that the BidBay site "dilutes the famous eBay logo."
eBay then told BidBay that the BidBay name was "confusing to eBay users" in a March 2000 letter.
"We have already spent over one million dollars branding our name on T-shirts, billboards and television commercials," Tannous responded at the time. "We plan to take BidBay public and have no plans to change the name of our site. BidBay.com is here to stay."
Irony for Sale
Tannous launched BidBay after he "became frustrated by the unfriendly attitude and lack of service" at eBay, according to the BidBay site. Ironically, Tannous purchased the BidBay name for US$1,000 at an eBay auction.
BidBay says that it has over 4 million users and that more than $153 million in bids have been placed in the past year. By comparison, eBay has over 29.7 million users who generated over $5 billion in transactions last year.
Monahan said eBay hopes that BidBay will cease the alleged infringements, but that the
online auctioneer is "fully prepared to litigate it to the end."
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