Irvine-based Wimo Labs filed a federal racketeering lawsuit Thursday against eBay and PayPal, claiming they knowingly abetted the sale of counterfeit products.

Wimo Labs sells phone accessories under the name Lunatik.

The suit alleges that eBay and PayPal not only facilitated but also profited from the sale of fake products that display the Lunatik trademark. PayPal was owned by eBay for 13 years before it spun off last month.

“Our client is the victim of trademark infringement and has been adversely affected by it,” said Deborah A. Klar, a lawyer representing Wimo Labs. She said Wimo had sent eBay more than 5,000 notices of trademark infringement involving more than 2,000 eBay sellers.

“Not only does eBay allow its sellers to list fake products that infringe on our client’s trademark; they also elicit eBay buyers to purchase these fake products,” she said.

Wimo Labs is seeking damages of up to $2 million per counterfeit trademark, plus lost profits and attorneys’ fees. Four trademarks were identified in the complaint.

Rather than take “effective remedial action,” the lawsuit claims, eBay “protects and conceals the identity of its unauthorized sellers” and fails to use the “reasonable means it has available” to deny its services to them.

Wimo further alleges that eBay and PayPal make “enormous profits” from fake products and are therefore ignoring the plaintiff’s claims.

EBay and PayPal said their companies would fight the lawsuit.

“Counterfeits are not welcome on eBay and we have a number of sophisticated tools, policies and other measures in place to keep them off our site,” the company said in a statement. “We will vigorously defend our practices in court.”

EBay and PayPal face a federal racketeering lawsuit, which focuses on the sale of counterfeit products.

Irvine-based company, Wimo Labs, filed a federal racketeering lawsuit against eBay Thursday.

Eyewitness News has been looking into online counterfeit sales over the past several months. Craig Crosby of The Counterfeit Report spoke with our consumer specialist Ric Romero. The Counterfeit Report works with manufacturers to expose bogus products up for sale.

Crosby told Romero the Report had shelves filled with fake products that were all purchased on eBay. He accuses the online company of doing little to stop counterfeit listings because of the profit involved in the sale.

Eyewitness News reached out to eBay for comment and a statement was released saying:

“We have received a copy of the complaint and are reviewing it. That said, counterfeits are not welcome on eBay and we have a number of sophisticated tools, policies and other measures in place to keep them off our site. We will vigorously defend our practices in court.”
http://abc7.com/business/irvine-company-files-federal-racketeering-lawsuit-against-ebay/950265/