A leading intellectual property lawyer says Trade Me might not be able to stop a competitor linking to its members' reputation ratings - and may fall foul of competition laws if it tries.
Yesterday, Trade Me fired a shot across the bow of upstart Geta, which plans to incorporate Trade Me feedback ratings into Geta seller profiles.
While not speaking directly to Geta's move, the NZX-listed company did sound a general warning to the market.
"People work hard for their Trade Me feedback and there’s nothing to stop a person telling others what their Trade Me feedback rating is," head of marketplace Craig Jordon told NBR.
"However it is a violation of our terms and conditions to have other websites link to Trade Me feedback.
"We don’t want to get silly about it, but would remind other website operators that inducing people to breach a contract is a tort and probably not a great idea. We’d suggest any website considering this sort of thing takes good legal advice before proceeding."
Geta chairman Gerard Peters labeled this approach anti-competitive. Mr Peters sees linking to or otherwise incorporating a seller's Trade Me reputation rating as a way of jump-starting his site; helping to solve the critical mass problem and providing instant authority.
NBR asked Chapman Tripp partner Matt Sumpter - a specialist in intellectual property, commercial litigation and antitrust law - for his opinion.
"I understand that users write their own “about me” profiles.That means that they own copyright in those profiles and can licence Trade Me’s rivals to use the descriptions. I can’t see anything obvious in Trade Me’s terms and conditions which would or could change that copyright position. It seems to me that users give Trade Me an implied licence to use the profiles, but it doesn’t look like they’re handing over an exclusive licence to use the material," Mr Sumpter said.
"I can’t see how Trade Me could stop users saying that, as a matter of fact, they enjoy a particular Trade Me reputation rating. Intellectual property laws are designed to encourage creativity, not muzzle free speech."
From there, there are shades of grey.
"Linking is tricky. It should be okay, but Trade Me could run a technical copyright argument to the contrary," Mr Sumpter said.
"But at some point where Trade Me stretches its intellectual property rights too far, it might have a competition law problem on its hands."
Whether Geta - one any one of the pool of new Trade Me competitors - could link to Trade Me ratings could make a fascinating test case, the Chapman Tripp partner said.
The question now, is whether Mr Peters - an importer of American muscle cars when not working on Geta - has the stomach, and the financial means, to take on the $1.6 billion Trade Me.
Mr Peters said this afternoon that Mr Sumpter's comments had confirmed his take on the situation.
"It does not seem legally feasible to control user's feedback," the Geta chairman told NBR. Trade Me was making a "childish, bullying" attempt to force members to stay on its platform.
Trade Me shares [NZX:TME] were up 0.25% to $4.08 in midday trading.
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