eBay Cleared In Tiffany Counterfeiting Lawsuit

According to U.S. District Judge Richard Sullivan’s 66-page ruling (PDF), eBay’s current efforts at enforcement – which primarily involves responding to takedown requests from copyright and trademark holders – are more than sufficient to keep the site out of liability for inadvertently brokering counterfeit goods.

“It is the trademark owner's burden to police its mark and companies like eBay cannot be held liable for trademark infringement based solely on their generalized knowledge that trademark infringement might be occurring on their websites,” wrote Sullivan.

This is a much-needed legal win for eBay who has not fared well as of late in other legal arenas. A French judge recently sided with LVHM - maker of Louis Vuitton handbags - in a similar suit, ordering eBay for fork over $60m in damages. Just prior to that suit eBay was forced to pay French luxury group Hermes for damages resulting from the sale of counterfeit handbags.

Should the victory stand it would set a legal precedence here in the states that could save sites like eBay millions of dollars. However it will do little to save them from on-going legal battles elsewhere in the world.

The lawsuit also has important implications for nearly every industry affected by piracy and copyright or trademark infringement. A victory for Tiffany would have set precedent that named content and platform providers – a description that fits a wide variety of names, including eBay and video-sharing site YouTube – as primary enforcers in other companies’ trademarks.

This would have potentially opened the door to hundreds of thousands of lawsuits. By ruling in favor of eBay judge Sullivan has effectively cleared many sites of wrong doing. This ruling may even inadvertently have a major impact on file sharing and torrent sites.

**Update**

Aug 11, as expected Tiffany's has appealed the previous decision of Judge Richard Sullivan that absolved eBay of any responsibility for counterfeit Tiffany items that appeared on the online auction site.

"The effect of this is that eBay can continue to profit at the expense of consumers and trademark holders," Patrick Dorsey, general counsel for Tiffany & Co., said in a statement. "In our view, this approach makes no sense as a matter of law or policy."

Tiffany maintains that eBay should "be compelled to investigate and take action to protect its customers and stop the illegal conduct" once it becomes aware that a specific brand like Tiffany is being counterfeited and sold on its site.

eBay has been battling Tiffany and other luxury retailers over counterfeiting for years. Monday's filing from Tiffany requests that the court overturn the July decision.

"We do not believe the law allows auction sites like eBay to continue to turn a blind eye to this problem while reaping profits from the listing and sale of counterfeit merchandise," Tiffany lawyer James B. Swire, a partner with Arnold & Porter, said in a statement. "Stated trademark law does not impose a duty on Tiffany to police eBay's site: eBay designed the site and has the responsibility to police it."