Monday, July 14th, 2008

UPDATED: eBay Wins Tiffany Court Case

It appears that the court has rejected Tiffany’s lawsuit against eBay. Tiffany had argued in the lawsuit that eBay should be held liable for trademark infringement on the basis that significant volumes of silver jewelry merchandise that Tiffany contends are counterfeit have been made available for sale on eBay’s website. As a matter of law, eBay pointed out in its briefing that its proactive measures more than adequately satisfy its legal obligations under U.S. trademark law.

At 9:15am PT today word came down that eBay had indeed won the case over Tiffany. Details are still coming in but for now, I received the following statement from an eBay spokesperson…

“Today’s decision is a victory for consumers. 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. While today’s decision is a victory for consumer choice, it is a shame that so much effort has been wasted when Tiffany could have worked with eBay to more effectively fight counterfeits. eBay will continue to lead the industry with innovative solutions to stop the sale of counterfeits.”

This is an initial reaction to the ruling. At first glance though, this looks like a best-case scenario for eBay and eBay users. I managed to take a quick look at the 65-page ruling from the Honorable Richard J. Sullivan, District Judge of the US District Court for the Southern District of New York. Here are some tidbits:

“…It is clear that Tiffany and eBay alike have an interest in eliminating counterfeit Tiffany merchandise from eBay - Tiffany to protect its famous brand name, and eBay to preserve the reputation of its website as a safe place to do business…”

“… the court concludes that Tiffany has failed to carry its burden with respect to each claim alleged in the complaint. First, the Court finds that eBay’s use of Tiffany’s trademarks in its advertising… is a protected, nominative fairs use of the marks…”

“Second, the Court finds that eBay is not liable for contributory trademark infringement. In determining whether eBay is liable, the standard is not whether eBay could reasonably anticipate possible infringement, but rather whether eBay continued to supply its services to sellers when it knew or had reason to know of infringement by those sellers…”

“The result of the application of this legal standard is that Tiffany must ultimately bear the burden of protecting its trademark.”

UPDATE: The following public statement was made by eBay at 1:30pm PT

eBay Inc. Applauds Court’s Rejection of Tiffany Counterfeit Claims Court’s ruling reaffirms consumer choice for authentic merchandise San Jose, Calif. — Monday, July 14, 2008 — eBay Inc. (Nasdaq: EBAY; www.ebay.com) today praised a federal judge’s ruling in the Tiffany vs. eBay trademark case, affirming the company’s leading efforts to fight counterfeits and to support consumer choice to buy and sell authentic merchandise online. The U.S. District Court for the Southern District of New York also declared that eBay takes appropriate steps to remove suspected counterfeit listings as part of the company’s additional efforts to provide a safe and trusted marketplace. Furthermore, the court also found that Tiffany was responsible for policing its own trademark on eBay. “We are extremely pleased that this ruling supports consumers by allowing them greater choice and value through the global marketplace that eBay provides,” said Rob Chesnut, senior vice president and legal counsel at eBay. “This decision validates that eBay has always been committed to fighting counterfeits in a way that goes beyond what the law requires. We see this as an important victory for our global community of buyers and sellers.” Counterfeit items are prohibited on eBay. eBay pioneered the fight against counterfeits on the Internet, and its groundbreaking initiative, the Verified Rights Owners program, allows eBay to collaborate with over 18,000 rights owners to help eBay identify and remove counterfeits from the site. “This ruling appropriately established that protecting trademarks is the primary burden of rights owners – not marketplaces like eBay,” Chesnut added. “The court ruled that eBay does in fact meet its responsibilities regarding counterfeits. We aggressively fight counterfeits not only to meet our limited responsibilities, but also because counterfeits hurt the eBay community—the millions of honest sellers building their businesses and buyers who come to eBay for great value and selection. That’s why we want to continue to work with rights owners to aggressively fight the sale of counterfeit items.” The court’s ruling is in line with well established legal precedent which holds that the obligation to enforce trademarks rests with the trademark holder. “The promise of the Internet and companies like eBay has been the ability for entrepreneurs and small businesses to compete with big businesses by having access to a global distribution channel for legal and authentic items,” Chesnut concluded. “We will continue to aggressively protect our marketplace and the innovation and competition it inspires.”

UPDATE: Rob Chesnut talks about the Tiffany ruling:

Cheers, RBH

Tagged: courtcase, ebay, ecommerce, lawsuit, legal, tiffany, vero

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12 Responses on this post. Click to add yours.

TonyOn 07.14.2008 at 6:54 pm Said:

Excellent news, now go win the case in Europe. Hopefully now Tiffany’s and companies in similar positions can work hard to rid the site of counterfeits in a sensible working relationship that doesn’t punish genuine sellers.

ocdgirl2000On 07.14.2008 at 8:25 pm Said:

Where would one go and apply for a job with Tiffanys? I bet they will need quite a few hired “enforcers”LOL!

How much do you think the Tiffany VERO reps get paid?

Patricia1On 07.14.2008 at 9:18 pm Said:

Maybe they could form a “community watch” like they did on ebay and get it done for free

vzaar JamieOn 07.15.2008 at 1:16 am Said:

Congratulations eBay and great news for both the consumer who wants choice and value and for sellers who want to expand their opportunities across multiple channels.

Fascinated to see how the ripples of this victory play out in other eBay marketplaces.

dimesOn 07.15.2008 at 6:00 am Said:

I think it’s eBay that will be needing more VERO staff - once Tiffany starts flooding eBay with takedown notices, eBay will need to comply immediately or risk Tiffany filing suit that eBay is unresponsive.

ocdgirl2000On 07.15.2008 at 6:25 am Said:

In addition, the other online auction/sales sites that are ALSO flooded with Tiffany fakes will be having a “free for all” in the USA markets as well! It will be hard on everyone (mostly the serious buyers), in the long run, since it will take a good deal of time to make the differentiation between the reals and the fakes, in ALL online sites.

Too bad the importers are not banned from bringing their stuff into this country. Someone needs to check the containers coming through all the ports.

JasonOn 07.15.2008 at 6:52 am Said:

One would think if a company cares so much about legitimacy, they would install a serial number system for their products, not unlike sports memorabilia to determine their authentic nature.

Plug in the code on their site, and boom - you know if it’s counterfeit.

But, that’d require cooperation, and since companies like Tiffany are pointing the blame and doing no work themselves, I doubt that will happen.

JohnOn 07.15.2008 at 7:42 am Said:

Tiffany sells fakes. Tiffany like so many companies makes products in China. That factory and it’s sister companies flood the market with identical product. If Tiffany wants anybody to feel sorry for it

1) Make the products yourselves - Make it real
2) Serial number them

I travel in China all the time. More than 35 Swiss Watch models and FAMOUS pens models are made in factories there, shipped to europe for boxes and then sold as REAL. Hmm… fishy if you ask me.

Who is fooling who?

bonniOn 07.15.2008 at 11:50 pm Said:

So now eBay’s reputation as an international flea market and a place where fakes and frauds can be bought and sold is pretty much legally established?

dimesOn 07.16.2008 at 5:14 am Said:

Don’t forget stolen goods, as addressed by newly-filed legislation. According to the blurb on the National Retail Federation site:

H.R. 6491, the Organized Retail Crime Act of 2008 was introduced today by Representative Brad Ellsworth, D-Ind., with Representative Jim Jordan, R-Ohio, as the lead co-sponsor. The bill would define organized retail crime as “the acquiring of retail merchandise by illegal means for the purpose of reselling the items” and make such activity – including transportation, sale or receipt of stolen retail goods, – a federal crime.

{snip}

The bill would also establish that operation of on-line marketplaces such as auction sites can be considered “facilitation” of organized retail crime unless the operator can show that specific steps had been taken to ensure that goods being sold were not obtained by theft or fraud. Site operators would be required to “expeditiously” investigate complaints that stolen items are being sold, maintain records of the names and physical addresses of high-volume sellers, and require high-volume sellers to either post that information along with merchandise offerings or make it available upon request to any business with a reasonable suspicion about the merchandise.

Operators of on-line marketplaces could also be sued by any business whose stolen goods were sold. Retailers lose between $15 and $30 billion to organized retail crime each year, according to the FBI and retail loss prevention experts. The figure compares to the $18 billion for robbery, larceny, burglary and auto theft combined reported by the FBI Uniform Crime Report.

Patricia1On 07.16.2008 at 11:35 am Said:

Tiffany deserved to protect its products just as much as any other company that manufactures goods to sell… I do not agree with the ruling. To expect a company to “patrol” every outlet where fakes can be sold is just plain wrong! Even us lowly artists are well aware of fakes and we are also well aware that ebay does not respond to every complaint we send them. Our works have been copied and even outright printed on canvas -with the artist’s name still in place! - and sold as originals. These are facts and I feel, Ebay needs to be more responsive to fakes on the site.

Uncle Joe AdamsonOn 07.16.2008 at 11:58 am Said:

This is one that the court got right. Now if we can just get the French courts to realize their country’s products aren’t the center of the universe, and that they don’t have the authority to enjoin the entire internet…

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