eBay Claims Victory in the Tiffany Lawsuit

Posted by: Catherine Holahan on July 14, 2008

E-Commerce giant eBay claimed victory July 14 in its long legal battle with luxury brand manufacturer Tiffany Co.

The renowned jewelry maker had sued eBay for trademark infringement in hopes of forcing the company to proactively remove items from its site listed under Tiffany’s name brand. In many cases, the items listed turned out to be counterfeit.

EBay successfully argued that it was a platform for buyers and sellers to interact and, thus, not liable for counterfeit items posted by sellers. Brand manufacturers, eBay maintained, were responsible for finding the items they believed to be fakes and requesting their removal. Like other user-generated content sites, such as YouTube, eBay immediately takes down items in response to complaints, leaving sellers who feel unfairly fingered to take up their case with the rights holder.

“Today’s decision is a victory for consumers,” said eBay spokeswoman Nichola Sharpe in a statement immediately following the decision. “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.”

It was not immediately clear whether Tiffany would appeal the decision.

The win in US court was a much needed victory for eBay, which recently lost three similar cases in European courts. Late last month, a French tribunal ordered eBay to pay Dior manufacturer LVMH $61 million in damages for counterfeit items that appeared on the French site. The Tribunal also demanded that eBay immediately remove all LVMH perfumes. EBay is appealing the decision, arguing that LVMH is trying to have legitimate merchandise removed simply because it does not want its luxury brand cache damaged by items appearing on a site known for discounts.

Had the US court agreed with earlier judgements in Europe, eBay would have faced significantly changing its business model. Currently, the company primarily relies on the community of buyers and sellers to flag counterfeit items and other inappropriate submissions (Though it does screen out items such as firearms). It also provides brands with tools to search the site for counterfeit items and request their removal.

A loss could have forced eBay to invest in expensive technology and personnel to proactively screen items before they are uploaded to its site for possible rights’ infringement. A Tiffany-victory also would have damaged eBay’s ability to feature more name-brand merchandise from resellers since certain brands could have argued that their items should never appear on the site or demanded that they be allowed to approve submissions.

It remains to be seen whether the US ruling could have any influence with eBay’s appeal in French courts.


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Reader Comments

Squeezebox

July 14, 2008 05:42 PM

The difference in the rulings is that in the United States, defendants are always presumed innocent until proven guilty. E-bay should have had at least a reasonable way to know the goods were counterfeit before they would be required to act. How do the European courts know that a jealous husband didn't sell off his wife's real designer handbags for pennies in order to get revenge?

horsemama

July 14, 2008 07:44 PM

eBay needs to make up their mind if they're "just a venue" as they always claim when sued for their own lack of diligence or if they are a party to the transactions, which they appear to want to be with all the new micro-managing policy changes they've come up with lately.

They used to use the "we're just a venue" argument to explain why they won't edit or censor feedback (other than the blatantly obscene) but lately they have started telling sellers what they can or can't say in feedback to their buyers.

They can't have it both ways. they're either "just a venue" or they're not.

As for the counterfeit issue, even when eBay KNOWS that a seller has sold fakes, they don't boot the seller off. They have profited from the sale of fakes and they know it. The reason they don't police the site has nothing to do with them not feeling responsible and everything to do with not wanting to give up all those listing and final value fees.

The US court reached a BAD decision, period. France got it right.

Expensive technology? If they can screen "Paypal" out of Mature audience listings right from the listing form, I'm sure they could use that same EXISTING technology to screen "Tiffany" in the same manner.

As usual, they lie through their teeth to try to spin everything their way.

Chuck G.

July 14, 2008 08:17 PM

So glad to hear eBay won at least one of these ridicules cases. It's simply the luxury industry upset that their inflated SRP gets to see its REAL worth on eBay. If somebody posts a Tiffany ring with a SRP of $3500, for example, but the auction ends at $2300...I'm sorry but that's what the consumers deemed the real price is... so DEAL WITH IT, Tiffany Co.!

Skinny

July 15, 2008 01:07 AM

Squeezebox--In the U.S., the presumption of innocence only applies to criminal defendants. This was a civil case, not a criminal case. Ebay was not charged with a crime, and not presumed to be innocent--they were simply being sued by Tiffany. The court found that Ebay had the better argument, so Ebay won.

James

July 15, 2008 01:36 AM

Skinny, I think they meant Ebay must view users as innocent until they are proven to be guilty of counterfitting. :)

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BusinessWeek writers Peter Burrows, Cliff Edwards, Olga Kharif, Aaron Ricadela, Douglas MacMillan, and Spencer Ante dig behind the headlines to analyze what’s really happening throughout the world of technology. One of the first mainstream media tech blogs, Tech Beat covers everything from tech bellwethers like Apple, Google, and Intel and emerging new leaders such as Facebook to new technologies, trends, and controversies.

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