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.