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eBay trumps Tiffany in trade mark ruling

US appeals court: Hosting auctions of fakes doesn't infringe

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eBay does not infringe jewellery shop Tiffany's trade marks when counterfeits are sold by sellers at the online auction site. Tiffany has lost its appeal in the US against the same decision as made by a lower court.

Tiffany claimed that by allowing people to sell fakes, eBay infringed its trade marks. The 2nd US Circuit Court of Appeals has said that this is not the case because it removed specific items when genuine rights holders brought them to its attention.

But the ruling raised the possibility that eBay may have to change the way it advertises itself. The Court asked the lower court which originally ruled in the case to examine whether eBay broke false advertising rules when ads for its service talked about the availability of Tiffany products.

It may have to warn viewers of ads that some of the Tiffany products could be fakes if the lower court rules against it.

"The law requires us to hold eBay accountable for the words that it chose insofar as they misled or confused consumers," the court ruling said, according to Associated Press. "A disclaimer might suffice … but the law prohibits an advertisement that implies that all of the goods offered on a defendant's Web site are genuine when, in fact, as here, a sizable proportion of them are not."

"Tiffany is very disappointed by [the] decision," said Michael Kowalski, chief executive of Tiffany. "As an e-commerce leader, eBay has a responsibility to protect consumers and promote trust in its marketplace."

"EBay knew that counterfeit merchandise was being sold on its site and eBay took no effective steps to stop it. EBay deliberately misled consumers for profit, and unfortunately, the court has justified its actions," he said.

The company said it would later decide whether to appeal to the US Supreme Court.

"The decision is a critically important victory for online consumers who want the best prices for genuine products and underscores eBay’s commitment to connecting buyers and sellers under the pillars of trust, value, and selection," said eBay general counsel Michael Jacobson. "The ruling validates eBay’s leading efforts to fight counterfeiting and its commitment to providing consumers with choice and value in a safe and trusted marketplace."

See: The ruling (45-page / 134KB PDF)

Copyright © 2010, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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