Tiffany demands reappraisal of eBay counterfeit decision

Jewelry giant Tiffany & Co. is appealing a recent federal court decision that cleared eBay from responsibility for counterfeit items which appear on the online auction site.

Last July, a US District Court in Manhattan ruled eBay isn't obligated to actively monitor and remove listings that infringe on the jeweler's trademarks. That ruling dovetailed with one from earlier this year when a French judge sided with the handbag group LVMH's compensation demands over fake Louis Vuitton merchandise listed on eBay. A German court this spring also ordered eBay to prevent the sale of fake Rolex watches.

Tiffany claims eBay should be held liable for "facilitating" and allowing counterfeit items to be sold on the website. It argues eBay needs to preemptively refuse to post any listing selling five or more Tiffany items and immediately suspend users if Tiffany suspects they are engaged in potentially infringing activity.

EBay responds that it already takes down auctions if notified that they violate trademarked or copyrighted material, but the ultimate responsibility of policing trademarks lies with the brand holder.

The court sided with eBay, ruling the law doesn't make the auction house responsible for contributory trademark infringement by refusing to take preemptive steps based on generalized knowledge that counterfeit goods might be sold on the website.

"Quite simply, the law demands more specific knowledge as to which items are infringing and which seller is listing those items before requiring eBay to take action," District Judge Richard Sullivan wrote in his ruling.

Tiffany announced today it has filed an appeal to the US Court of Appeals for the Second Circuit.

“Unfortunately, the trial court incorrectly held that trademark holders and not eBay are responsible for policing the eBay site. The effect of this is that eBay can continue to profit at the expense of consumers and trademark holders,” said Patrick Dorsey, general counsel for Tiffany in a statement. "In our view, this approach makes no sense as a matter of law or policy. Once eBay has reason to know that a specific brand like TIFFANY & CO. is being widely counterfeited and sold, eBay should be compelled to investigate and take action to protect its customers and stop the illegal conduct.”

Ebay begged to differ.

"Tiffany's decision to carry this litigation on after the District Court's decision doesn't do anything to combat counterfeiting," said an eBay spokeswoman in an e-mailed statement. "The best way to stop counterfeiting is ongoing collaboration between companies, government agencies and law enforcement." ®