July 15, 2008

Judge Says Tiffany, Not eBay, Should Police Trademark

By Jon Swartz

SAN FRANCISCO -- Online auctioneer eBay scored a major court victory Monday when a federal judge ruled that Tiffany & Co. failed to prove eBay was responsible for the sale of fake Tiffany jewelry.

U.S. District Court Judge Richard Sullivan in New York said companies such as Tiffany are responsible for policing their trademarks online. He ruled eBay can't be held liable for trademark infringement "based solely on their generalized knowledge that trademark infringement might be occurring on their websites."

The 66-page decision could play a key role in deciding how business is conducted on the Web and refine trademark and copyright protections online, legal experts say.

Leigh Ann Lindquist, a trademark attorney in Washington, says the ruling should ease some concerns of similar lawsuits against eBay. Last month, the Paris Commercial Court ruled eBay did not take the right measures to prevent the sale of counterfeit goods bearing the names of Louis Vuitton Malletier, Christian Dior Couture and others.

"While it's a big win for eBay, I doubt it deters large companies with counterfeit problems on eBay," says Lindquist. "Fake jewelry is a growing market."

Tiffany is expected to appeal, says James Swire, an attorney representing the company.

He says Tiffany is "disappointed" by the ruling, which "leaves consumers at the mercy of sellers of counterfeit goods on eBay."

In 2004, it sued eBay to remove bogus items and immediately suspend sellers that Tiffany suspected of fraud. Tiffany also sought monetary damages.

EBay countered it was not in a position to determine which goods were knock-offs of the high-end jeweler and that Tiffany did not "consistently participate" in eBay programs that help brand owners minimize fraud.

Tiffany's Swire disputed the latter claim.

EBay spokeswoman Nichola Sharpe called the decision a "victory for consumers."

"This decision validates that eBay has always been committed to fighting counterfeits in a way that goes beyond what the law requires," said Rob Chesnut, senior vice president and legal counsel at eBay.

EBay has plunked down tens of millions of dollars on anti-counterfeiting efforts since 2006. It claims to remove about 90% of fraudulent goods from its site within four hours of being notified.

Shares of eBay slipped nearly 2%, to $27.49, in trading Monday. (c) Copyright 2008 USA TODAY, a division of Gannett Co. Inc. <>