eBay Scores Victory in Internet Trademark Case

NEW YORK/SAN FRANCISCO (Reuters) - EBay scored a major legal victory on Monday when a federal judge absolved it of taking more steps to police fake Tiffany jewelry sold on its website and held that brand owners are ultimately responsible for protecting their own trademarks.

All of Tiffany's trademark infringement claims against eBay (EBAY.O) were rejected -- a knockout blow to the four-year-old lawsuit that had been closely watched by Internet companies as well as luxury goods makers seeking to stop the sale of counterfeit products online. The ruling is expected to be appealed.

Tiffany & Co (TIF.N) had alleged that eBay turned a blind eye to the sale of fake Tiffany silver jewelry on its site. EBay countered it was not in a position to determine which goods were knock-offs of the prestigious New York brand and had said the jeweler did not adequately participate in eBay's programs that help brand owners prevent fraud.

The judge, in a 66-page decision following a non-jury trial in U.S. District Court in Manhattan last November, said he was "not unsympathetic" to Tiffany and others who have invested in building their brands only to see them exploited on the Web. But he said the law was clearly on eBay's side.

"It is the trademark owner's burden to police its mark and companies like eBay cannot be held liable for trademark infringement based solely on their generalized knowledge that trademark infringement might be occurring on their websites," wrote Judge Richard Sullivan...

...Tiffany had wanted eBay to preemptively take down listings that offered five or more of its items and immediately suspend sellers Tiffany suspected of fraud. It had also sought monetary damages from eBay. The judge rejected all claims.

Ebay, which has been trying to increase trust between buyers and sellers in its main auction business, has increased spending on technology and people to stem the sale of fake goods on its site.

San Jose, California-based eBay says it takes down more than 90 percent of fake goods from its site within four hours of their posting after being alerted by trademark holders.

Judge Sullivan found that Tiffany's claim ultimately failed due to Tiffany's choice to sue eBay, rather than individual sellers, and because eBay stops fraudulent listings after being alerted to violations.

U.S. courts have largely taken the position that it is the trademark owner's responsibility to determine which goods sold online are counterfeit. Under this view, a party such as eBay is liable only when it fails to remove offending items once alerted by the trademark owner...

Click here for the full story on the Washington Post's website.

Click here for the text of the Judgment.

Photo of eBay headquarters posted on Flickr.com under a creative commons license by pbo31.

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