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Brand Owners, Marketplace Sites Face Challenges Post-Tiffany v. eBay
17 December 2012
The United States’ Second Circuit Court’s April 1 opinion in Tiffany v. eBay, both affirmed and remanded portions of the decision of the US District Court for the Southern District of New York that addressed whether the online marketplace site eBay may be liable under theories of trademark infringement or dilution for sales of counterfeit goods made through its website, report lawyers at Baker & McKenzie, writing through a Client Alert. The report note that the case also addresses whether eBay may be liable for false advertising under these circumstances.
“The appellate court’s ruling gave both trademark owners and online marketplace websites their own discrete victories,” the lawyers wrote. “While the Second Circuit affirmed the district court’s holdings that eBay is not liable for direct or contributory trademark infringement or trademark dilution, the appellate court remanded the question of whether eBay engaged in false advertising when it advertised the goods sold through its site as ‘Tiffany’ merchandise, when a portion of the goods could be fake.”
At any given time, some 100 million items are for sale on eBay’s website. “Among those items are listings by third party sellers purporting to offer merchandise under Tiffany’s trademarks – most legitimate, but some possibly counterfeit,” said the Baker & McKenzie lawyers. “eBay advertised the availability of Tiffany goods on its website and elsewhere online. The appellate court remanded the issue for further consideration of whether eBay should be held accountable for the words it chooses to use to the extent that they may be deemed to mislead or confuse consumers.”
Tiffany brought suit against eBay in 2006, alleging that the marketplace site engaged in trademark infringement, trademark dilution, and false advertising by facilitating and advertising the sale of counterfeit Tiffany goods. Baker & McKenzie reports that, after a bench trial, in July 2008, the district court concluded that eBay was not liable for facilitating the sale of counterfeit items on its website under any of the alleged claims.
“On Tiffany's first direct infringement claim, the Second Circuit stopped short of adopting the ‘nominative fair use’ doctrine applied by the district court,” Baker & McKenzie said. “Instead, it held that eBay’s advertisement of Tiffany brand products was a lawful use of Tiffany’s trademark in a situation necessary to describe Tiffany’s product.”
On Tiffany's second claim, they wrote, the Second Circuit affirmed in favour of eBay, “holding that the significant measures taken by eBay to curtail and prevent counterfeit activities, including eBay’s fraud engine to check listings for counterfeits and eBay’s policy of removing counterfeit material identify by rights holders under its Verified Rights Owner program, prevented a finding that eBay failed to act on knowledge about specific counterfeit sellers, which was necessary for a finding of contributory infringement.”
Likewise, the Baker & McKenzie lawyers said, the Second Circuit affirmed the district court’s finding that no trademark dilution had taken place because eBay did not use the Tiffany trademark to refer to its own products and services.
