July 16, 2008

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Yesterday, a U.S. district judge has given eBay victory in a four-year-old trademark protection lawsuit, in the case of Tiffany vs. eBay. Judge Richard Sullivan of New York found that eBay's method of checking suspected counterfeit items is more than sufficient and that Tiffany bears more responsibility for watching over its brand over the Internet.

The Court's ruling is a huge win for eBay and it could have a strong impact on its legal challenges abroad as well. Earlier this year, European courts have ruled in favor of LVMH group, Moet Hennessy-Louis Vuitton and Rolex in trademark lawsuits involving counterfeits against eBay.

Industry observers say that in the Internet world where we're moving more toward information brokerage than direct eCommerce, it's really critical to identify just how much responsibility you have for policing any kind of content or of the specific products or services sold for that matter.

In the Tiffany vs. eBay case, Judge Sullivan ruled the company went far enough in removing suspected counterfeit goods upon receiving complaints from Tiffany, and that no further action was deemed necessary.

Additionally, Sullivan agreed with eBay that it didn't have to pre-emptively remove the items even if site officials had their own doubts about the validity of the products. The Court's ruling also means more work and money for retailers like Tiffany, Heather Kliebenstein, an IP (intellectual property) attorney for Merchant & Gould.

The same concerns may still await eBay in Europe. It's unclear whether the judge's ruling will have any effect as the company appeals trademark decisions it lost in Germany and France in both 2006 and 2007.

Overall, eBay still faces an uphill battle overseas. E-tailers and eCommerce companies can simply avoid patent infringement actions even if the Web site provider has general knowledge of the infringement or that counterfeit goods are being sold on their sites.

Brand owners will need to be able to point out or document specific instances of trademark infringement to succeed in court, based on this precedent. This will increase the burden on brand owners and their in-house counsel.

It is now clear that eBay will have to adjust its patterns of market practice for the legal environment in different venues. It can certainly do that, but the question remains what constitutes fairness?

Various courts in Europe are going to be on the lookout for the European market and its concept of the European consumer, even if these global marketplaces want to trade with the same rules in place. Trademark infringement is different in Europe regarding presumption and in terms of who has responsibility for not only infringement but contributor infringement as well.

While it would have cost eBay more money to cancel the sale of specific products had it lost the Tiffany case, the online auction giant will still have to ensure its global business complies with European courts nevertheless.

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Source: eBay.

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