eBay Is Not Liable for Contributory Infringement for Listing Counterfeit Goods

The Second Circuit issued its long awaited decision in Tiffany Inc. v. eBay, Inc., 2010 U.S. App. LEXIS 6735 (2d Cir. 2010). The Court held in eBay's favor on the key issue in the case, finding that eBay was not liable for contributory infringement for listings of counterfeits of Tiffany goods on its site. In this Analysis, Janet Marvel, a partner at Pattishall, McAuliffe, Newbury, Hilliard and Geraldson, examines Tiffany Inc. v. eBay. She writes:

BACKGROUND

     eBay is an online marketplace on which millions of sellers have listed goods. Many goods are counterfeit, and eBay has engaged in significant efforts to curb sales of such goods. Tiffany, the world-famous jeweler, conducted "Buying Programs" on eBay, and found that over 70 percent of alleged "Tiffany" goods it purchased were counterfeit. Tiffany complained routinely to eBay and suggested that eBay adopt a number of programs to help stop the problem, including a suggestion that eBay refuse to permit the same seller to list more than five Tiffany silver jewelry products at one time. eBay rejected Tiffany's approach, instead taking down individual listings after Tiffany notified eBay that the listings were for counterfeit goods. eBay apparently did not dispute that it knew counterfeits of Tiffany goods were sold on its web site, but took the position that it was not responsible for ferreting out all such counterfeits.

HOLDING

Contributory infringement

     The court applied the Supreme Court's famous Inwood test of contributory infringement: "[I]f a manufacturer or distributor intentionally induces another to infringe a trademark, or if it continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement, the manufacturer or distributor is contributorially responsible for any harm done as a result of the deceit." Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456, U.S. 844, 854 (1982). The Second Circuit has not adapted that test, obviously covering goods, to contributory infringement allegations against a service provider. The court declined to formally adopt application of Inwood to services providers. However, it did apply Inwood to eBay, because eBay did not dispute that Inwood established the correct standard.

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