Tiffany Makes Another Bid to Restrict Auctions of Counterfeit Jewelry on eBay

Tiffany Makes Another Bid to Restrict Auctions of Counterfeit Jewelry on eBay

eBay took measures to cut down on the sale of counterfeit goods. However, Tiffany felt that the measures did not go far enough and demanded that eBay discontinue all Tiffany auctions on its site. eBay refused. The Second Circuit in Tiffany Inc. v. eBay, Inc., 600 F.3d 93 (2d Cir. N.Y. 2010) took a fresh look at these issues. In this Analysis, Steve Abreu, of Sunstein Kann Murphy & Timbers, discusses Tiffany and internet sales of counterfeit goods. He writes:

     On appeal, in Tiffany (NJ) and Tiffany & Co, v. eBay, Inc., 600 F.3d 93, 94 U.S.P.Q.2d (BNA) 1188 (2d Cir. NY 2010), the Second Circuit took a fresh look, starting with the claim that eBay's use of TIFFANY and other marks in the auction listing was direct trademark infringement because consumers were likely to be confused as to the origin of the goods. The court stated the general rule that trademark law does not reach the sale of genuine goods bearing a true mark even though the mark owner does not authorize the sale.

     Further, the court held that the defense of nominative fair use 1 applied when eBay used Tiffany's mark on its website, and in sponsored link advertising, to refer to the Tiffany goods it had on sale and accurately describe them. Finally, the district court reminded Tiffany that it cannot control the "legitimate secondary market in authentic Tiffany silver jewelry."

     The court found more difficulty in determining whether eBay had committed "contributory trademark infringement," a tort that entitles the victim to damages. A service provider such as eBay can be found liable for contributory infringement if it (1) exercises sufficient control over the infringing conduct, and (2) intentionally induces another to infringe a trademark or continues to supply its services to one who it knows or has reason to know is engaging in trademark infringement.

     The appeals court found that eBay did exercise sufficient control over the means of the infringing conduct but that it did not intentionally induce infringement. The remaining issue was whether eBay continued to accommodate sellers of counterfeit goods who it had reason to know were auctioning counterfeit Tiffany goods.

(footnotes omitted)

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