Intellectual Property

To Moniteur or Not to Monitor, That is eBay’s Question

There are two sides to every coin, and in light of recent judgments, it looks like eBay’s coin is coming up heads in Europe and tails in the United States. In France, a court recently ordered eBay to pay approximately $60 million to the fashion company, LVMH Moet Hennessy Louis Vuitton SA, because eBay allowed fake merchandise to be sold online. In a similar decision, a French court ruled against eBay in a suit brought by Paris luxury house Hermès over the sale of fake handbags. In both instances, eBay was found liable for online sales of fakes brands despite eBay’s argument that liability rested solely with online sellers.
However, in the United States, the coin has flipped the other way. On July 14, the United States District Court for the Southern District of New York entered judgment for eBay in the case of Tiffany Inc. v. eBay, Inc., 2008 U.S. Dist. LEXIS 53359. Tiffany, the famed jeweler, sought to impose liability on eBay for online sales of counterfeit Tiffany jewelry. Specifically, Tiffany sought to hold eBay liable for contributory trademark infringement on the grounds that eBay allowed the counterfeit items to be sold on its website. In entering judgment for eBay, the court asked whether eBay had continued to supply its services to sellers when it knew or had reason to know of the infringement. The court answered the question in eBay’s favor, noting that when Tiffany put eBay on notice, eBay immediately removed the infringing listings. Consequently, Tiffany ultimately bore the burden of protecting its trademark.
It is not surprising that when it comes to fashion, French court’s guard trademarks closer than the United States. As the birthplace of brands like Dior, Chanel, and Yves Saint Laurent, Paris is synonymous with fashion, with its stylish boutiques in the triangle d’or and its fashion houses on the rue du Faubourg Saint-Honoré. The divergence between the French judgments and the United States judgment might have as much to do with culture as it does with the law, and because of this, eBay might do well to protect its global presence by adopting, as a best practice, the standard rejected in Tiffany and by the Supreme Court in Inwood Labs. v. Ives Labs., 1982 U.S. LEXIS 113 (1982). Under this standard, eBay would be required to take preemptive steps in light of its reasonable anticipation or generalized knowledge that counterfeit goods might be sold on its website. In fact, by adopting this standard, eBay might stay one step ahead of the policymakers, who could one day decide that U.S. law is inadequate to protect rights owners against online sales of infringing products.