Intellectual Property Law

Tiffany Jewelers Court Case: Ebay a 'Rat's Nest' of Fakes

By IBLS Editor

In an extraordinary broadside leveled at the integrity of the Internet's largest auction house, Tiffany Jewelers of New York City has claimed in a court case that consumer buyer safeguards in the business are appallingly absent. Tiffany's, the world's second largest luxury jeweler, has stated in its court brief about eBay, "Indeed, it was a proverbial 'rat's nest.'" The case, which is currently being litigated, is basically an argument over who is responsible to police the internet auctions for counterfeit products, eBay or Tiffany. The case is Tiffany (NJ ) Inc. v. eBay Inc., 1: 04-cv-04607, U. S. District Court, Southern District of New York (Manhattan ).

 Copyright and Internet experts believe the decision could well set a precedent and new standard for online sales. Geoffrey Potter, chairman of the anti-counterfeiting practice at the law firm of Kramer Levin Naftalis & Frankel, states, "It's important if Tiffany prevails because it would force eBay to radically change the way it handles auctions of products with a famous trademark." Potter believes that it is crucial that Tiffany's should prevail, because "If eBay wins, the status quo would continue." While testimony concluded November 20, 2007, the outcome has not been handed down.

In a shocking statement in its brief, should it prove accurate, Tiffany claims most so-called "Tiffany" products auctioned on eBay are fakes. Further, it claims they notified eBay of 300,000 counterfeit items between 2003 and 2006, yet eBay declined to take all "feasible" steps to ban the auctions. Tiffany's has been the leading name in Gotham upscale accoutrements for almost two centuries. Tiffany claims in their brief that eBay had reason to know of frequent and fundamental misuse of its auction house for sale of counterfeit Tiffany items, including bracelets, watches, necklaces, and rings.  Tiffany claims that in a similar way that file sharing programs like KaZaA provided a venue for copyright infringers, Tiffany claims eBay is similarly supporting copyright theft, and says that from a sample of 136 Tiffany items advertised on eBay, 73% were fraudulent.

In response to dispute, eBay Australia spokesman Daniel Feiler said, "Counterfeits are illegal and not welcome on eBay, and is disappointed that it has come to this given that we have been actively supporting Tiffany's brand protection efforts. eBay will aggressively defend itself as we believe Tiffany's claims are without merit."

In their brief responding to the suit, eBay strongly rejects the claim of high numbers of fraud being perpetrated on their site, pointing out they go above and beyond legal requirements for such sites. Part of their defense is that they never take possession of the items. Further, eBay claims their "Verified Rights Owners" program, starting in 1998 and now sued with 18,000 global copyright rights owners makes it easy for brands to alert eBay to knockoffs in their name. The Internet auctioneer claims this leads them to remove the item immediately, faked or not. But eBay also warns that an adverse ruling against them would "wreak havoc" on internet commerce.

The judge hearing the case is Richard Sullivan, and while a judgment in the case is expected to come down shortly, the dispute will undoubtedly be immediately appealed and re-litigated. Should eBay lose, it might well augur a radical change in how online sales are done via auction, forcing them to screen millions of good for authenticity, yearly. In regards to this idea, eBay claims it would be impossible to be able to take such responsibility because it is out of the loop of possession, which is one reason the prices can remain much lower in many auctions, than through a typical marketer.

Full post as published by IBLS Internet Law Blog on December 16, 2007 (boomark / email).