Legal News

Second Circuit Rules for eBay in Counterfeit Goods Case

By Ashby Jones

The issue facing the Second Circuit in the eBay/Tiffany lawsuit was an interesting one: To what degree can a designer/manufacturer hold an online retailer liable for selling goods that purport to be made by that designer, but aren’t?

The Second Circuit on Thursday resolved the issue in online retailer eBay’s favor, upholding the dismissal of trademark-infringement claims made by Tiffany over the sale of fake goods on the auction site. Click here for the opinion; here for the WSJ story. Click here, here and here for previous LB coverage of the case.

So long as eBay takes steps to remove listings it knows are bogus — and isn’t otherwise willfully blind to fraudulent sales — it can avoid liability, the court ruled.

Judge Robert Sack, writing for the three-judge panel, seemed to hang his hat on the market:

We are disposed to think, and the record suggests, that private market forces give eBay and those operating similar businesses a strong incentive to minimize the counterfeit goods sold on their Web sites . . .

EBay received many complaints from users claiming to have been duped into buying counterfeit Tiffany products sold on eBay. The risk of alienating these users gives eBay a reason to identify and remove counterfeit listings. Indeed, it has spent millions of dollars in that effort. . . .

Tiffany had argued that eBay knew it had a problem with counterfeit items being listed on its Web site and did little to clean it up. EBay insisted the obligation rested with the New York jeweler to identify and alert it to auctions of counterfeit Tiffany silver jewelry.

Tiffany said it was disappointed by Thursday’s ruling and may appeal the matter to the Supreme Court.

Representing Tiffany: Arnold & Porter’s James Swire; for eBay: Weil Gotshal’s Bruce Rich.

Full post as published by Law Blog - WSJ.com on April 01, 2010 (boomark / email).