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Auction Websites Hang in Legal Limbo

By Ryan Singel, Kevin Poulsen, Sarah Lai Stirland, Kim Zetter, and David Kravets

Heavyweights in the online world are weighing in on a lawsuit that threatens to derail internet retailing. The case is being brought by Tiffany against online auction site, eBay.

The lawsuit, before the New York-based 2nd U.S. Circuit Court of Appeals, claims eBay is liable for contributory trademark infringement because it refuses to police its site for infringing materials. Viacom is making the same argument in a pending copyright lawsuit against Google's YouTube.

A New York federal judge in July ruled against Tiffany, the high-end jeweler. The judge said eBay, the world's largest online auction site, was acting within the law because it removed auctions from the jeweler's counterfeited goods when notified by Tiffany. "The law demands more specific knowledge as to which items are infringing and which seller is listing those items before requiring eBay to take action," U.S. District Judge Richard Sullivan wrote in July.

Tiffany, which said eBay "facilitates substantial fraud," appealed.

The latest vocal entrant into the legal debate is the Electronic Frontier Foundation, Public Knowledge and Public Citizen(.pdf). If Tiffany prevails on appeal, online marketplaces would likely come "to a halt," the groups said in a court filing Wednesday. They urged the appellate court "to reject Tiffany's effort to rewrite trademark law to relieve mark-owners of their traditional obligation to police their own marks, online and off."

Amazon and Google, (.pdf) as well as Yahoo(.pdf) and others have sided with eBay. The Council of Fashion Designers of America(.pdf) and the International Anti-counterfeiting Coalition(.pdf) have urged the court to side with Tiffany.

"Although eBay profits handsomely from a system of its own invention that facilitates substantial fraud, the district court believed that the solution to the counterfeiting problem is to put the burden on the victim," Tiffany wrote the appeals court.

Tiffany added that the lower court's ruling "favors the party that has profited from facilitating the fraud and disfavors the two groups of victims that the trademark law is designed to protect ?- the consumer who purchases counterfeit goods ad the trademark owner, here Tiffany, which has carefully nurtured its brand for more than 170 years."

Adding to international confusion, a French court in June ordered eBay to pay $63 million to Louis Vuitton, the luxury good maker that claimed eBay failed to police adequately its auction site for Louis Vuitton knockoffs.

The appeals court has not scheduled oral arguments in the case, Tiffany v. eBay, 08-3947.

See Also:

• Bush Signs Law Creating Copyright Czar
• Judge: Copyright Owners Must Consider 'Fair Use' Before Sending ...
• Stifled by Copyright, McCain Asks YouTube to Consider Fair Use ...
• MPAA Says No Proof Needed in P2P Copyright Infringement Lawsuits ...
• The Digital Millennium Copyright Act of 1998
• Lawsuit Claim: Students' Lecture Notes Infringe on Professor's ...
• 'Orphan Works' Copyright Law Dies Quiet Death
• Google Unveils YouTube Copyright Filter to Mixed Reviews
• AT&T To Police Internet For Copyright Infractions
• Music Label's Copyright Argument is Rubbish
• Meet the Latest Copyright Scofflaw -- Meet the GOP
• Study This: Copyright Law Hurts, Helps Economy
• Egypt Conjuring Copyright Pyramid Scheme
• GOP 'Caving' on Trademark Lawsuit Threats
• Judge Doesn't Give Tiffany a Trademark Silver Spoon in eBay Flap ...
• Judge Throws Wrinkle Into Plastic Surgery Trademark Claim
• GOP Threatens CafePress Over Shirts, Stickers and Logos
• Google Profits From Typo Squatting, Report Charges

Full post as published by Threat Level on December 04, 2008 (boomark / email).