Luxury Brands Forced to Bear the Burden of Infringement Monitoring: Tiffany v. eBay – by “Kendall W”

www1.nysd.uscourts.gov/cases/show.php?db=special&id=83

 

The rapid development of the Internet has enabled various new ways for sellers to connect to buyers and to expand their businesses past geographical barriers.  But, as commerce advanced so did the forums for counterfeiting and infringement.  Similar to the Google and Louis Vuitton trademark case, Tiffany v. eBay brings to light yet another instance of infringement via the Internet.

In this case, Tiffany’s asserted that eBay “actively advertised the availability of Tiffany merchandise” on their website, which is in no way an authorized vendor of the brand.  The allegations against eBay included direct trademark infringement under federal and common law; contributory trademark infringement under the federal and common law; unfair competition under federal and common law; false advertising under the Lanham Act; trademark dilution under federal law; and contributory dilution.

The Court outright rejected Tiffany’s direct infringement claims, which I do agree is the least sound of the arguments, contending that eBay, and any other vendor, should be free to use “Tiffany” to accurately describe a jewelry that is, technically, from the Tiffany collection.  To this, Tiffany rightfully argued that eBay should be held liable for the rampant sales of counterfeit Tiffany jewelry on their website.  Because all Tiffany’s merchandise sold on the site is not counterfeit, and because eBay quickly takes down listings when Tiffany’s sends directed notes, the United States District Court for the Southern District of New York ruled in favor of eBay, stating that “the law is clear: it is the trademark owner’s burden to police its mark, and companies like eBay cannot be held liable for trademark infringement based solely on their generalized knowledge that trademark infringement might be occurring on their websites.”

Aside from direct trademark infringement charges, eBay should seemingly be held liable for contributory trademark infringement, trademark dilution and contributory dilution.  The eBay platform cultivates a context catering to a variety of sellers, sometimes anonymous, which allows them to very easily and intentionally sell second-hand and counterfeit goods.  The website knowingly makes it overly easy to do this.  In this sense, eBay is enabling and facilitating trademark infringement and the charge of contributory trademark infringement seems applicable.  In addition, sellers on eBay are peddling used or fake Tiffany’s jewelry.  Tiffany is a considered a luxury brand, and it’s jewelry something not easily attainable by the general population.  The company has spent time and resources to develop a high-end brand, and sellers on eBay undermine the brand and diminish value.  In this way, eBay should be held liable for trademark dilution and contributory dilution.

The ruling in this case basically holds that, regardless of the fact that Tiffany and other luxury brand companies have invested enormous resources into developing their brand, they are nonetheless responsible for monitoring all activity and counterfeit activity pertaining to their brand.  This extensive responsibility is unreasonable considering the scope of the Internet and marketplace websites such as eBay, and the ruling in this case reinforces the illicit and explicit exploitation of luxury brand companies via the Internet.  Ebay should bear the burden of monitoring the activity on their website because it is just that, their website.  In the interest of integrity and accountability as well as wanting to facilitate the exchange of quality goods, they should monitor the transactions taking place on their site and should screen the sellers.

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