George Nathanael is a JD candidate at Osgoode Hall Law School.
On April 1st the U.S. Court of Appeals for the Second Circuit decided in favour of eBay (for the most part) in their case against Tiffany and Company. The case revolved around the advertisements that eBay had placed for Tiffany jewellery being sold on its site, and the fact that some of the merchandise being sold by its users was counterfeit. Tiffany argued that eBay should be found liable for direct and contributory trademark infringement, dilution, and false advertising.
On the issue of direct trademark infringement, the court decided that because eBay did in fact sell Tiffany merchandise it was allowed to use the trademarks to advertise this. For contributory trademark infringement, it was found that eBay did not induce the trademark infringement caused by its users selling counterfeit goods. It was also ruled that even though eBay may have generally known about such infringement potentially being carried on through its platform, eBay needed to knowingly allow specific instances of infringement to occur in order to be found liable for contributory infringement.
Regarding trademark dilution, eBay’s use of Tiffany’s marks never referred to eBay’s own product and eBay could not be found liable for any dilution. The issue of false advertising was remanded back to the district court where there is to be a proper analysis of whether consumers were likely to be misled by eBay’s advertisements.
This case raises similar issues to a French case decided late last year, in which eBay was ordered to pay millions to LVMH Möet Hennessy Louis Vuitton for allowing its users to sell knock-offs of high end brands. The U.S. court looked favourably upon eBay’s measures for removing counterfeit goods, including the fact that it has a staff of 70 individuals whose job is to work with law enforcement in combating IP infringement. However, the French court was not swayed much by such efforts. In general, it seems virtually impossible for courts to come to a set standard of oversight in cases involving online platforms that are open to the public to use for a variety of reasons, primarily because each factual matrix presented can be so different. Businesses may always find it difficult to determine how much they should integrate such protective measures into their business models.
For a more in depth look into the appeals case, see here, here, and here.