Tiffany Learns, Yet Again, That eBay Is Not Responsible For Users Selling Counterfeit Items

from the secondary-liability dept

Back in 2004, famed jeweler Tiffany sued eBay, because some users on eBay were selling counterfeit Tiffany items. It's the same old story of secondary liability -- with eBay pointing out (quite accurately) that if users are selling counterfeit goods, that's between Tiffany and those users. eBay is just the platform. But Tiffany didn't care. Its CEO even admitted that it was suing eBay because that was easier than going after those actually responsible. It's an incredible sense of entitlement by Tiffany: because it doesn't want to actually police counterfeit sellers, eBay should just step up and do so automatically?

The district court smacked down Tiffany on every count, explaining pretty clearly that it makes no sense at all for eBay to be responsible for the actions of users. And, of course, Tiffany appealed.

The appeals court has sided with eBay yet again, telling Tiffany, once again, that eBay is not liable for the actions of its users (full decision -- pdf). The court notes that eBay seems to have bent over backwards -- beyond what the law requires -- to help Tiffany stop the sale of counterfeit items and to warn users to make sure they're buying legitimate items. It notes that while eBay may have had "general knowledge" of counterfeit goods on the site, whenever it had specific knowledge, it was quick to take down the offending content, and thus there was no secondary or contributory trademark infringement.

Separately, the court agreed with the lower court that eBay did not violate Tiffany's trademarks by mentioning Tiffany in its own ads -- saying that it was entirely accurate to note that you could buy Tiffany products on eBay. That was factual, and thus, no trademark infringement. It made quick work of Tiffany's "dilution" claim as well, pointing out that eBay has nothing to do with that:
Tiffany argues that counterfeiting dilutes the value of its product. Perhaps. But insofar as eBay did not itself sell the goods at issue, it did not itself engage in dilution.
The one area where the appeals court differed from the district court is outside of the trademark realm, but on the question of whether or not eBay's ads that mention Tiffany could, potentially, be seen as "false advertising." The court noted that there was nothing that was directly false in the ads (it was, again, accurate that you could buy Tiffany goods via eBay), but that it could be possible that users were mislead or confused. So it sent the case back to the lower court to retry that particular issue.

In the meantime, though, Tiffany wants to appeal the rest of the ruling to the Supreme Court, which may now have a chance to establish, clearly, that you can't pin secondary liability on a service provider. Tiffany's response to the ruling actually seems a hell of a lot more "misleading" than any of eBay's ads:
"EBay knew that counterfeit merchandise was being sold on its site -- and EBay took no effective steps to stop it," Tiffany Chief Executive Officer Michael J. Kowalski said in a statement. "EBay deliberately misled consumers for profit, and unfortunately the court has justified its actions."
But that's simply, factually, incorrect. As the court clearly noted, eBay bends over backwards to try to stop counterfeit merchandise from being sold on the site. Hopefully Tiffany execs come to their senses, but it seems likely they'll still appeal, and still fail to recognize the difference between blaming the party doing the actual infringement and the service provider they use.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    icon
    btrussell (profile), Apr 1st, 2010 @ 4:08pm

    Aren't laws/rulings supposed to be consistent?

    If torrent indexers are forced offline because of users, then so should e-bay, or vice versa.

     

    reply to this | link to this | view in thread ]

  2.  
    identicon
    Anonymous Coward, Apr 1st, 2010 @ 4:16pm

    Re:

    I think the rationalization is that there is a difference between real property and unreal property. For now.

     

    reply to this | link to this | view in thread ]

  3.  
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    Mike Masnick (profile), Apr 1st, 2010 @ 4:19pm

    Re:

    Aren't laws/rulings supposed to be consistent?

    If torrent indexers are forced offline because of users, then so should e-bay, or vice versa.


    Well, copyright law and trademark law are different, and the rules for secondary/contributory infringement are somewhat different (i.e., they're pretty well defined in copyright law, but not so much in trademark law).

     

    reply to this | link to this | view in thread ]

  4.  
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    ECA (profile), Apr 1st, 2010 @ 4:41pm

    You need another section/dept.

    You need another section or dept..

    IDIOTS R US..

    as if there is a Major market for persons that could afford a $2000 purse and other over priced goods.

     

    reply to this | link to this | view in thread ]

  5.  
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    Dan (profile), Apr 1st, 2010 @ 5:36pm

    This could be good

    This could be good if the supreme court gets to decide the issue of secondary liability once and for all.

     

    reply to this | link to this | view in thread ]

  6.  
    identicon
    DJ, Apr 1st, 2010 @ 5:47pm

    Governments should sue themselves

    By Tiffany's logic, state and local governments should sue themselves for millions of dollars.
    After all, they're the ones who paved the roads on which drivers commit countless traffic offenses every day.

     

    reply to this | link to this | view in thread ]

  7.  
    identicon
    Pixelation, Apr 1st, 2010 @ 6:14pm

    Ebay " did not itself engage in dilution. "

    Apparently Tiffany's is engaged in delusion.

     

    reply to this | link to this | view in thread ]

  8.  
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    Philip Cohen (profile), Apr 2nd, 2010 @ 6:27pm

    eBay/PayPal: Dead Men Walking

    “EBay argued to the court that it has spent as much as $20 million annually to rid the site of fraud, including buyer protection programs and employees whose sole job is to monitor infringement issues.”
    http://www.foxbusiness.com/story/markets/industries/media/tiffany--ebay-continue-battle- infringement/

    And is that not the whole problem? eBay is spending (only) $20 million annually to rid the site of “fraud, including buyer protection programs and employees whose sole job is to monitor infringement issues”.

    On his way to bringing the eBay marketplace to its knees, one person, the eBafia Don himself, was effectively taking home $20 million annually …

    For those with a longer attention span, an evening’s entertainment of detail and facts on eBay’s deliberate facilitating of wire fraud on its consumers world wide and a list of links to a number of PayPal horror stories is contained in my post at:
    http://www.auctionbytes.com/forum/phpBB/viewtopic.php?p=6502877

     

    reply to this | link to this | view in thread ]

  9.  
    identicon
    enrolled agent 2010, Apr 3rd, 2010 @ 2:22am

    "But that's simply, factually, incorrect. As the court clearly noted, eBay bends over backwards to try to stop counterfeit merchandise from being sold on the site. Hopefully Tiffany execs come to their senses, but it seems likely they'll still appeal, and still fail to recognize the difference between blaming the party doing the actual infringement and the service provider they use."

    They just never get this statement, do they? What is Tiffany after? eBay paying for the counterfeit Tiffany items sold on the website? How stupid or money-hungry can they be?

     

    reply to this | link to this | view in thread ]

  10.  
    identicon
    eBayer, Apr 4th, 2010 @ 8:28pm

    ebay does NOT bend over backwards to stop counterfeits! You can report the .99 cent items by Chinese sellers ALL DAY long and nothing is ever done.

    I'd like to see the REAL amount that ebay spends warding off counterfeits.

    Fact is that ebay makes a ton of money off them in EVERY category so ebay has no intentions of ridding them of the site. Only when they have to by a VERO report or takedown.

    What Tiffany should take to the courts is the fact that even if a sellers fake items get taken down and that seller gets suspended, they just sell on another ID.

    Funny how Amazon had counterfeit jeans show up and they were taken down within an hour of reporting them and those sellers are banned from Amazon selling FOR LIFE and they cannot just go open another selling account because Amazon goes the extra mile to ensure that won't happen.

     

    reply to this | link to this | view in thread ]

  11.  
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    ben, Jul 7th, 2010 @ 12:19am

    Tiffany's argument doesn't sound so stupid to me -

    If I understand eBay correctly, it takes a small portion of every sale. If this is true, then eBay directly profits from every illegal sale.

    Therefore, eBay has knowledge (even if general) that illegal items are being sold, eBay facilitates the transactions, and eBay profits from the transactions. This is very closely akin to accessory theories of criminal liability (difference, I believe, is that the specific intent is lacking). I didn't read the case, but I'm going to assume that the Court mentioned something along the lines that eBay didn't act recklessly, with disregard for a substantial likelihood that a transaction would result in copyright infringement. However, reasonable minds could disagree on that, as one might assert that knowing that, despite your best efforts, illegal transactions are in fact taking place (general knowledge), and continuing to operate the site anyway IS reckless behavior.

    In any case, the author lost me when they implied that Tiffany's is lazy for not going after the 'real criminals'. How stupid are you? You realize that they went after eBay because, unlike eBay (a registered corporation) with someone appointed to receive service of process), the sellers are virtually impossible to catch. This is not at all an uncommon criminal strategy - protect victims by criminalizing the behavior that leads to the criminal activity. (For instance, the government doesn't want you using drugs, so they make the sale of drugs illegal as well). It is specifically the fact that Tiffany's cannot catch the sellers that they are going after eBay. Also crazy that you idiots seem to have such disrespect for a corporation that is trying to protect the rights of their shareholders - of which some I'd wager are just blue or white collar workers with a retirement plan.

     

    reply to this | link to this | view in thread ]

  12.  
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    areyouserious, Jul 7th, 2010 @ 12:34am

    Re:

    How silly of you for acting like this is a cut and dry issue. If Walmart sold illegal merchandise bought from a third party, Walmart would share in the liability. eBay is not Walmart, but it is not merely a service provide either. This hybrid marketplace is fraught with gray area.

    However, I am deeply disturbed by your moral compass - you call Tiffany's (a publicly traded company with a large amount of investors) money-hungry. I doubt when your stocks values drop that you are so quick to call the companies that you invested in "money hungry" when they try to get some profits back that were STOLEN from them.

    This is classic victim blaming. By calling Tiffany's "money hungry" it makes it sound like the jerks who are committing copyright infringement (a.k.a. felons) are decent people who should be left alone.

    Newsflash - crime doesn't have a positive effect on the economy, but a strong business can. You idiots should be rooting for the corporations (unless of course they are somehow usurping our freedoms).

    In any instance, if someone were ripping me off and using eBay or any other site as a conduit for ripping me off, I'd be mad at the site as well.

    Let a criminal store some stolen goods in your garage and see how the eBay defense works.

     

    reply to this | link to this | view in thread ]

  13.  
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    Mike Masnick (profile), Jul 7th, 2010 @ 12:37am

    Re:

    Tiffany's argument doesn't sound so stupid to me -


    Then we disagree.

    If I understand eBay correctly, it takes a small portion of every sale. If this is true, then eBay directly profits from every illegal sale.

    Not quite. eBay profits from offering a service of bringing buyers and sellers together. It does this no matter what is being sold. Thus, to claim it profits directly from illegal sales is wrong. It profits from any sales. It has no direct knowledge of the propriety of each sale and putting the liability on eBay makes little sense if you believe in properly applying liability.

    Therefore, eBay has knowledge (even if general) that illegal items are being sold, eBay facilitates the transactions, and eBay profits from the transactions. This is very closely akin to accessory theories of criminal liability

    Not quite. You are confusing general knowledge with specific knowledge. That's quite important under the law. See the recent Viacom/YouTube decision (which quotes the Tiffany decision) if you don't understand why.

    I didn't read the case

    Aha. So you are coming from a position of ignorance. Great.

    In any case, the author lost me when they implied that Tiffany's is lazy for not going after the 'real criminals'. How stupid are you?

    Mmm hmm. So you haven't even read the case, but you have no problem calling me stupid. Very convincing.

    You realize that they went after eBay because, unlike eBay (a registered corporation) with someone appointed to receive service of process), the sellers are virtually impossible to catch.

    Yes, hence my point that Tiffany is being lazy. Going after the easy company rather than the one actually liable is lazy.

    This is not at all an uncommon criminal strategy - protect victims by criminalizing the behavior that leads to the criminal activity.

    This is a civil dispute, not a criminal one. And, even so, your argument doesn't hold much weight. Blaming the tools for users (which is what happened here) is a mistake, and is quite different than outlawing selling illegal drugs.

    It is specifically the fact that Tiffany's cannot catch the sellers that they are going after eBay.

    And that somehow makes it okay? If someone robs my house, and I can't figure out who did it, but I *did* see them drive away in a Ford, I can sue Ford? Is that really the argument you want to make?

    Also crazy that you idiots seem to have such disrespect for a corporation that is trying to protect the rights of their shareholders - of which some I'd wager are just blue or white collar workers with a retirement plan.

    Heh. You started off this comment by saying reasonable people can disagree, and ended it calling us "you idiots" while even admitting you're ignorant of the actual case.

    You win at the internets.

     

    reply to this | link to this | view in thread ]


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