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.