EBay v. Tiffany

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FACTS:

• The Plaintiff is Tiffany & Co., a luxury jewellery and speciality retailer headquartered in New York, sells jewellery and other accessories. The defendant is eBay, Inc. which is American e-commerce.
• eBay used to advertise the availability of Tiffany jewelry on its website. After a complaint by Tiffany, eBay discontinued placing the ads. Based on a suspicion of an investigation as to the authenticity of goods that were being sold on eBay via third-party sellers bearing the name of Tiffany, it was determined that almost 70% of “Tiffany” items purchased on eBay were counterfeit.
• This led to Tiffany filing a lawsuit against eBay in 2004 in the U.S. District Court claiming the goods sold under the name of Tiffany were counterfeit in nature leading to trademark infringement, unfair competition, contributory trademark dilution, and false advertising claims.
• Also, the advertisements made by eBay regarding Tiffany goods lead to infringement of their registered trademark. A federal judge in New York and then a U.S. appeals court ruled that eBay was not liable for trademark infringement by allowing fake Tiffany goods to be sold on the website by individuals.

ISSUES:

• eBay allowed the sale of counterfeit Tiffany merchandise on its selling platform through third-party sellers.
• eBay, despite possessing the knowledge that counterfeit goods were being sold on its platform, kept on advertising that Tiffany jewelry was available on its website through unverified sellers

Tiffany alleges that eBay infringed its trademark in violation of section 32 of the Lanham Act. Under section 32, “the owner of a mark registered with the Patent and Trademark Office can bring a civil action against a person alleged to have used the mark without the owner’s consent.”

The Second Circuit held that such advertisements could comprise false advertising.

• They implied the genuineness of all Tiffany goods on eBay’s site, and
• Consumers were likely to be misled by such advertisements. An advertisement is unlawful, noted the Court, when it implies that all of the goods advertised for sale are authenticated when in fact a lot of them are not.

Tiffany argued that eBay was acting willfully blind and on purpose avoided knowing the truth about the sale of counterfeit goods on its site. Also, to establish liability for a false advertising claim, the plaintiff must prove that a false or misleading statement was made in commercial advertising that creates a likelihood of harm to the plaintiff. JUDGEMENT: In 2008, the trial court ruled against Tiffany on all claims and the company appealed its decision. When it came to the Court of Appeals, the Second Circuit affirmed the lower court’s decision in April 2010, which did not find eBay liable for contributory trademark infringement for the sale of counterfeit Tiffany goods by third-party sellers on its website. Regarding the claim of trademark infringement made by Tiffany, the court found eBay’s use of the Tiffany marks on its website was protected under the nominative fair use doctrine.

JUDGEMENT:

In 2008, the trial court ruled against Tiffany on all claims and the company appealed its decision. When it came to the Court of Appeals, the Second Circuit affirmed the lower court’s decision in April 2010, which did not find eBay liable for contributory trademark infringement for the sale of counterfeit Tiffany goods by third-party sellers on its website. Regarding the claim of trademark infringement made by Tiffany, the court found eBay’s use of the Tiffany marks on its website was protected under the nominative fair use doctrine.