The long-awaited Tiffany v. eBay decision came down today—a big defense win for eBay. Judge Richard Sullivan's opinion makes clear that the onus for finding counterfeit goods is on the mark-holder, not the market-maker. His opinion comes just two weeks after a French court made the opposite finding, holding eBay responsible and ordering the company to pay more than $60 million.
In the New York case, the court ruled that eBay's use of the Tiffany marks is "nominative fair use."
An oft-overlooked aspect of both of these cases: they aren't only about fake goods. Both Louis Vuitton and Tiffany exercise tight control over all of their sales; not only do they fight counterfeiters, they also take action to control legitimate markets for new and used goods. The French decision against eBay, which some called a "hometown verdict," wasn't just about fakes; it was about control of the marketplace for the real goods. MarketWatch columnist Therese Poletti notes that eBay was found guilty of "unauthorized sales of certain authentic LVMH perfumes" including Kenzo, Guerlain, Dior and Givenchy, which were sold outside the "approved" channels—and that, she writes, "reeks of protectionism."
In his decision, Judge Sullivan makes it clear that doesn't fly stateside. When it comes to secondary markets, luxury goods makers can't have total control. He writes:
While rights holders such as Tiffany may have obvious economic incentives to curtail the sale of both counterfeit and authentic goods on the Internet — after all, every sale of Tiffany jewelry on eBay potentially represents a lost sales opportunity via Tiffany’s own authorized distribution channels — the law provides protection only from the former, not the latter. Clearly, eBay and other online market websites may properly promote and facilitate the growth of legitimate secondary markets in brand-name goods.
Selected early responses: Legal Pad quotes Stanford's Mark Lemley, who writes that "the U.S. has a legal system that respects and encourages the development of the Internet, and France, so far, does not.” Santa Clara's cyberlaw expert, Eric Goldman, calls the case "a nice clean win" for online service providers who haven't known what to do about trademark takedown notices; and adds that "the battleground might just shift to the Second Circuit or Congress." More coverage: Law.com, WSJ, NYT, CNET, AP.
Tiffany Inc. v. eBay Inc., 04-cv-04607, S.D. New York, was filed in 2004 and went to a week-long bench trial (no jury) on November 13, 2007. Tiffany was represented by Arnold & Porter; eBay by Weil, Gotshal & Manges.