Published: December 4, 2007
Tiffany’s landmark lawsuit that aims to change eBay’s “takedown notice” model of removing fakes once notified by copyright holders advanced recently as a Federal District Court judge ordered both sides to file post-trial briefs by December 7 following a weeklong bench trial in late November. In that trial, lawyers for Tiffany & Co. argued that the online auction platform should be required to “proactively” police its network, which Tiffany and a number of other luxury brands claim enables the trading of counterfeit items.
Lead attorney for Tiffany, James B. Swire of Arnold & Porter LLP, said he did not want to comment on a case yet to be decided, but did say, “We like the case we presented to Judge [Richard] Sullivan. He said he wants to write something soon. So we’re hoping for an opinion, if not by the end of this year, then by the end of January.”
Earlier Swire had said the case, which centers on Tiffany jewelry, “hits Tiffany’s bottom line and reputation.” According to information posted on the company’s website, jewelry represented approximately 83 percent of the company’s net sales in 2006.
Neither Tiffany nor eBay responded to requests for comment on the lawsuit.
The suit began in July 2004 when in a complaint filed with the US District Court Southern District of New York, Tiffany alleged that San Jose, Calif.-based eBay and “John Does 1‵0” †that is, the myriad of sellers conducting auctions of what are described as Tiffany items at any given time †were involved in facilitating, counterfeiting and infringing and diluting Tiffany’s venerable trademark.
The Tiffany lawsuit attempts to put some legal teeth into the luxury brand’s longstanding protests to eBay that it remove listings for counterfeit Tiffany jewelry and stop scammers from using a “Tiffany” identifier to label counterfeit merchandise. That label, according to the firm’s original complaint, showed up not only on eBay’s onsite advertising, but also on ads that popped up when people performed searches on Yahoo and Google.
“The sale of counterfeit goods using the Tiffany trademark by defendants John Does 1‵0 and facilitated and encouraged by eBay is intended to cause and has caused confusion, mistake or deception of the trade and public and is intended to cause and has caused them to believe that those counterfeit products are the same as Tiffany’s products or are authorized, sponsored or approved by Tiffany or are otherwise affiliated or connected with Tiffany and/or Tiffany’s products,” the complaint stated.
Tiffany contends that eBay has knowledge that fakes continue to be advertised and sold on its website and is being willfully blind to the activity, profiting on the illegal activity through the fees that it charges for listing and closing fees on transactions. “EBay’s actions and failure to act have caused and will continue to cause immediate and irreparable harm to Tiffany and to the substantial goodwill embodied in Tiffany’s registered trademarks,” the complaint stated.
The legal action seeks relief in six areas, including trademark infringement and false advertising, and aims for a judgment that would permanently enjoin eBay and its sellers from offering for “sale, advertising and/or promotion in the United States” any jewelry bearing the Tiffany trademarks that has not been “made, sponsored or approved” by Tiffany.
In addition to punitive damages and court costs, Tiffany is also looking for the court to make eBay account for profits arising from counterfeit sales and either pay Tiffany three times such profits or damages of $1 million per counterfeit mark per type of jewelry sold.
If eBay loses this case, a Pandora’s box of litigation will probably follow, note observers, and already other luxury goods makers such as Rolex, Louis Vuitton and L’Oreal have lined up in European courts to protect their trademarks. Moreover, eBay’s hands-off business model would have to be significantly altered at great expense and difficulty for the company.
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