Tiffany v. eBay – Transnational Trademark Problems?

by Jeff Liu , MTTLR Associate Editor

Last summer, a federal district court ruled, in Tiffany v. Ebay, that online marketplace eBay was not liable under trademark and unfair competition law for facilitating the sale of counterfeit items on its website. The court noted that it is a “Trademark owner’s burden to police its mark, and companies like eBay cannot be held liable for trademark infringement based solely on their generalized knowledge that trademark infringement might be occurring.” Some U.S.-based commentators praised the decision; others were somewhat more critical. Few, however, commented on the way this decision has the potential to the put the U.S. directly at odds with several key European Union countries on contributory liability for trademark violations.

While this decision represents a victory for eBay and other online marketplaces in the United States, courts in other countries have shown less sympathy for eBay. Especially in European jurisdictions decisions have tilted in support of trademark holders rather than the operator(s) of online marketplaces. Several judicial decisions handed down by countries in the European are opposite to the decision handed down in Tiffany Inc. Two important decisions highlight the conflict at hand. On June 30, 2008, a French court ordered eBay to pay 61 million dollars in compensation to LVHM for allowing the sale of fake merchandise on its website. Just a month earlier, another French court had ordered eBay to pay Hermes a compensation of 20,000 Euros for the sale of counterfeit merchandise on its website. And both of these decisions come in light of decision by a German appeals court in April, 2008 against eBay on the same issue. The German appeals court ruled eBay had to take preventive measures against the sale of fake Rolexes on its website. Both the French and German courts seem to have taken the position that eBay has a responsibility to prevent the sale of counterfeit goods on its website, but the U.S. court has taken the opposite position, that the burden falls onto the holder of the trademark. In an increasingly global marketplace, this conflict will have to be resolved.

Testing the Scope of Fuel Economy Standard Preemption: The New York Taxicab Cases

by: Joshua E. Ney, Associate Editor, MTTLR

Image Feeding Frenzy by 54east. Used under a Creative Commons BY-NC 2.0 license.

Under the Energy Policy and Conservation Act (EPCA), the National Highway Traffic Safety Administration (NHTSA) prescribes corporate average fuel economy (CAFE) standards for passenger automobiles and light-duty trucks.¹ The CAFE standards specify a minimum fleet-wide average fuel economy applicable to manufacturers in a given model year.²

Since the enactment of the EPCA, the NHTSA has exercised this authority with relatively unchallenged exclusivity. The EPCA’s express preemption clause forbids States to “adopt or enforce a law or regulation related to fuel economy standards.”³ Until recently, few states had sought to regulate automobile fuel economy, and no court had determined that a state or local law violated this preemption clause. That changed on October 31, 2008, when a federal judge blocked the implementation of a new rule promulgated by the New York City Taxi & Limousine Commission (TLC).⁴ The ongoing legal battle is giving courts their first opportunity to define the scope of EPCA preemption.

The 2007 Rule: Preemption of State-Mandated Fuel Economy Standards

On December 11, 2007,⁵ the TLC approved a rule (the “2007 Rule”) requiring all taxicabs coming into service on or after October, 1, 2008, to have “a minimum city rating of twenty-five (25) miles per gallon.”⁶ Beginning October 1, 2009, the 2007 Rule would require all taxicabs coming into service to have a minimum rating of thirty (30) miles per gallon.⁷ In contrast, most of the current taxicabs in the City achieve only 12–14 miles per gallon.⁸

In September 2008, a coalition of affected parties filed a complaint in the United States District Court for the Southern District of New York, asserting that the EPCA preempted the 2007 Rule.⁹ The plaintiffs included the Metropolitan Taxicab Board of Trade (MTBOT), a trade association made up of taxicab fleets in the City.¹⁰ The court granted the plaintiffs’ motion for a preliminary injunction, finding that the plaintiffs had “demonstrated a likelihood of success on the issue of preemption.”¹¹ In the court’s view, “Congress’s undoubted intent was to make the setting of fuel economy standards exclusively a federal concern.”¹² Thus, the 2007 Rule fell squarely within the “ordinary meaning” of the EPCA’s preemption clause.¹³ The court rejected the City’s argument that the preemption clause only applies to fuel economy standards as they relate to manufacturers or sellers (as opposed to consumers, such as taxi owners).¹⁴

The 2008 Rule: Preemption of Voluntary Fuel Economy Incentives?

Following the district court decision, New York City Mayor Michael Bloomberg announced that the City would replace the enjoined 2007 Rule with “a series of initiatives to increase the use of fuel efficient and environmentally friendly taxicabs, through new financial incentives.”¹⁵ The incentives proposed by the Mayor (the “2008 Rule”) involve the City’s taxicab “lease cap” system. Under the “lease cap” system, a taxicab owner leasing his or her licensed taxicab to a driver may not charge a lease rate greater than the Standard Lease Cap.¹⁶ The Standard Lease Cap currently ranges from $105 to $129 per shift, depending on the time of the shift.¹⁷ Under the proposed 2008 Rule, fleet owners leasing fuel efficient vehicles will be allowed to charge drivers an additional $3 per shift, while the lease cap applicable to owners of non-fuel efficient vehicles will decrease by $12.¹⁸ These incentives are intended to compensate for the higher cost of purchasing fuel efficient vehicles.¹⁹

The precise contours of the 2008 Rule will not be clear until the TLC completes a formal rulemaking process.²⁰ However, the president of the MTBOT has already voiced his intention to challenge the Rule.²¹ This legal challenge will tee up a novel question regarding the scope of EPCA preemption: May a State or political subdivision adopt voluntary incentive programs to encourage the purchase of fuel efficient vehicles where it could not have mandated the purchase of such vehicles?²²

To resolve this question, the court will need to determine whether the 2008 Rule is “related to fuel economy standards” within the meaning of the EPCA’s preemption clause. In general, where a federal statute contains an express preemption clause, the preemption determination rests on the “plain wording” of the clause.²³ In this case, however, the preemption clause’s use of “related to” language renders a simple “plain wording” analysis problematic.²⁴ The Supreme Court has pointed out that “[i]f ‘relate to’ were taken to extend to the furthest stretch of its indeterminacy, then for all practical purposes preemption would never run its course, [and the effect would be] to read the presumption against preemption out of the law.”²⁵ Rather, the court must “go beyond the unhelpful text and the frustrating difficulty of defining [‘related to’] and look instead to the objectives of the [EPCA] as a guide to the scope of the state law that Congress understood would survive.”²⁶

In light of this guidance, the court must answer the following question to determine whether the EPCA preempts the 2008 Rule: In enacting the EPCA, did Congress intend to withdraw from the States the authority to provide economic incentives influencing consumer choices with respect to vehicle fuel economy? If the answer is yes, then the 2008 Rule “relates to” fuel economy standards, and the EPCA preempts the Rule. If the answer is no, then the 2008 Rule does not “relate to” fuel economy standards and survives EPCA preemption.²⁷ This case will present a matter of first impression for the court. Furthermore, the Committee reports accompanying the bill that became the EPCA did not discuss the intended scope of the statute’s preemption clause.²⁸ Thus, it is difficult to predict how the court will rule. Stay tuned.

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1 The EPCA directs the United States Secretary of Transportation to prescribe the CAFE standards. 49 U.S.C. § 32902(a) (2006). The Secretary has delegated this authority to the NHTSA. 49 C.F.R. § 1.50(f) (2006).
2 49 U.S.C. § 32901(a)(6).
3 49 U.S.C. § 32919(a) (“When an average fuel economy standard prescribed under [the EPCA] is in effect, a State or a political subdivision of a State may not adopt or enforce a law or regulation related to fuel economy standards or average fuel economy standards for automobiles covered by an average fuel economy standard under [the EPCA].”)
4 Metro. Taxicab Board of Trade v. City of New York, No. 08 Civ. 7837 (PAC), 2008 WL 4866021 (S.D.N.Y. Oct. 31, 2008).
5 Press Release, New York City Taxi & Limo. Comm’n, TLC Unanimously Approves Regulations Leading to a Cleaner, Greener NY Taxi Fleet (Dec. 11. 2007).
6 New York, N.Y., TLC Rule § 3-03(c)(10) (2008).
7 TLC Rule § 3-03(c)(11).
8 William Neuman, As First Plan Stalls, Mayor Tries New Push for Green Taxis, N.Y. Times, Nov. 14, 2008.
9 Metro. Taxicab, 2008 WL 4866021, at *1.
10 Id.
11 Id.
12 Id. at *8 (quoting Green Mountain, 508 F. Supp. 2d at 307).
13 Id. at *9.
14 Id. (citing Engine Mfrs. Ass’n v. South Coast Air Quality Mgmt. Dist., 541 U.S. 246 (2004), (holding that a state law that restricted emissions in new vehicles was preempted by the Clean Air Act regardless of whether it targeted purchasers or manufacturers.))
15 Press Release, Office of the Mayor, New York City, Mayor Bloomberg Announces New Incentive/Disincentive Program to Reach Goal of Green Taxi Fleet (Nov. 14, 2008).
16 New York, N.Y., TLC Rule § 1-78(a) (2008).
17 TLC Rule § 1-78(a)(1).
18 Press release, Office of the Mayor, New York City, supra note 15.
19 Id.
20 Id.
21 Neuman, supra note 8.
22 Cf. Engine Mfrs. Ass’n v. South Coast Air Quality Mgmt. Dist., 541 U.S. 246, 255 (2004), (declining to resolve the application of Clean Air Act preemption to voluntary incentive programs).
23 Green Mountain Chrysler Plymouth Dodge Jeep v. Crombie, 508 F. Supp. 2d 295, 351 (D. Vt. 2007).
24 See Id. at 353.
25 See New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 656 (1995) (cited in Green Mountain, 508 F. Supp. 2d at 353).
26 See Green Mountain, 508 F. Supp. 2d at 353 (quoting Travelers 514 U.S. at 656).
27 In context of the federal ERISA statute, whose express preemption clause also includes broad “relate to” language, the Supreme Court has found that a state program did not “relate to” the federal requirements where the state program “merely provide[d] some measure of economic incentive to comport with the State’s requirements.” Cal. Div. of Labor Standards Enforcement v. Dillingham Constr., N.A., Inc., 519 U.S. 316, 332 (1997).
28 Green Mountain, 508 F. Supp. 2d at 354.

Criminal charges for cell-phone self-portraits - more harm than good.

by Melanie Persinger, MTTLR Associate Editor

Image Lincoln by Katy/teapics. Used under a Creative Commons BY-NC-SA 2.0 license.

As new technologies become part of our lives, teenagers figure out a way to use these technologies to do what it is they do best: get themselves into trouble. Cell phones and picture messaging are no exception. This fall, a fifteen-year-old girl in Ohio was arrested for taking nude photographs of herself and sending them to other minors. The teenager was charged with illegal use of a minor in nudity oriented materials and possession of criminal tools under Ohio law 2907.323(A)(3). The charges could also qualify the girl to be classified as a sex offender, requiring her to register annually. An Ohio prosecutor, Ken Oswalt, said that the other minors who received the photographs might also be charged for possession of child pornography.

The Ohio case was recently settled out of court, and the young woman in that case will not have to register as a sex offender. But the law at issue was Ohio’s version of Megan’s law, which has been enacted, with slight variations, in all fifty states and the District of Columbia. This means that a similar case could potentially come up anywhere in the United States. In fact, the case in Ohio is by no means the first instance of a minor being faced with criminal charges for taking and sending, or posting online, nude photographs of themselves. According to Fox News, “Similar cases have been reported in New Jersey, New York, Alabama, Utah, Pennsylvania, Texas and Connecticut.” Michigan and Florida have also seen similar cases. Because this is a growing trend, it is important to ask ourselves if criminal charges are the appropriate way to deal with these teenagers’ misconduct.

The aim of laws of this type (preventing sexual offenses against minors) is to prevent harm to the child. Proponents of the law in issue argue that this means protecting children from harm they could cause to themselves in addition to protecting them against harm caused by others. While the current law does this to a certain extent, it is also overly broad in that it imposes a different, and arguably worse, harm on the minor. It is true that once the photographs become public, they will likely haunt the teenager forever or could possibly end up in the hands of adults who are looking for child pornography, both of which are harms that we should be concerned about. However, imposing criminal charges will not undo the fact that the photograph(s) are now out in public. Additionally, imposing criminal charges, especially requiring the minor to register as a sex offender, is also likely to haunt them forever. It is hard to see how preventing harm to minors justifies imposing other harms on them: the stigma of a criminal record and being labeled as a sex offender.