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.