Although the merchandise that the jewellery giant Tiffany & Co. creates tends to sparkle and shine, its recent legal decision to appeal the U.S. federal court’s decision regarding its case against eBay appears much duller in comparison. I am referring to the appeal of that court’s verdict that held that eBay was not under further obligations to take additional measures in order to prevent its users from selling counterfeit Tiffany & Co. merchandise online. Currently, eBay removes counterfeit materials when it becomes aware of the goods’ illegality through its “VeRO” program (those companies holding trademarks search through eBay’s listings and flag suspicious merchandise). In essence, Tiffany & Co. wanted eBay to be liable for the illegal counterfeiting done by its users before it’s brought to eBay’s attention by trademark holders!
Tiffany & Co.’s appeal is not wholly without legal support. A German court’s decision required eBay to take additional preventative measures to thwart counterfeiting. Additionally, a French court ordered eBay to pay damages to compensate for its users deceitful practices. So there is the possibility that the court of appeal will be influenced by these international decisions and reverse the trial courts decision.
The arguments put forth in pursuit of this appeal by Tiffany & Co.’s legal counsel are as follows. Firstly, they compare eBay’s position as the organizer and maintainer of the medium used for the illegality, to that of a “flea market operator” that is aware of counterfeit material being sold by individual vendors. This “flea market comparison” fails. Flea market operators need to know who they are renting space too, pursue their own individual tenants, and are aware of what sellers are selling. eBay, on the other hand, is literally open to anyone and everyone. This is part of eBay’s appeal. Additionally, eBay has no idea what is being sold through its services. It is the consumer’s responsibility to be diligent and investigate the sellers based on their ratings and reviews when purchasing.
Secondly, Tiffany & Co. argue that the fact that eBay does not precisely sell this merchandise, should not absolve them of liability. The fact that eBay “profits” from the sale of counterfeit merchandise should be enough for a positive obligation to be placed upon them. Indeed, eBay does take a percentage from the objects that are sold through its auctions. Many could make a valid argument that this is specifically how eBay profits and benefits from the sale of counterfeit goods. However, eBay provides a service to its clients. It provides an avenue for anyone to sell almost anything conveniently and easily. It’s my opinion that the compensation eBay receives is in return for providing this service, and not from the sale of counterfeit merchandise. As mentioned above, eBay has designated methods to remove counterfeit materials and ban those users selling it. This process is counterintuitive to profiting off illegality. To require eBay to go above and beyond that would shift the burden of protecting ones trademark from the trademark holder towards a third party.