Court Rejects Appeal By Tiffany Vs eBay Over Trademark

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Court Rejects Appeal By Tiffany Vs eBay Over Trademark [reuters.com]

The Supreme Court said on Monday that it rejected an appeal by Tiffany & Co (TIF.N) arguing that eBay Inc (EBAY.O) should be held liable for trademark infringement for selling counterfeit goods on its website.

The case has been widely viewed as a major legal challenge in the United States to Internet companies such as eBay, Google Inc (GOOG.O) and others that host services that other people provide. They have argued they should not be held responsible for users' trademark violations.

In appealing to the Supreme Court, Tiffany said the case presented an extremely important question about allocating trademark rights and burdens in the modern Internet economy.

[Demaestro]

Tiffany said the case presented an extremely important question about allocating trademark rights and burdens in the modern Internet economy.

I agree with this, but I think that the answer to the question is that the burden should always be the offender, not the venue the offense took place.

It would be like Tiffany suing New York city because so many fake bags are sold on it's street corners.

[buckworks]

like Tiffany suing New York

I can think of a major difference: New York City does not charge service fees for facilitating those street-corner transactions. New York City does not profit from the sale of counterfeit goods.

Ebay does.

[Demaestro]

I can think of a major difference: New York City does not charge service fees for facilitating those street-corner transactions.

Kind of, New York does collect license fees from legal vendors some of which I am sure are selling illegal wares.... and the ones without licenses are fined for not having a license.

So they do profit, just not in the form of service fees, but in licensing and fines.

[buckworks]

That reasoning is very indirect, and I don't think that licenses and fines bear much comparison to charging fees for every transaction.

Even though Ebay was found not to be the party violating Tiffany's trademarks, they nonetheless profit from other people's violations, every time it happens.

At what point does that become Not Okay?

[Demaestro]

Even though Ebay was found not to be the party violating Tiffany's trademarks, they nonetheless profit from other people's violations, every time it happens.

At what point does that become Not Okay?

My analogy isn't perfect, it was more to show that the venue of a crime shouldn't be held accountable for said crime. In the real world or the digital.


At what point does that become Not Okay? I would say at the point where they actually break a law would the point where it becomes not ok. At this point I haven't seen any law that Ebay has broken. Maybe IF it could be shown that more "bad" items are sold then "good" items on Ebay that they could be called negligent but even that is a stretch.

It would be an insurmountable task for New York city to ensure each of it's licensed street vendors sold only legitimate goods... Ebay also faces the same insurmountable task of ensuring this from it's vendors.
They spent $20 million last year combating fake listings. It isn't like they are doing nothing.

I see a distinction between buying something FROM Ebay and buying something ON Ebay. As far as I know Ebay hasn't sold any trademarked goods.

I don't think collecting a fee from every transaction on their site constitutes a crime. Apparently neither do the courts.

I think it is lazy to go after the deep pockets and the larger payday then go after actual offenders.

It is easy to point at Ebay and be angry that they have made a profit from the transactions but I find it hard to swallow that Tiffany's is really interested in justice and protecting their mark when they don't go after the real offenders... smells like a cash grab not protection of a trademark. If they got I.P.s of sellers, requested ISP to name the holders of the I.P.s and named them as co defendants in the case then I would believe that they are interested in justice.

[explorador]

I believe Ebay has responsibility there, is just that laws are still not up to date to this problems, so far we end up talking about it via metaphors. Law should be, need to be updated.

So far take per example piracy on the street-market. Goverments try to fight it but still, the sellers pay a fee for the right on the streets to the goverment. The goverment facilitates the place where the "crime" takes place. That's a hole in the law... at this moment you can't blame the goverment for that act. Law implies something is wrong if it's written so. Same with ebay, they facilitate the infraesctructure for the offenders to commit their acts, not only so, they profit from that act.

[tangor]

Many jurisdictions hold shops/stores accountable for criminal activity on their premises, ie. if known and they do nothing to prevent it, they become an accomplice. How that might apply, INAL, but I can see how government overreach might become involved in the deliberately lax commerce of the web...

[badbadmonkey]

It is easy to point at Ebay and be angry that they have made a profit from the transactions but I find it hard to swallow that Tiffany's is really interested in justice and protecting their mark when they don't go after the real offenders... smells like a cash grab not protection of a trademark. If they got I.P.s of sellers, requested ISP to name the holders of the I.P.s and named them as co defendants in the case then I would believe that they are interested in justice.

Maybe eBay should be made to pay Tiffany's for the inordinate amount of time they are no doubt forced to spend trawling eBay processing counterfeit limitations. Why should Tiffany's have to fund the enforcement of eBay's users' compliance with the law?

This argument is nonsense. For Tiffany's to go after every offender is entirely unreasonable. eBay is the clear enabler and a direct profiteer of illegal activity at Tiffanny's direct expense.

[buckworks]

I think it is lazy to go after the deep pockets and the larger payday then go after actual offenders.

The size of anyone's pockets is a side issue, although playing legal whack-a-mole with a multitude of smaller offenders would certainly reduce the size of the aggrieved party's pockets. The legal bills for that could easily put some businesses out of business, through no fault of their own.

That's not justice either.

[ChocolateDimple]

This argument is nonsense. For Tiffany's to go after every offender is entirely unreasonable. eBay is the clear enabler and a direct profiteer of illegal activity at Tiffanny's direct expense.

I agree with you that eBay does enable and profit from these untoward activities. However, what is Tiffany's objective of this law suite? If they are in it just to recover losses because eBay has directly cost them an inconvenient expense, then you would be right to go after eBay.

If they want justice as Demaestro points out, to curb the problem they have to go after the offenders and send a message to all future offenders that the law can and will get them.

If they got I.P.s of sellers, requested ISP to name the holders of the I.P.s and named them as co defendants in the case then I would believe that they are interested in justice.

Assuming drinking is a crime, if an alcoholic finds his regular bar shutdown, would that deter him from drinking or would he just find a new bar? Sure, the bars are wrong to sell liquor but how many do you want to shutdown before you realize the bars aren't the problem? The culture of drinking has already been cultivated, you have to curb the culture. Shutting down bars only promotes more underground ones to prosper.

[willybfriendly]

ICE can shut down sites facilitating file sharing, but the Supreme Court won't hear a case dealing with trademark infringement?

Both are intellectual property rights violations. Both are govt agencies.

Help me here. I'm confused...

[jecasc]

New York City does not charge service fees for facilitating those street-corner transactions.

But they charge you for opening your business, they charge sales tax on every transaction, they charge income tax on the profit and you probably have to pay some sort of space rate if you have your business is on a public street.

[Sgt_Kickaxe]

Good call.

Tiffany &co should have known to go after the person/people committing the crime(s) and not after the medium. eBay has no intention of selling counterfeit goods.

A rulling in favor of Tiffany would also have made a HUGE impact on the lives of many eBay affiliates in general. Potentially all websites associated with eBay would have become violators, under the ruling Tiffany was seeking, without even selling any products.

[milosevic]

Why should Tiffany's have to fund the enforcement of eBay's users' compliance with the law?

Because that's what businesses do to protect their interests. Websites have to look for scraped copy and media, others have to protect their trademarks and patents, others protect their client list - and that's their job. It's a fact of business.

I say it's good that we don't have to shut down the Internet so Tiffany's can sell more of their ridiculously overpriced handbags. If you ask me, that's what the problem is - that the original product is so heinously overpriced and marked up that it opens the door wide open to selling fake copies. Does this have any parallels with illegal music downloads?

[badbadmonkey]

We're not talking about the wild of the internet. We're talking about a very controlled environment: eBay, which provides an environment and all the processes necessary - including payment - for a CRIMINAL TRADE. "The internet" does not benefit from criminal activity, but eBay Inc does. They should be force to adequately enforce their own T&C in line with the law, or pay for others if they have to do it themselves.

If your closing argument is to draw a parallel with the freetard justification for music piracy, I doubt there's much reasoning with you.

[milosevic]

I would say the Internet does benefit from a lack of strict controls over such things.

If Ebay had to implement strict controls over listings, the cost of monitoring and policing them would surely be passed on to the user. So even though I couldn't care less about Tiffany's handbags, I would be paying more for all auctions.

If your closing argument is to draw a parallel with the freetard justification for music piracy, I doubt there's much reasoning with you.

If your closing argument is an appeal to ridicule and an argument from fallacy, then I am lol at my desk.

Edit: You also set up a straw man as I never did 'draw a parallel', I only posed a question. Nice going, maybe you should try a career as a tabloid journalist.

[Webwork]

Has any court, ever, allowed trademark holders to "at least" recover money damages equal to the provable income or profits the hosting company (EBay, Google, etc.) earned from its role as the enabler/facilitator the illicit transactions?

If Tiffany has sufficient evidential proof that EBay "earned" :( $4 million from facilitating transactions in knock-offs then EBay should pay that back.

A turn over of illicit profits would not be a penalty or an award of damages so much as it would be a disgorgement or turnover of illicitly received funds, akin to but not as extreme as laws criminalizing "receiving stolen goods".

[tangor]

The problem is that eBay is the venue and the only "profit" they make is a transaction fee. The actual spend went to the infringer and that is who must be taken to task for lost earnings. eBay (or any other site that sells) can be held accountable for KNOWINGLY allowing illegal activity in which result compensatory punitive damages can be sought, and in these litigious times might actually exceed the real lost earnings.

[milosevic]

and in these litigious times might actually exceed the real lost earnings.

The cynic in me wants to replace "might actually" with "will massively"...

[Demaestro]

This argument is nonsense. For Tiffany's to go after every offender is entirely unreasonable. eBay is the clear enabler and a direct profiteer of illegal activity at Tiffanny's direct expense.

I hope the irony of your post isn't lost on you.

On one hand you allude that Ebay should stop this problem or pay up. On the other hand you proclaim that... and I will quote you "to go after every offender is entirely unreasonable"

So it is reasonable for Ebay to stop each offense but it is unreasonable for Tiffany to do the same?

Ebay spent $20 million trying to curb the problem.. What has Tiffany's contribution been to help to stop this problem. All I see them doing is trying to profit from the problem rather than stop the problem.

[buckworks]

transactions in knock-offs

One problem in a discussion like this is ambiguity in language. In the fashion world, the word "knock-off" does not necessarily imply any intent to deceive. A knock-off is a copy with a clear resemblance to a more expensive design but it does not pretend to be anything other than a copy.

However, I've often seen the word "knock-off" used interchangeably with "counterfeit" which is a different matter entirely. A counterfeit pretends to BE the real thing, not just imitate it. There is a clear intent to deceive.

Counterfeiting is the problem here, not just "knocking off".

[badbadmonkey]

So it is reasonable for Ebay to stop each offense but it is unreasonable for Tiffany to do the same?

Yes. It's not ironic at all. It is eBay's choice to engage in and, by throwing up their hands and declaring "it's too hard your Honor", permit the trade of counterfeit goods. They have a clear choice - if they cannot "go after" the offenders and keep their own house clean, they could simply quit the trade in the problem goods all together. But they do not, of course. Even it were feasible, why should Tiffany's have to? It is eBay's site, they are the ones with the capability to implement back-end solutions. Is every stake holder in the world expected to invest countless hours of time monitoring eBay for counterfeit products?

Tiffany's on the other hand does not have the choice to take the easy route and quit the trade completely... and it seems is simply expected to take blatant IP infringement on the chin, while eBay hides behind the equivalent of safe harbor and laughs at them, all the while collecting illicitly garnered proceeds.

eBay is responsible for what happens on their site and should be accountable.

[Demaestro]

It is eBay's choice to engage in .... the trade of counterfeit goods.

No it isn't. That is what you are missing. They don't CHOOSE to have lawbreakers spoil their site and cause them to end up in courts spending $20 a year combating the problem.

They (Ebay) have a clear choice .... they could simply quit the trade in the problem goods all together.

You are getting ridiculous now. Perhaps New York should shut down since they can't stop crime.

Ebay should shut down if they can't become the first crime free place marketplace on the planet? Why?

You would have tens of thousands of legal vendors hurting.. leave 1000s out of a job and over what? Tiffanys can't even show damages or losses here... they have NO CASE.

Courts aren't set up to give people and companies windfalls. They are set up to make you whole.

If I damage your car to the tune of $1500 then you get $1500 you don't get $5000. That would be a windfall.. that isn't what courts do, except when there is punitive damages and nothing like that here.

[milosevic]

I really think the burden of IP right enforcement should fall with the person or company being infringed in most cases.

In this example, handbags are sold at likely 2000% or 3000%+ markup.

Is it not right that Tiffany should pass on the cost of preventing trademark infringement and counterfeiting to their consumers? After all, their consumers are paying for the brand name anyway: You could have a functionally identical handbag that cost 1/10th what the Tiffany bag does - their customers already demonstrated that they will pay huge amounts of money for exclusivity - and that exclusivity is (arguably) it's only value.

So if the cost of enforcing this (and other designer gear trademarks) was passed on to the user, the entire world would pay for a very small proportion of the richest to be able to walk around town without seeing someone else with the same handbag. I guess you can imagine just how much sympathy I have. :)

[buckworks]

FWIW, the problem of counterfeiting can affect everything from auto parts to medications. This is not just a high fashion issue.

could have a functionally identical handbag that cost 1/10th what the Tiffany bag does

That's just fine as long as it's not claimed to be a Tiffany's bag.

----

The question of what's "functionally identical" could become an interesting discussion on its own. Many seemingly similar items have major differences in quality and durability which become apparent with use over time but are not immediately obvious to a non-expert shopper.

[milosevic]

Good point Buckworks, I guess I am presuming that those buying the fakes on eBay are fully aware they are buying fakes, and this may be the case but I doubt that situation applies everywhere.

[Sgt_Kickaxe]

eBay doesn't sell items, it's merely a platform not unlike google, Bing and Yahoo. If you use Google, Bing and Yahoo to monitor, track and eventually catch crooks you can use ebay as well. Knockoffs are against eBay TOS and there is a method to report knockoffs, use it!

[buckworks]

presuming that those buying the fakes on eBay are fully aware they are buying fakes

That presumption is not well-founded.

The root problem here is phony merchandise being promoted as the real thing.

This case wasn't about goods which were being clearly promoted as replicas, copies, "inspired by Tiffany's" or something like that. The issue is merchandise which claims to be the real thing when it isn't.

When fake products are promoted as the real thing, users are deceived, and not only does the real brand suffer lost sales, the brand's reputation can suffer real damage if something goes wrong and frustrated consumers assume it's the real brand's fault that the items turned out to be lower quality than they were expecting.

Ebay's responsibility in the situation is certainly good fodder for debate, but the problem faced by companies with hard-earned brand reputations is very real.

I wonder if some folks would find the problems easier to grasp if the case had been something like Ford suing about phony car parts which claimed to be made by Ford?

[Demaestro]

The root problem here is phony merchandise being promoted as the real thing.

Very true and why I feel putting the onus on Ebay to prevent this is an impossible task, I agree they have a responsibility to try to stop it but that interest lies in having users of their site not get ripped off not in protected the IP of another.

I am sure in some situations the seller isn't even aware that their merchandise is fake. They were ripped off and never knew and are now reselling, and in others the seller knows but takes extra steps to avoid Ebay's net. A tactic used by most soc type accounts is open 100 accounts and selling something real and simple, build up rep.

Then they take 1 of those accounts and start selling fakes.. that account gets nipped the person still has 99 other accounts with good rep to use, switching one at a time.. all the while building up good rep on other accounts.