Well, a long a protracted legal battle between Tiffany & Co. and eBay over the sale of counterfeit goods through eBay’s online auction site has come to an end that has Tiffany feeling at least as blue as its trademark color.  This past Monday, the Supreme Court of the United States (SCOTUS) denied certiorari to Tiffany’s to hear its appeal of a lower court ruling in favor of eBay (see Ars Technica synopsis synopsis here).  Originally filed in 2004, the thrust of Tiffany’s suit has been that eBay has had knowledge of the sale of “massive” amounts of counterfeit Tiffany goods through its website and has not done enough to prevent such infringing sales, causing damage (lost sales) to Tiffany due to eBay’s contributory infringement (NOTE: Tiffany also alleged direct trademark infringement, but that argument went nowhere fast as the Electronic Frontier Foundation aptly noted here – if the goods are Tiffany goods, what else are you going to call them?).  Relying upon its VeRO program (among other bases in its defense of the cause of action), eBay effectively countered that general knowledge of infringing activity is not enough to trigger contributory trademark infringement liability…and when presented with specific allegations of infringing activity by Tiffany, eBay asserted it took (and continues to take) swift action to de-list the auction.  In essence, eBay asserted that a general “blanket” notice that counterfeit goods are being sold through eBay is not enough to shift the burden to eBay to police all the online auctions of Tiffany merchandise, and that eBay was taking aggressive action when presented by Tiffany’s with specific instances of infringing activity. Both the trial court and appellate court effectively agreed with eBay, leaving Tiffany with little recourse but to petition the SCOTUS for review.

What I find interesting in this case is not the SCOTUS refusal to hear the appeal (that decision was a no brainer), but that Tiffany’s position has less to do with its trademark blue, and more to do with a whole lot of green. Tiffany continues to press the point that policing such eBay sales is a massive undertaking that should not rest so heavily on Tiffany’s shoulders in the Internet age.  Reading between the e-leaves, I am more inclined to think that Tiffany was trying to shutdown a secondary market for its products, given the trial court’s skepticism of Tiffany’s evidence of the pervasiveness of the counterfeit product sales through eBay – a market that is undermining overall Tiffany sales.  Notwithstanding the fact that U.S. trademark law imposes an affirmative duty upon a trademark owner to police its marks or risk loss of rights/dilution,  as well as permitting the resale of legitimate trademarked goods,  Tiffany conveniently sidesteps these points by claiming that the online fraud is so pervasive that eBay should be held accountable and that the law should reflect the challenges imposed upon trademark owners from Internet sales by expanding the scope of contributory trademark infringement liability.  This argument smacks of a change in the law that should be done by Congress, not the courts…and a change with which I do not subscribe. Although they provide no reason for the denial of the petition, I am inclined to think that the SCOTUS agreed and…thankfully…did not want to “legislate from the bench”.

I am not unsympathetic to Tiffany’s plight  – it is a world-renowned brand and counterfeits are likely a problem for them (just as they are for a great many other notable brands…as anyone who has seen street vendors selling Prada or Louis Vuitton handbags in New York’s Chinatown can attest).  The problem, however, is that not every auction can be presumed to be counterfeit – there may be (and likely are) some legitimate sales of genuine (albeit gently used) Tiffany merchandise on eBay.  Tiffany has a duty to police its brand, wheher on a street corner in Chinatown or on the Internet – it has been doing a very effective job in controlling its distribution channels for over 100 years whilst it built its brand, so why not now in the age of the Internet?  In fact, with the tools presented by eBay (see my prior post here), Tiffany arguably has more  online weapons in its arsenal to protect against infringing sales.  I will not pretend that they are the panacea for allegedly infringing sales on eBay, but they are an effective tool among many others available under the law. The SCOTUS denial without a reason speaks volumes, and the lower court rulings speak for themselves –  unfortunately, Tiffany just doesn’t seem to like what it has heard. Something tells me that there are some lobbyists waiting in the wings for Tiffany’s call…

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