(Source: LiewCF)
Ruling preserves safe harbor for online intermediaries

A federal court in New York sided with eBay in a lawsuit with upscale jeweler Tiffany & Co. Monday, mandating that eBay sellers can continue to peddle designer jewelry without the site policing listings for counterfeit items.

According to U.S. District Judge Richard Sullivan’s 66-page ruling (PDF), eBay’s current efforts at enforcement – which primarily involves responding to takedown requests from copyright and trademark holders – are more than sufficient to keep the site out of liability for inadvertently brokering counterfeit goods.

“It is the 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 on their websites,” wrote Sullivan.

Filed in 2004, Tiffany’s lawsuit accused eBay of ignoring the sale of counterfeit Tiffany jewelry on its auction site. The suit also alleges trademark infringement due to the sellers’ use of the Tiffany name in product listings, and asks the New York federal court to force eBay to be more proactive in policing its listings for fake goods.

The lawsuit attracted a wide range of spectators, and legal analysts say the suit has important implications for nearly any industry affected by piracy and copyright or trademark infringement. A victory for Tiffany would have set precedent that named content and platform providers – a description that fits a wide variety of names, including eBay and video-sharing site YouTube – as primary enforcers in other companies’ trademarks.

Instead, the judge noted, eBay has a team of 200 employees dedicated to rooting out counterfeit listings, and another 70 that liaise with law enforcement. Further, noted Sullivan, eBay’s automated enforcement software is so aggressive that it’s crashed the site’s computer systems on numerous occasions. Tiffany, on the other hand, spent substantially less time developing its arguments, which include a commissioned survey of goods that Sullivan found to be “flawed” and a paralegal hired to patrol the site for two days a week.

Similar claims, made by media giant Viacom against video-sharing site YouTube, are also working their way through a New York federal court. Some analysts speculate that the Tiffany v. eBay decision could affect that case, however little appears to have happened since Google was ordered to give complete usage logs to Viacom earlier this month.

Sullivan’s decision stands in stark contrast to a similar ruling entered against eBay in France, where the Commercial Court of Paris recently sided with Louis Vitton and ordered the auction site to block sales of all Louis Vitton products – counterfeit or not – offered by unauthorized distributors.

It is expected that Tiffany will attempt to appeal the decision.

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