July 30, 2008, 12:00 AM

Online retailers get a break from ruling in eBay-Tiffany lawsuit

A federal judge last month ruled that primary responsibility for monitoring trademark violations rests with trademark holders like jewelry maker and retailer Tiffany & Co., not with online marketplaces like eBay. The ruling should make life easier for online marketplaces like Facebook and MySpace as well as eBay, one expert says.

A federal judge ruled last month that primary responsibility for monitoring trademark violations rests with trademark holders like luxury jewelry manufacturer Tiffany & Co., and not with online marketplaces like eBay that host sales of items said to be from Tiffany.

“Online retailers should feel some relief from this decision,” says Chris Glancy, a trademark and copyright litigation specialist at law firm White & Case LLP.

The ruling not only benefits online marketplaces like eBay but also social network sites like Facebook whose users may post notices of goods for sale, he says. For instance, Facebook would have to verify that an Apple computer offered for sale was legitimate.

The decision makes clear that web site operators must act when notified that an item is counterfeit. U.S. District Court Judge Richard J. Sullivan of the Southern District of New York noted the extensive investments eBay has made in fighting fraud and to its Verified Rights Owner program that 14,000 trademark owners, including Tiffany, use to report counterfeit items to eBay.

Tiffany claimed in its 2004 lawsuit that hundreds of thousands of counterfeit silver jewelry items were sold on eBay from 2003 to 2006 and that eBay did not do enough to prevent those sales. Tiffany is likely to appeal the decision, a spokesman says.

A French court in June ruled against eBay in a similar trademark infringement case brought by luxury goods manufacturer LVMH. EBay says it will appeal that decision.


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