Tiffany (NJ) Inc. v. eBay Inc. 600 F.3d 93 (2nd Cir. 2010), is a United States Court of Appeals for the Second Circuit case in which plaintiff Tiffany & Co. filed the complaint, first in 2004, alleging that eBay constituted direct and contributory trademark infringement, trademark dilution, and false advertising since it facilitated and advertised counterfeit Tiffany jewelries on its online market. On July 14, 2008, the District Court for S. D. N. Y. decided in favor of eBay on all claims. Tiffany appealed these decisions to the Second Circuit. The court affirmed the judgment of the district court with respect to the claims of trademark infringement and dilution. The false advertising claim was returned to the district court for further processing, which was then ruled in favor of eBay.
Background
Tiffany
Founded in 1837, Tiffany & Co. is an established brand of luxury goods with high-end quality, including jewelry, watches, and home items. Created in New York City by Charles Lewis Tiffany, Tiffany is "renowned for its rare and magnificent diamonds" its "style is defined by groundbreaking designs and glamorous collections." Tiffany marks are famous and a valuable asset for the company and are closely controlled through the distribution chains of its goods.
In 2009, Tiffany had worldwide net earnings of $368.4 million, 90% of which derived from jewelry sales.
eBay
eBay is an online-market place, founded in 1995, that allows its registered users to buy and sell items with other users. eBay has more than 97 million active users globally, In 2010, users worldwide collectively traded more than $2,000 worth of goods every second. It is the "world's largest online marketplace, where practically anyone can buy and sell practically anything." Sellers put listings of their items under certain categories, such as "Books" or "Electronics", and potential buyers can search the items they want by keyword search or by browsing under the category. The two parties contact each other directly and decide the payment and shipping details to complete a transaction. eBay makes revenue by charging the sellers a commission fee for its listing services and for each completed deal. eBay addresses trademark owners’ concerns through their Verified Rights Owner (VeRO) program and "fraud engine". Through VeRO, owners of trademarks report potentially infringing listings to eBay by submitting a Notice of Claimed Infringement form (NOCI). eBay staff review submitted NOCIs and remove the offending listings if the information is accurate. The fraud engine is a collection of software rules and models that automatically find and remove listings that violate eBay policies.
Starting from 2004, counterfeit Tiffany goods were found to be sold on eBay's website, which could also be linked from eBay's homepage as top-sale listings.
Actions leading to litigation
In May 2003, Tiffany complained to eBay regarding the sale of counterfeit items on its website and eBay recommended Tiffany participate in VeRO. In 2004 (and again in 2005 after litigation ensued), Tiffany conducted surveys to determine the extent of counterfeiting occurring on eBay. Tiffany hired a third party to purchase a random sample of items bought from eBay using the keywords "Tiffany" and "sterling" and then inspected these items for authenticity. 136 pieces were purchased in 2004, 73.1% of which were counterfeit, 5% were authentic, and the remaining 21.9% were unverifiable. 139 items were purchased in 2005, 75.5% of which were counterfeit.
After counterfeit items continued to be sold on eBay, Tiffany made 5 different demands on eBay in June 2004 – (1.) Prevent sellers from listing 5 or more Tiffany jewelry items at once, (2.) Ban the sale of silver Tiffany jewelry, (3.) Ban the sale of items advertised as counterfeit Tiffany, (4.) Stop advertising the availability of Tiffany merchandise, and (5.) Remove ‘Tiffany’ sponsored link advertisements on search engines. Although eBay continued to allow the sale of Tiffany jewelry and buy sponsored link advertisements through a third party, eBay's refusal to categorically ban sellers listing more than 5 Tiffany items at a time triggered this lawsuit.
District Court findings
On July 14, 2008, the district court ruled in favor of eBay on all issues. Tiffany appealed and on April 1, 2010, the Second Circuit court ruled in favor of eBay on all issues, except the false advertising claim, which it remanded back to the district court. On remand, the district court again ruled in favor of eBay on the last issue on Sept. 13, 2010.