The judge in the 2004 lawsuit between Tiffany and eBay has finally ruled, dealing an important victory to eBay and providing a setback to Tiffany and other manufacturers that frequently find counterfeit goods on auction sites.
Tiffany had hoped to require eBay to proactively examine all auctions to determine if the goods being auctioned were counterfeit. The two of them work together on removing counterfeit listings, but typically eBay only responds if Tiffany tells them of a counterfeit.
It isn't that eBay doesn't monitor auctions or provide support for trademark owners. CNET reports that:
eBay says it spends $5 million a year in maintaining its fraud search engine, which has 13,000 rules that are designed to identify counterfeit listings based on words such as "replica" or "knock-off." Listings flagged by the search engine are manually reviewed by customer service representatives.
In addition, eBay offers a Verified Rights Owner ("VeRO") program that lets trademark owners report and remove infringing listings. Tiffany is one of more than 14,000 companies and individuals participating in the VeRO program.
More on eBay's VeRO program.
This decision is nearly the direct opposite of the one handed to ebay in France, where LVMH was awarded a $61M judgment because eBay did not police counterfeits well enough.
Today's clearly reinforces the burden of trademark policing to the trademark owner. In fact, the US District judge Richard Sullivan goes as far as to state that explicitly in his decision:
The court is not unsympathetic to Tiffany and other rights holders who have invested enormous resources in developing their brands, only to see them illicitly and efficiently exploited by others on the Internet. Nevertheless, the law is clear: it is the trademark owner's burden to police its mark."
Update: As usual, Eric Goldman has an excellent writeup.