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Matt Sayles/AP

eBay Cleared in Tiffany Counterfeit Suit

July 15, 2008 03:25 PM
by Anne Szustek
A federal court ruled that eBay is not responsible for fakes sold through its Web site, the only victory in three recent trademark regulation lawsuits against the online auction giant.

30-Second Summary

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U.S. District Court Judge Richard Sullivan wrote in his decision, "Tiffany must ultimately bear the burden of protecting its trademark."

The ruling is a bit of solace for third-party online auctioneers, as it establishes that Web-based enterprises do not hold sole responsibility for patrolling how trademarks are used on their sites.

"If the Web companies shoulder too much of the burden, their ability to wring a profit from the sales or the advertising that appears alongside the commerce could be compromised," writes BusinessWeek.

The ruling seems to directly contradict the European courts that found eBay liable earlier this summer for sales of fake Hermès and Louis Vuitton goods.

Fashion conglomerate LVMH, which owns high-end labels Louis Vuitton, Dior and others, found that some 90 percent of Dior and Louis Vuitton goods auctioned on eBay were fakes. The court awarded $63 million to LVMH for what it deemed eBay's "culpable negligence," and required eBay to pay nearly $20 million in additional damages for unauthorized sale of the brand's perfumes.

Less than a month earlier, French fashion house Hermès, known for such signature items as the pricey Birkin bag, won $30,000 in damages from eBay and sellers over auctions of two counterfeit Hermès bags. That court cited eBay for “failing to act within their powers to prevent reprehensible use of the site.”

Fashion fakes constitute a $600 billion worldwide industry—one that's been linked to illegal activities much more tangible than infringement on intellectual property laws, including child labor and the financing of narcotics trafficking and terrorism. New York City Police Commissioner Ray Kelly alluded that fashion counterfeiting rings helped fund the 2004 Madrid train bombings.

Headline Link: ‘EBay Wins Court Battle with Tiffany'

Background: Designer labels' struggles against counterfeiting

Opinion & Analysis: 'Judge to Tiffany: Police Your Own Brand'

Video: ‘Fakes are Never in Fashion’

Reference: The court ruling and lawsuit; guides to fashion and online selling

Related Topics: eBay

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