Thanks for notifying me that trial is going to begin. You are right, this one has the potential to be a landmark decision. As best as I am aware (but I may be wrong), no major manufacturer has successfully won a US court judgment against Ebay regarding counterfeit goods.

I won't speculate what the outcome will be. No matter what happens, I'm sure it will be appealed.
But lets just say that I expect that Tiffany will try to use the Rolex decision from Germany this summer as precedent. If this happens, Ebay will no doubt object, since German decisions mean absolutely nada to US courts.

Since the Rolex case from Germany was the first one in the EU involving counterfeit goods on Ebay, I suspect that many other plaintiff manufacturers will now use that decision as precedent. It really is up to the manufacturer because Ebay has no incentive to stop the listing of counterfeit goods. After all, they get more listing fees when fake goods are listed. If courts force Ebay to reduce the number of fake goods, Ebay loses twice: once in the fact that it loses the listing fees on the fake goods and twice because it has to pay people to either take down the offending listings or develop a system where sellers have to verify the authenticity of the merchandise.

A win by Tiffany here in the US would really go a long way towards forcing Ebay to clean up the site.

Ebay also has litigation coming up in French court. The plaintiff is Louis Vuitton. I have no idea when it is set to begin, but it would put a big smile on my face if the author of this blog would research that topic and report back in the future.

Back to the Rolex case in Germany. Rolex lost at trial, and they lost at the intermediate appellate level. But Rolex won at the German supreme court (or whatever it is called). I posted the details of the outcome below.
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http://www.itnews.com.au/News/57494,german-
court-says-ebay-must-work-to-halt-sale-of-fake-
rolexes.aspx

By W. David Gardner
Information Week
July 30, 2007

Despite its best efforts, eBay has been plagued by con artists attempting to sell a variety of counterfeit goods on its site..

EBay must do more to halt sales of counterfeit goods on its site because of a ruling in a German court involving the sale of fake Rolex watches. EBay reported the measure Friday in a SEC filing, although the actual court decision was reached back in June.

The SEC filing was the latest event in a six-year dispute between eBay and Montres Rolex SA and its affiliates. EBay had won earlier decisions in the dispute.

EBay has been plagued by con artists attempting to sell a variety of counterfeit goods on its site. The auction firm has had some success in tightening up its policies governing the sale of goods.

Last month, two men were cited for selling US$6 million of counterfeit software on the auction site. "The (German) court's decision found that eBay must take reasonable measures to prevent recurrence (of counterfeit Rolex postings) once it is informed of clearly identified infringement," eBay said in the SEC filing.

The firm noted that the decision will likely lead to additional cases in Germany, which is eBay's second largest auction market -- the US is the largest.

"We expect that this ruling will likely result in increased litigation against us in Germany," eBay said, "although we do not currently believe that it will require a significant change in our business practices."

In addition to its legal cases in Germany, eBay is defending two lawsuits in French courts. Luxury apparel and clothiers Louis Vuitton Malletier and Christian Dior Couture claim eBay broke French law with its advertising keywords, which allows sellers to post items for counterfeit goods EBay also is embroiled in legal tussles with several French perfume makers.

The companies argue the San Jose, Calif.-based online marketplace interferes with their distribution network.

Here is another article about the Rolex decision... this time from Reuters
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July 27, 2007
SAN FRANCISCO (Reuters) - EBay Inc disclosed on Friday that Germany's top court ruled several months ago that the world's largest online auctioneer must do more to halt the sale of counterfeit goods on its site.

The ruling by the German Federal Supreme Court came in an appeal by plaintiffs Montres Rolex SA and affiliates in a six- year-old dispute over the sale of counterfeit Rolex watches on eBay's German site, according to an eBay financial filing.

EBay had won successive court rounds leading up to the appeal before the country's top court. The suit alleges unfair competition. Rolex was seeking an order enjoining the sale of Rolex-branded watches on eBay and damages from eBay.

"The court's decision found that eBay must take reasonable measures to prevent recurrence once it is informed of clearly identified infringement," eBay said in a quarterly regulatory filing with the U.S. Securities and Exchange Commission.

"EBay may in certain circumstances be liable upon first notice of infringement," the filing added.

The Federal Supreme Court, based in Karlsruhe, referred the case back to the Higher Regional Court of Duesseldorf, which had rejected Rolex's appeal in an earlier decision in 2004, according to eBay.

At issue is whether a low starting price in an eBay auction -- the court decision cited a new price of less than 800 euros -- is sufficient evidence to show that Rolexes were fake.

EBay warned that court ruling could lead to further cases against it in Germany, the company's second largest auction market after the United States.

"We expect that this ruling will likely result in increased litigation against us in Germany, although we do not currently believe that it will require a significant change in our business practices," the eBay filing said.

EBay's filing said the decision was handed down in June. But the Federal Supreme Court's site shows the court handed down its decision on April 19th. The decision, in German, can be found at: http://tinyurl.com/24wqx6/.

Separately, eBay said it continues to fight two lawsuits in French courts brought by luxury goods makers Louis Vuitton Malletier, a unit of LVMH , and Christian Dior Couture, a unit of Christian Dior .

The suits allege eBay broke French law by allowing sellers to post listings for counterfeit goods and allowing them to buy advertising keywords that drove buyers to listing for the counterfeit goods when buyers search for the brands.

The plaintiffs seek 35 million euros in damages.

Another suit filed last year by Parfums Christian Dior, Kenzo Parfums, Parfums Givenchy and Guerlain Societe in Paris alleges eBay sites have interfered with the perfume makers exclusive distribution network, eBay said. The plaintiffs seek 9 million euros and an injunction against further sales.

"We believe that we have meritorious defenses to these suits and intend to defend ourselves vigorously," eBay said.

Other luxury brand owners have filed suits against eBay, or threatened to do so, the San Jose, California-based company said.

EBay shares were off 21 cents at $32.82 in afternoon trading on Nasdaq.

I like it all ready. This article was on CNN today.
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Tiffany and eBay square off in court
November 13, 2007: 03:40 PM EST

Nov. 13, 2007 (Thomson Financial delivered by Newstex) --

NEW YORK (AP) - A lawyer for Tiffany & Co. (NYSE:TIF) accused eBay (NASDAQ:EBAY) Inc. on Tuesday of allowing the sale of tens of thousands of pieces of counterfeit Tiffany jewelry on its Web site; an eBay lawyer responded that Tiffany wasn't doing its share to protect customers.

The arguments in U.S. District Court in Manhattan came at the start of a trial to decide whether eBay can be blamed for the sales of silver Tiffany knockoffs on its Internet site since 2003.

James B. Swire, Tiffany's lawyer, said eBay 'simply turned a blind eye' to the sales.

Bruce Rich, eBay's lawyer, said the site has suspended hundreds of thousands of sellers who broke its rules.

He blamed Tiffany for failing to protect its own trademarks by notifying eBay when it spots sales that seem suspicious. Rich said that when companies do so, eBay often stops the sales even before it can check whether they are legitimate.

In a 2004 lawsuit, Tiffany said it notified eBay a year earlier that thousands of pieces of fake silver jewelry were being sold as if they were genuine Tiffany products.

Swire said the company randomly bought 325 items being sold as genuine Tiffany jewelry on eBay's Web site from among 280,000 listings related to Tiffany products. Of those, 75 percent turned out to be fake, he said.

He said there was no evidence that eBay did anything to stop the false sales after it reported its findings to the company.

Instead, he said, eBay supports sellers, offering marketing assistance that includes conducting seminars on how to grow the online jewelry business.

Rich said eBay spends more than $10 million annually to clean counterfeit merchandise from its site, which carries 6 million postings a day.

He said the company relies on the expertise of more than 14,000 copyright and trademark owners to find counterfeit merchandise.

'It cannot get it done by itself,' Rich said of eBay.

'We never see this merchandise. We don't turn a blind eye to it,' he said. 'We turn people over to law enforcement all the time.'
He said eBay's success relies on creating a safe and friendly business.

'There are a lot of bad guys out there and eBay spends an enormous amount of money trying to keep up with it,' Rich said.

I believe that the prior lawsuits filed against eBay alleged copyright infringement. eBay prevailed because under the terms of the Digital Millenium Copyright Act, its obligation is to remove infringing items when notified by the copyright holder.

Tiffany is claiming trademark infringement, which isn’t covered under the DMCA.

Well, they just might as well do away with eBay altogether. Just shut it down...

This is fake, that is fake, good god, no one can keep up with what's real or not. anymore .The chinese are making that stuff faster and faster.

They need to go after the companies that MAKE the FAKE stuff in the first place. More and more companies have their cheap crap made overseas...

They put their own brand at risk, they put a brand name on it and charge 100 times what it's worth...These same companies making millions more of the the same stuff for 5 bucks, selling out the back door is then called counterfit! lol.

Tiffany vs eBay Financial TImes of London
By Syl Tang
Friday Sep 21 2007 11:57

Yesterday, Tiffany & Co finally had their day in court. In 2004 the jeweller sued the monolithic auction site eBay (NASDAQ:EBAY) for trademark violation; specifically for knowingly failing to prevent the mass trafficking of counterfeit goods through its website. The case has been winding its way through the US district court system and will finally, after three long years of paperwork, be heard in the southern district of New York in front of Judge Richard J Sullivan.

Companies concerned about counterfeiting, among them Gucci, Prada and LVMH, have been watching closely. Dana Thomas, author of Deluxe (Allen Lane), a study of the luxury market, says: "Luxury companies created this problem when they created demand within a market that can't afford their goods to begin with. The real issue is that eBay is a democratic sales outlet, like a garage sale, and nothing should be banned. What is the difference between eBay and a consignment shop? Just the 50 per cent fee you pay to the store.

In the court complaint filed by Tiffany & Co on July 13 2004, the company seeks to restrain eBay from assisting in the sale of any Tiffany & Co goods "except for genuine merchandise that in its entirety has been made, sponsored or approved by plaintiffs". This raises the question of whether Tiffany will want to approve goods presented to them by eBay.

Purchasing online has always been fraught with issues of authenticity. Type the word "fake" into the discussion boards on eBay and the results are full of would-be buyers asking about authentication of everything from Hermès scarves to Tiffany key chains and complaining about items already purchased.

None of this is lost on eBay, of course. According to the company's spokesperson Catherine England, "We started VeRO [an anti-counterfeiting and trademarks protection programme] in 1998 and we had only begun the company in 1995. Given the sheer volume of more than 100m items listed at any given time, with 6.1m new items listed each day ... it's not always possible to be an expert in every item that could be listed, but we partner with 18,000 rights owners through VeRO."

But being too involved works against eBay's very business model. The site makes money on volume: lots of transactions equals lots of third-party fees; the more involved the company has to be with each transaction the lower the profit margin. eBay is not coy about this: on the site it clearly says: "As a seller, you're ultimately responsible for the legality of any item you offer for sale on eBay and the listing describing that item."

It is also stated: "Under federal law (the Communications Decency Act), because eBay does not censor feedback or investigate it for accuracy, eBay is not legally responsible for the remarks that members post." In other words, they are expressly not responsible for assuring the authenticity of everything that is sold.

"We're not a retailer; we're a conduit," says England. "Transactions happen directly between buyers and sellers. At no time does eBay ever take possession of the items sold, nor do we intermediate transaction. Goods go directly from seller to buyer, and payment goes directly from buyer to seller."

Yet the crux of the Tiffany claim is that eBay is enabling, knowingly, the movement of thousands of dollars of illegal goods, thereby making eBay the trafficker of the illegal goods themselves. Indeed, Tiffany & Co vice-president Linda Buckley says that on occasion eBay has done even more. "eBay is more than a conduit," claims Buckley. "eBay also trains its sellers in advertising and promotional techniques and as the [official legal] Complaint shows, in the past it advertised Tiffany goods on its home page and directed potential buyers to other Tiffany sites."

Not all luxury companies share Tiffany's stance on authentication. Hermès, for example, doesn't authenticate in their stores. But if luxury companies themselves do not authenticate, should it become eBay's burden to do so?

A climate of dissatisfaction with eBay may make that question moot. On July 2, David Steiner, founder of the AuctionBytes.com site, posted Nielsen/NetRatings data refuting eBay's claim that time spent on their site was increasing; many responded, pointing to eBay's unhelpful customer service as the cause. Said poster Steve49: "eBay's downfall is going to be their complete lack of communication." And last month's issue of Consumer Reports has a survey of eBay dissatisfaction.

Guidelines on eBay's Help section and postings by eBay's staff make clear that eBay uses discretion in which sellers are removed and what auctions are shut down and that the rules are not transparent. "I put a real Louis Vuitton, in the original box, with photos showing it was genuine," says one seller. "I was living in Paris and the morning after I listed, I had not responded in time to a Vuitton spotter on Texas time wanting me to prove it was real, and by the time I woke up, eBay had shut down the sale by the request of this spotter. I was outraged. Why do I have to answer to eBay?"

eBay has taken steps to tackle such complaints. Since January, says England, they have made additional checks in the luxury category, such as limits on cross-border sales and on volume of items per day and verifying seller's financial information. "We've seen a 60 per cent decrease of reports to VeRO from rights owners," she notes.

But it may be too late. Competition has sprung up. An authentication service called MyPoupette will make money doing what Louis Vuitton will not: put a stamp of approval on LV goods sold on eBay. Karen Kooper from KarenKooper.com and Portero.com resell nothing but authenticated luxury goods. Michael Sheldon, chief executive of Portero, says: "eBay is ... facilitating a bunch of sellers they can't control. It's so easy to put a photo of a real item and then sell a fake item. The eBay marketplace doesn't work for luxury goods."

Financially, eBay is not hurting: on July 18, it reported a 50 per cent increase in net income (over the same time period in 2006) with second-quarter profits at $376m and revenues at $1.83bn.

But this month in the UK, France, Germany, Spain and Belgium L'Oréal took legal action against eBay, alleging it facilitates the sale of fake cosmetics and fragrances. Louis Vuitton and Dior, too, filed complaints in 2006 in France. Much hinges on the judgment in New York.

http://us.ft.com/ftgateway/superpage.ft?news_id=fto092120071214514528&page=2