A New York federal judge is considering a lawsuit involving Tiffany (NYSE: TIF) and eBay (NASDAQ: EBAY). The case will decide whether eBay has a responsibility to vet the authenticity of products bearing the Tiffany logo on its site.
eBay believes that it is Tiffany's responsibility to police the site for infringement of its trademarks, and the company's policy is that it will respond to claims by companies flagging possibly counterfeit merchandise. But eBay itself does not devote substantial resources to policing for counterfeiters. Rolex and Louis Vuitton have sued eBay on similar grounds.
According to the Wall Street Journal, "Tiffany argues that eBay knew it had a problem with counterfeit items being listed on its Web site and did little to clean it up."
In the "risk factors" section of its latest 10-K, eBay touches on the Tiffany lawsuit, saying that "Litigation and negative publicity has increased as our websites gain prominence in markets outside of the U.S., where the laws may be unsettled or less favorable to us. Such litigation is costly for us, could result in damage awards, injunctive relief, or increased costs of doing business through adverse judgment or settlement, could require us to change our business practices in expensive ways, or could otherwise harm our business."
It stands to reason that if eBay could take responsibility for counterfeit listings in a cost effective way, it would have avoided this litigation. eBay's business model could be in some pretty serious trouble if a judge rules that the company is responsible for copyright infringement by third party sellers -- it might have to just stop selling luxury goods altogether.
This will be an important case for any eBay investors to follow.
eBay and Tiffany lock horns
Posted Mar 26th 2008 5:06PM by Zac Bissonnette
Filed under: Law, eBay (EBAY), Tiffany and Co (TIF)
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Reader Comments (Page 1 of 1)
3-26-2008 @ 5:20PM
Sheldon L said...
Interesting issues.
1) What is the responsibilty of a flea market or swap meet except to have the items removed if they learn of a problem?
2) How can you determine if something is authentic from a picture on the web?
3) If ebay was to try and solve the counterfitting problem would they have to retain experts in each area in question?
4) In the case of Tiffany, they are the only merchant of their products, therefore almost any Tiffany products sold in quantity on eBay must be fakes or stolen, almost by definition.
3-26-2008 @ 5:35PM
william lindblad said...
I agree with Sheldon but would like to add this:
The Tiffany (Like Louis) mark has been around for years. Tiffany can get hairy, especially in a lawsuit as there is Tiffany & co and there was Tiffany studios. Father & Son and two distinct businesses and both marks and products are authentic. Louis Comfort Tiffany was the studios and the famous lampshades.
You can't police this. In the antique end the amount of fakes is endless and some can fool museum experts. This is caveat emptor land and if you do not know, or do not feel secure with the seller - don't buy.
3-26-2008 @ 5:40PM
brazen said...
it is insane to expect ebay to verify every item on it's site as being authentic. however that does not mean some court will not expect them to do so.
3-26-2008 @ 6:14PM
Marc said...
It can be possible to identify fakes from pictures. For example, an expert on Tiffany may know that a pattern or style was never produced by Tiffany, ergo the item up for sale is a fake.
That being said, my own experience with reporting fakes on Ebay is that they respond with a form email, and do absolutely nothing. I've even reported items as fakes with extensive and clear supporting photographic evidence that could be understood by a fifth grader, to no response.
4-02-2008 @ 8:16PM
commoncents said...
Isn't Ebay the very same auction site that will pull an auction unless the seller has some kind of cetificate of authenticity? Aren't they also the one's who pull particular auctions- say for instance in the description - the seller says in description ... that "this is NOT a 'xxxx' , but is very similar to 'xxxx' " ? It's their house- their rules... Ebay is and should be held accountable.... after all- they've got money to burn anyway... and they are the ones who opened the door to international exchange on their site.... of which most "fake,black markets or knocks offs" come from....
Tiffany should win this one.... along with all the other companies... that are having knock offs sold on ebay... "AUTHENTIC" products by Kate Spade, Gucci, Prada, Louis Vuitton etc etc... ALL should go after ebay for allowing such misconduct.-and all should win by a landslide... Ebay would appear to be a clearance house where to find such items... since Ebay only monitors certain items... this is just my opinion ....