Rob Webb – RobWebb2K – Markets, Information, Technology, Law

Well it looks like eBay v. Tiffany & Co. is finally over and eBay has come out on top. This is a huge case for the web and internet commerce. The ruling means that eBay (and other web based marketplaces like Craigslist)  can continue to rely on trademark holders to monitor their site for knock-off items. Back in 2004, Tiffany’s sued eBay for damages incurred from sales of knock-off Tiffany’s jewelry being sold on eBay and wanted to limit the number of Tiffany items any one seller can have for sale at one time. While a ruling in the favor of Tiffany’s would probably never registered on eBay’s radar screen, an avalanche of money hungry plaintiffs would have followed and the precedent would have been set that eBay could be liable for trademark infringement in regards to counterfeit goods. If any damages were awarded, hypothetically, any brand that has ever had a knock-off item sold on eBay would have stood to get some cash.

In 2001, the landmark case of ecommerce, Hendrickson v. eBay, the court found eBay to not be liable for stolen or counterfeit items sold on its site. The site was found to be in the safe harbor of the DMCA, and differentiated from the classic case of the flea market proprietor found liable for selling stolen goods. eBay was found to be in the safe harbor, including robust terms of service and links for users to flag inappropriate content. At the end of the day, Hendrickson required manufacturers to be on notice and proactively search and flag stolen goods on eBay. This was a big change from the flea market paradigm of the past, but there were a lot of strange things happening in 2001. Conversely, after Hendrickson, Napster & Grokster came through, which were about copyright but pondered a similar unchartered realms of e-commerce and trade. Napster couldn’t keep 100% pirated work off the site per court order, and were forced to shut down.

If eBay had lost the case and been put in a position where they needed to comply 100% a la the Napster Trajectory, they would have been put in an extremely difficult place, because while it is easy to recognize a NBC TV clip, it is not so easy to recognize a knock-off Tiffany & Co. ring by looking at a grainy photograph. This distinction may have been what in the end saved eBay. However, while Hendrickson and Napster both made trademark claims, they were overshadowed by the copyright issues in the cases which call to the DMCA. Tiffany’s claim was strictly within trademark.

Additional coverage: AP, Marketwatch, Reuters, NYT, CNET