EBay beats Tiffany, but TM law is very much alive and well …

The Wall Street Journal announced today that EBay Wins in Fight Over Tiffany Counterfeits.

eBay finally wins one, and it’s about time. EBay (and other e-commerce companies) won decisively against Tiffany and other trademark holders, which are trying to hold Internet companies liable for the sale of counterfeit goods. The issue involves burden of policing trademarks on the Internet, and Tiffany argued that eBay doesn’t do enough to police its network. The court held that eBay removes content once notified by Tiffany, which is the extent of its legal burden under US Trademark Law. Tiffany wanted eBay to police its network regarding Tiffany trademarks, much as it does prohibiting firearms.

Technically speaking, it wouldn’t be a problem for eBay to police its network as Tiffany desires. The problem is, it creates a slippery slope for eBay in several ways. First, by doing this for Tiffany, it would create a precedent for eBay to do it for all valid trademark holders (or at least those who requested this from eBay). Additionally, it suggest some form of liability to Tiffany, should eBay make mistakes. Finally, such action would cause a disservice to eBay’s customer base, as there are valid holders of Tiffany products. For example, I happen to have a couple of silver cufflinks from Tiffany, and if I want to sell them, I should be able to do so without seeking some form of permission from Tiffany.

It sounds like Tiffany isn’t going to give up. I expect them (and other significant trademark holders) to seek additional rights at the federal level. The problem is, they are overstepping their bounds, and definitely infringing on my rights as a holder of Tiffany goods should I desire to sell them. If we give rights to trademark holders to hold eBay, Craig’s List and the classifieds liable for counterfeits, I will no longer have an opportunity to sell my old Dell laptop, my Logitech mouse, iPhone, Tiffany earrings, my wife’s Louis Vuitton purse, etc, etc, etc.

Don’t think for a minute, that trademark holders are powerless with this decision. It simply reinforces the burden of policing the trademark (i.e. monitoring where your trademark is being used), and once a trademark holder identifies (or thinks they’ve identified, even if they are wrong) improper use of their trademark, an Internet company would be wise to immediately respond to any notice received by taking down the offending material. Otherwise, it becomes an easy case for contributory trademark infringement against your company.

When I was COO & Corporate Counsel for FatCow Web Hosting, I received numerous trademark infringement claims against our customers. The problem for us, is that our 30,000+ customers hosted their websites with us, some websites having many thousands of pages or products, with only one page or product containing the offending material. As a company, we can’t go in and modify a customer’s database to remove the one row (or page) containing the trademark problem. We have to take down the entire website. Therefore, it was our policy to contact the customer first, apologize about the predicament we were in as a hosting company, and explain the options to our customer. Often, those options were:

• Remove the offending material (usually within 72 hours);
• Resolve the matter with the complaining party;
• Obtain a court-order to keep your website up; or
• Have us take down your entire website.

More times than I can remember, I would receive a call by either the customer or their attorney, demanding that we leave the website up and basically trying to plead their case to me as though I’m a trademark judge. Unfortunately, in US Trademark Law, there is no safe harbor for an Internet company or ISP against contributory trademark infringement claims by a valid trademark holder. This means, as an Internet company or ISP, you must take down any material that is alleged to infringe a valid trademark otherwise you risk exposing yourself to a contributory trademark infringement cause of action, which will be difficult to win given the notice you were provided by the original complaint and the fact that you derive revenue from your customer.

In other words, Tiffany didn’t lose anything in this case against eBay. Trademark law is still alive and well for trademark holders.