Supreme Court Denies Cert in Tiffany v. Ebay

On November 29, 2010, the Supreme Court denied certiorari in the Tiffany v. eBay case out of the influential Second Circuit. That court had found in favor of online marketplace eBay in a suit brought by Tiffany, Inc., charging contributory trademark infringement where eBay posted listings that offered counterfeit silver Tiffany jewelry for sale. Tiffany (NJ), Inc. v. eBay, Inc., 600 F.3d 93 (2d Cir.), cert. denied, 2010 U.S. LEXIS 9355 (2010). Tiffany had sent hundreds of complaints to eBay, which had taken down the specific listings complained of but refused to stop other listings that purported to sell Tiffany silver jewelry.

In its petition for certiorari, Tiffany had asked the Court to find that a defendant can be held liable for operating a marketplace that it knows to sell “substantial quantities of goods that infringe. . . a trademark,” even if it doesn’t know which particular goods are infringing. After the denial of the petition, the ruling by the Second Circuit stands: eBay is not liable for contributory infringement, despite the fact that it may have generally known that counterfeit Tiffany goods were being sold on its site. The court found that eBay did not continue to supply its services to those who sold counterfeit Tiffany products while knowing or having reason to know that those sellers were infringing the mark. Finally, the court noted that eBay did not ignore infringement of which it was aware; such willful blindness would likely have made the auction site liable.

From the perspective of brand owners, the Tiffany case presented a particularly weak fact pattern because of eBay’s diligence in seeking out counterfeits and promptness in taking down listings when brand owners complain. The online marketplace spends millions of dollars each year and uses several different mechanisms to ferret out fraudulent listings on its site, and quickly takes down listings upon reports of potential infringement by trademark owners. In fact, eBay’s rigorous anti-counterfeiting efforts were pivotal to the Second Circuit’s decision.

After Tiffany, trademark owners should assume that they bear the ultimate burden of policing third-party use of their marks online. While a third party may be contributorily liable for offering a service that facilitates the sale of infringing goods, if that party does not exercise direct control over those sales and does not know or have reason to know about specific infringing activity, it is the trademark owner that must ferret out and stop those sales itself. However, brand owners can still claim contributory infringement by online marketplaces that sell counterfeit goods, if those marketplaces fail to respond to specific complaints by the brand owners.